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June 14, 2023

LONG OVERDUE!

Picture of Hank Newman, CEO/Founder

Hank Newman, CEO/Founder

2020 has re-written the record books. How long will it take to return to normalcy?

I’ve been lazy! Or it might be the confusing indicators we keep getting. Or it might be confusion over just where in the heck the economy is at. Or — it could be something else. I will have to go with laziness and apologize for not sending a market update for a very long time!

Maybe I’m frustrated, too, because we saw plenty of signs of a freight recession coming as long as a year ago, yet all the pundits kept proclaiming how strong everything was and how long it would last. Some of you remember my Dad’s enduring quote about such pundits — “Often wrong, but never in doubt!” I guess it’s easy for some to erase their memories and pretend it never happened. I’ve mostly tuned them out, much like I’ve tuned out all social media.

What’s the point?

Maybe I’m getting too old for this sh**.

Since so many indicators I’ve watched for so long have gone awry, I hesitate to offer any direction. But if I go back to reading tea leaves and burning incense, it feels like we will be bumping along a freight bottom for a very long time. From a shipper perspective, that MIGHT be good, but it all depends on your strategy.

Here’s a quick summary of some of the things that MIGHT happen (I certainly don’t want to be one of my Dad’s long-despised talking heads!):

  • LTL pricing continues in a huge “churn” market. Meaning — carriers will fight to take small increases on business they currently handle but bid aggressively on new lanes — the same old, same old with a slightly different spin. You can save a lot of money if you’re willing to change carriers. We’ve seen this “churn” for most of the year, but with many carriers just now starting to report significant volume declines — maybe it’s just beginning.

  • TL pricing will stay pretty much where it is for the rest of the year. It’s down significantly (down over 40% excluding fuel since the peak in January 2022!), but with what seems to be a shifting in consumer spending from goods to services — who knows? This really hurts the smaller trucking firms as many of their expenses continue to rise significantly. Finding a truck at a good rate for the rest of the year should be easy, barring a few blips like end-of-quarter days, etc.

  • LTL Performance will continue to drag even with less freight moving. Why? Because those new ORs that Wall Street is demanding make it too easy to sacrifice performance for profits. IDK – I’m probably wrong. Reconex continues to publish our proprietary TrueMark™ Monthly LTL Performance Report, so I hope you subscribe!

The recent Freightwaves article about another potentially false indicator prompted me to get moving again. Strong heavy-duty truck sales are an excellent sign for the economy, and declining sales have predicted 10 of the last five recessions. But the counter-point is that 2020 wrecked everything, so this indicator may also be awry. The article is linked below for you to view.

Perhaps the fact that we pumped trillions and trillions of dollars into the economy — free money for so many folks — is behind messing up the things we’ve relied on for decades. That may be it. If so, it may take a decade to return to normalcy (if possible in today’s very, very weird upside-down world)!

I did see a pig fly the other day, though! That may offend someone somewhere, but hopefully, I’ll be back for a few semi-regular Reconex market updates!

New truck sales are robust – but there’s still a trucking bloodbath

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