Why is the freight market so bad right now?
Rethinking the Freight Transportation Market: A Journey from Prosperity to Peril
The freight transportation industry, like many sectors reliant on commoditization, has historically cycled through phases of prosperity and hardship. Recently, this market has witnessed some of its most challenging times, reflecting a broader economic trend.
Predictions and Realities: The Market’s Downturn
Early signs of a market downturn were identified by FreightWaves SONAR in March 2022, foreshadowing a significant slump in the freight industry. The pandemic had led to an overcapacity in the market, causing freight-hauling rates to plummet, reaching or even falling below the levels seen in 2019. This period, extending over 18 months, thus, became marked by an excess of available trucks compared to the freight needing transportation.
The Widespread Impact
This decline, not isolated to the trucking sector in the United States. Moreover, the ripple effects became felt globally. As a result, impacting various components of the freight ecosystem, including ocean carriers, railroads, air cargo carriers, and freight forwarders. Additionally, the issues, not confined to a single region or mode of transportation but were indicative of a global trend.
The Bleak Outlook
Despite a natural inclination to report positive news, the current state of the freight, transportation, and logistics sectors offers little in terms of optimism. The market is undergoing one of the worst downturns in its history. This is not a simple market correction but a severe recession within the freight industry, fueled by an overbuild of capacity. The resolution of this crisis is not imminent and will likely take considerable time.
The Industry’s Struggles
Since early 2022, the downturn has led to numerous companies dying! Including well-known names like Yellow Corp and Convoy, either closing their doors or downsizing significantly. This wave of bankruptcies, shutdowns, and layoffs has not only resulted in financial losses! However, also affected countless employees across the industry.
Reporting on the State of Freight
FreightWaves has been at the forefront of reporting these developments, highlighting various aspects of the struggling freight economy. These reports include a series of articles documenting the hardships faced by the industry, from bankruptcies and shutdowns to layoffs and company closures.
A Catalog of Industry Hardships
The past year has witnessed a distressing number of company closures and bankruptcies across the freight industry. Notable instances include the liquidation of Twin Express, Slync’s operational wind down, and the shutdown of companies like SEL Supply Chain Solutions, Convoy, and Certified Freight Logistics. Each of these events tells a story of a struggling sector grappling with economic downturns.
The Layoff Wave
The industry’s struggles have also been marked by significant layoffs. Companies across the spectrum, from vehicle lifecycle management firms like Solera Holdings to major logistics providers like Maersk, have had to let go of a substantial number of employees. These layoffs reflect the broader challenges facing the industry in a time of economic uncertainty.