May 2023

Initial indications show small and medium size carriers have been impacted the most as closures have become commonplace, while some major carriers are in the midst of employee lay-offs as operating revenues continue to plummet.

This recession has dragged diesel prices down by half since last year, signalling a broader slowdown in the economy. The key industrial fuel, which is used to power machines as well as trucks, began to dip during a warmer-than-expected winter, and the slowdown has been exacerbated by diminishing factory output and weaker demand for on-hire trucks.

One of the key factors contributing to the freight recession is a demand slump, resulting from retailers over-buying during the COVID-19 pandemic, unsustainable in any environment, let alone amid a backdrop of elevated inflation and a weakening consumer economy.

This situation is also overburdening warehouses across the country as the destocking process for retail inventories has been much longer and more painful than anticipated.

Consumers are still spending on experiences like travel, leisure, and restaurants, but they are leaning towards non-discretionary goods, leading to less items being produced and, thus, transported.

Some industry experts predict as small and medium-size business capacity leaves, we may see rates stabilize and eventually rebound as capacity starts to match demand.

For more information, contact William Sanchez, Manager – Truck Services.