Posted: April 26, 2022
In January the American Trucking Association Index released that For-Hire Truck Tonage and rose 0.6% in January after a 0.9% increase in December. January’s gain was the sixth straight increase which would indicate the worst effects of the pandemic are being erased.
While this news seems to an clear open road for the industry and the U.S. economy as a whole, analysts are concerned that trouble may be lurking right around the bend.
Many say that demand will slowly settle back down to pre-pandemic levels. When the demand begins to shift downward, an over employed trucking market may me culled.
To add to the issues with an inflated workforce, costs are also at an all-time high to support drivers and equipment. Some estimates put operating expenses for maintenance, insurance and fuel costs surging as much as $0.38 per mile over pre-covid levels.
Many start up fleets that flooded the market due to the high demand will take an enormous hit as the market slows. These entrepreneurs purchased equipment at the top cost point of the market due to limited supply. The struggle to support the financing of this equipment with lower revenues could create a surge of businesses going under in 2022 and 2023.
And if fuel cost continue to surge, the probability for strain in the overall industry will rise as bottom lines are constricted.
While it’s not possible to know the exact future of the industry, the one certainty is it will be volatile. The hope is the twists and turns it takes will be navigable and not a winding road to an economic break down.