This year has been rocky for the $800 billion trucking industry.
After a raucous 2018, 2019 has seen retailers and manufacturers moving less, according to the Cass Freight Index. Freight rates have dipped year over year for six months straight. Loads on the spot market, in which retailers and manufacturers buy trucking capacity as they need it rather than through a contract, have fallen by a chilling 62.6% in May year over year.
And that means rates have dipped for independent truckers as well as major companies. Rates for van loads sank 20% in May year over year, according to DAT.
The earnings of big and small players alike are getting hit as factory activity continues to decline. The Lexington, Ky., owner-operator Chad Boblett said some truck drivers are seeing a “bloodbath.”
There has been a spate of trucking companies declaring bankruptcy this year, too. The largest was New England Motor Freight, which was No. 19 in its trucking segment. Falcon Transport also shut down this year, abruptly laying off some 550 employees in April.
“We have become increasingly convinced that freight is likely to remain weak through 2019 followed by falling truckload and intermodal contract rates in 2020,” the UBS analyst Thomas Wadewitz wrote to investors in a June 18 note.
Trucking’s biggest companies have been slashing their outlooks. Knight-Swift and Schneider both cut their annual outlooks earlier this year.
Even giants like FedEx, UPS, and J.B. Hunt, the country’s third-largest trucking company, haven’t been immune. UPS’s first-quarter bottom line was below last year’s revenue, and the package giant’s earnings were below expectations.