The trucker demand that soared during the pandemic has been on a sharp decline since the beginning of March, and analysts believe that drop could indicate an economic recession.
An article published by FreightWaves reports that Ken Hoexter, managing director of Bank of America’s trucking research, wrote in a note to investors that trucking demand is “near freight recession levels.”
In a survey by Bank of America that collected the views of forty-four shippers in retail, consumer goods, and manufacturing industries, the shipper outlook is down 23% from where it was last year. The proprietary Truckload Demand Indicator hit 58 — the lowest since June 2020, as reported by ZeroHedge.
“Respondents noted a softening demand outlook, loosening market, deteriorating rail service, and pricing softness in the market,” Hoexter said in the note. “Shippers’ short-term positive outlooks fell to 39% from 50% last survey, neutral outlooks jumped to 43% from 39%, while negative outlooks were 18% from 11%.”
In a section of the survey that measures shippers’ views on truck rates, Hoexter reported the respondents’ outlook plunged to the lowest levels since May 2020, with about 36% of them expecting rates to fall over the next several months.
Fox Business reported that in addition to Bank of America, Wall Street firms Goldman Sachs and Deutsche Bank also suggest the possibility of a recession in the next couple of years.
The Wall Street Journal reported in early April that the Cass Freight Index, which measures domestic shipping demand, rose 0.6% in March from last year and 2.7% from February. Analysts said those numbers indicate a slowdown in the freight market.
The survey results come at a time when many fear a recession is on the horizon as the Federal Reserve increases interest rates to combat inflation. With inflation at its highest since 1981, the Fed raised rates by .25% in March and plans to make additional .5% increases in the near future.
“I think it’s fair to say that the days of expecting (freight) rate increases are pretty much over,” Avery Vise, a trucking analyst at FTR Transportation Intelligence, told the WSJ. “It’s a question of just how quickly things are going to normalize.”