U.S. Trucking Downturn Raises Fears Of Economic Gloom

Craig Fuller monitors millions of transactions between US truckers and their customers as chief executive of transportation data company FreightWaves - and he does not like what he is seeing, Lisa Baertlein reported for Reuters.

Photo Insert: History has proven trucking to be a possible indicator for the US economy.

There has been an unexpectedly sharp downturn in demand to truck everything from food to furniture since the beginning of March and rates in the overheated segment that deals in on-demand trucking jobs - known as the spot market - are skidding.

"It basically just dropped off a cliff," said Fuller, who is concerned that the US is at the start of a trucking recession that could decimate truckers' ability to dictate prices and push trucking firms into bankruptcy. Meanwhile, investors and financial analysts worry what will happen if the trucking slump deepens.

History has proven trucking to be a possible indicator for the US economy. That is because when people buy less, companies ship less - and business activity slows. Economic recessions followed six of the 12 trucking recessions since 1972, according to an analysis by trucking data company Convoy.

Experts predicted trucking would soften a bit as pandemic-weary consumers shifted some spending from goods to services in response to the United States lifting COVID prevention measures.

But they did not foresee Russia's invasion of Ukraine, which sent fuel prices to record highs, jolted already volatile stock markets, and forced shoppers to hit pause. And now, trucking's most demand-sensitive sector - the spot market - is in correction territory.

"It is the proverbial 'canary in the mineshaft'," said Joseph Rajkovacz, director of governmental affairs for the Western States Trucking Association. The group represents small trucking companies that dominate the spot market, which handled as much as 30% of freight during the height of the pandemic.

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