Trucking demand near recession levels: Bank of America

We’ve seen a catastrophic drop in demand for trucking freight. It’s natural given the very high prices for truck hauls recently. Now tender rejection, a measure of how often trucking firms reject contracted loads to go after higher-paying spot market loads, has dropped to around 9% from well over 20%.

Does this mean that the inventory buildup also is about over? We hear conflicting things from the maritime front. There are still ships waiting to unload, even though Shanghai has reduced its shipping considerably. Many firms have gone to private shipping rather than using the liner alliances. But the containers still seem to be coming.

It’s a good question what portion of the trucking drop is to be attributed simply to the high prices, and what part to the actual reduction of demand.

I think it may be the high prices. They may be inducing shippers and buyers to hold off to keep logistics costs down. Buying larger orders less often is a good way to reduce total inventory cost, even if you leave out quantity discounting. So firms can plan to buy later. It may pay off with reduced trucking need and lower truck haul prices.

So is there a driver shortage? We may be training a bunch of new drivers just as the demand for them is cratering. How is that good for those people?

Rachel Premac kMonday, April 25, 2022

Trucking demand near recession levels: Bank of America – FreightWaves

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