America's trucking industry is in a dire state, which is bad news for the American economy because it serves as an indicator of the mood of consumers and their pocketbooks heading into the holiday season, one expert warned.
Post pandemic, there has been a surplus of trucks and drivers compared to the amount of freight that needs transporting. As lockdown spending slowed and the cost of living continues to rise, more truckers are fighting for the same loads, which results in a "dogfight" between truckers and trucking companies, JKC Trucking Vice-President and Co-Owner Mike Kucharski told Fox News Digital.
"Everybody's calling this the great trucking recession, and it's true because all the trucking companies right now are in dark times," he said. "This is not a good time to be in the trucking industry. Just to paint a picture, the trucking industry is the engine that drives the American economy forward. We're fueling growth [and] prosperity by transporting goods to where they need to be and when the engine breaks down or stops, it works like a heart. When that ceases to be, it brings the entire economic system to a halt."
Yellow Corporation, for example, which is one of the nation's oldest and largest trucking companies, filed for Chapter 11 bankruptcy in August, laying off 30,000 employees. Convoy Inc., a Seattle-based trucking startup that was valued by investors at $3.8 billion just last year, shut down last month.
"Because volumes are down, we may even see more trucking companies go out of business," Kucharski said. "It's going to be really interesting and scary to see how this all unfolds over the next few months because of what has happened in the last two years."
Kucharski's company, JKC Trucking Inc., specializes in a particular sector of the trucking industry known as LTL, or less-than-truckload carriers, which handles pallet-sized shipments of freight through a network of terminals. JKC is Chicago's largest specialty contract carrier for climate-controlled and dry freight loads specializing in LTL shipments for customers with one box, one pallet or half a truck to ship from the Midwest to California, Florida and major cities west of the Mississippi River.
Kucharski explained that freight volumes, specifically, are a critical indicator of the status of the industry, as well as the economy. But he said right now the industry is experiencing "volume volatility" meaning volumes and rates are down due to supply and demand.
"Obviously an increase in freight volume typically suggests the economy is growing, as it indicates greater demand for goods and services," he said.
"We had COVID, we had a huge surplus of spending [and] we didn't have enough truckers to move it," he added. "Now everybody, the consumers, have depleted their funds and they're not buying as much."
In addition, the prices of everything, including energy and food, have "skyrocketed." Consumers are buying less and truckers are fighting over freight "to make some profit or break even to survive another year," he said.
Kucharski said another factor in the "great trucking recession" is diesel fuel prices, which are a major operating cost for trucking companies.
"It costs more to deliver goods and therefore this cost is passed on to the consumer. Consumers are feeling strapped for cash due to the increased costs and interest rates, they are holding back on purchases seeing what's going to happen and now we have our drivers sitting on the sidelines with no work," he said.
"It's a vicious cycle and all the trucking companies are in a dogfight, to get this volume because we went from 100 miles an hour to almost a complete halt," he added. "Until the entire economy corrects itself, we're going to be in the slump, and we're going to continue to see other trucking companies go out of business. Everybody is in bad shape, I don't care if you're Amazon or a one-trucking operation, everybody across the spectrum is affected."
Kucharski said the current economic climate is "the aftershock of COVID." Pre-COVID Americans had more money in their savings, but after COVID, people had depleted their savings, which has led to bad economic decisions, he said.
The holiday season is often a boon for the trucking industry, but Kucharski said spending dropped off after Thanksgiving last year, which resulted in the worst holiday season since the 2008 financial crisis. Unfortunately, he said there are fears that this holiday season could be "even more challenging than 2022."
"The rampant inflation has created financial hardships for Americans across the board," Kucharski said. "People are tightening their belts, you just have to right now, and this holiday season is going to be a major test and economical indicator of how economic pressures are impacting Americans and the trucking industry."