There are warning signs everywhere that the trucking industry is in the middle of a serious contraction. This crisis is yet another symptom of President Joe Biden’s failed economic policies and the inflation they brought about.
It was just September when 30,000 truck drivers employed by Yellow suddenly became unemployed as the company entered Chapter 11 bankruptcy.
Now, digital freight broker Convoy announced it is closing down, dealing a second blow to American business.
Trucking is a key indicator of the health of the U.S. economy and the overall mood of consumers. One business insider declared the public is slow to realize how serious the issue is and how much it affects everyday lives.
Rick McQuaide, the operator of a Pennsylvania trucking company, said the industry is on a downward trajectory. “When trucking and supply chain freight is heading in the wrong direction, so is the country. I am just not sure that people understand there is a problem.”
Trucking employment imploding as industry faces unprecedented headwinds https://t.co/DYPltEoy7H
— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) November 5, 2023
As with many current issues, the trucking slowdown began with mismanagement of the COVID-19 pandemic.
McQuaide noted that Washington handed out free money, leading to people ordering goods like never before. This translated into trucking companies purchasing new vehicles and greatly expanding.
But that spree dramatically slowed, and in its wake were firms that had too many trucks and too little freight.
In essence, a bubble has burst.
To demonstrate how much, consider a comparison. In June 2020, the industry had 241,835 registered drivers qualified to haul 10,000 pounds or more.
Four months ago, that number had ballooned to 475,371, for a massive leap of 96%.
For many years there have been more driving positions available than truckers to fill them. This led to a strong belief that getting a CDL and entering the industry meant never having to worry about steady work and the paycheck that came with it.
That has changed. Now there are tens of thousands of drivers looking for jobs — and many are deeply in debt with large purchases to further their careers.
Many of the industry’s new drivers who worked for larger companies took the plunge and bought their own big rigs. Now they could be independent owner-operators.
With the surplus of drivers flooding the market, companies are now free to play one against another to offer lower compensation. And with the skyrocketing price of diesel, the industry for many has gone bust.