Truckers have been riding an epic wave of demand. But the tide is turning. Are we in a freight recession? Are we reverting to pre-pandemic supply chain patterns? Opinions are shifting fast.

No doubt spot truckload rates have plummeted since the start of the year and fuel prices have spiked. This combination of lower revenue and higher costs is especially brutal for small carriers and owner-operators.

Inflation, interest rates, war in Europe, Covid and pandemic-weary consumers shifting their spending from goods to services are reasons for broader economic concern.

At the same time, overall truckload volumes are strong and contract prices are near record highs. Shippers are repairing their routing guides and focusing on their trusted carrier partners.

So are we in good times or bad? Here are some things to think about.

Benchmarks vs. balance sheets

Every doom-and-gloom news story is peppered with stats about truckload rates and volumes. It’s good to put these numbers into context.

Freight data comes from a variety of sources including academics, consulting firms, government agencies and private companies. The best pricing data comes from invoices and tender information for loads actually moved as opposed to “sentiment surveys” or rates that brokers post on a load board.

Spot pricing data gets the most attention but it only tells part of the story. Maybe 15% of truckload freight moves on the spot market and most of that is van freight. Very little LTL, bulk, hazmat or other specialized loads get posted to big load boards. And most of the pricing stats are national averages for U.S. domestic freight.

The best data you have is your own balance sheet and what’s happening with freight on the lanes you service. Anything else is an FYI or a benchmark.

Question the source

The more chaotic things get, the more likely you are to see wrong or noisy information.

Case in point: In early April, a financial analyst with a big U.S. investment bank downgraded a number of trucking stocks based on data that showed truckload spot van rates falling far faster than they actually were. His note to investors warned of “price dives” and demand “near freight recession levels.”

Before he could issue a correction about the faulty pricing data, the note triggered a ton of news coverage and a big selloff across the truckload sector. North America’s biggest flatbed carrier saw its share price fall in part due to bad van data. One of its largest shareholders sent out a press release calling on the Board of Directors to buy back shares because the price had dropped 30% and was “worthy of an industry premium — not a discount.”

Cycling concerns

Every boom cycle ends when capacity outstrips demand. During this cycle, carriers have not been able to add equipment like they want to because OEMs haven’t been able to convert orders into finished vehicles. This lack of new inventory could help prevent a hard overcorrection.

Looking at freight volumes, big parts of Canada’s industrial economy are still building steam. Carriers that haul automotive freight are champing at the bit. There’s a huge demand in oilfield services. There’s no telling how much freight has been tangled up in China during Covid lockdowns, or when that wave of imports will hit the West Coast.

Trucking is a cyclical business but the cycles of the customers you serve matter more.

June is a key month

June is an important month for trucking. Back-to-school and holiday retail goods are moving into warehouses. Produce season will keep reefers rolling, while flatbed carriers are hauling materials and machinery for summer construction projects. If you’re wondering about a “freight recession,” June should indicate where we’re headed the rest of the year.

According to Barron’s there have been 12 freight recessions since 1972. I’ve lived though most of them and I don’t remember any of them. When I was young I was too busy hustling to notice, and as I got older I grew accustomed to the ups and downs and learned to keep my eyes on the next swell. Panic, after all, only attracts the sharks.