The Great Trucking Recession – A Warning Bell for the American Economy

As the holiday season approaches, the dire state of America’s trucking industry rings alarm bells for our economy. According to industry experts, the trucking sector, often considered the engine driving the American economy forward, is sputtering, and the consequences could be felt far beyond the highways.

Mike Kucharski, Vice-President and Co-Owner of JKC Trucking, paints a bleak picture. In the wake of the pandemic, a surplus of trucks and drivers now competes for a shrinking pool of freight. The slowdown in lockdown spending and the relentless rise in the cost of living have triggered a fierce competition between truckers and trucking companies, leading to what Kucharski describes as a “dogfight” for available loads.

“This is the great trucking recession,” Kucharski warns, emphasizing the critical role the trucking industry plays in fueling economic growth. “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.”

The repercussions are already evident. Yellow Corporation, a stalwart in the trucking sector, filed for Chapter 11 bankruptcy, resulting in the layoffs of 30,000 employees. Even tech-savvy startups like Convoy Inc., valued at $3.8 billion just last year, have succumbed to the industry’s challenges.

JKC Trucking, specializing in less-than-truckload carriers (LTL), faces the heat as freight volumes, a crucial economic indicator, experience “volume volatility.” Kucharski explains that historically, increased freight volume signals economic growth, but the current trend points in the opposite direction. “We had COVID, we had a huge surplus of spending [and] we didn’t have enough truckers to move it,” he notes. “Now everybody, the consumers, have depleted their funds and they’re not buying as much.”

The surge in prices, from energy to food, has added fuel to the fire. Consumers, feeling the pinch, are tightening their belts. Kucharski highlights the vicious cycle: truckers, grappling with elevated diesel fuel prices, pass on increased delivery costs to consumers already wary of making purchases.

This confluence of factors, according to Kucharski, is the aftershock of COVID. Pre-pandemic, Americans had healthier savings, but the economic fallout has led to depleted reserves and tough financial decisions.

As the holiday season looms, there are ominous signs. Last year saw a drop in spending after Thanksgiving, resulting in the worst holiday season since the 2008 financial crisis. Kucharski expresses concerns that this year could be even more challenging.

“The rampant inflation has created financial hardships for Americans across the board,” warns Kucharski. “This holiday season is going to be a major test and an economical indicator of how economic pressures are impacting Americans and the trucking industry.”

In essence, the troubles in the trucking industry serve as a canary in the coal mine for the broader economy. The trucking recession is not just a challenge for trucking companies; it’s a warning that economic troubles could be on the horizon. As we head into the holidays, it’s a call for everyone to pay attention to the road ahead. The health of the trucking industry is intertwined with the prosperity of our nation, and a breakdown here could reverberate throughout the entire economic system.