Trucking Companies in the U.S. Face Oversupply and Falling Rates After 2018 Issues


Many truckers invested 2018’s profits into new supply and equipment, leading to an oversupply, and the industry has seen last year’s profits and gains from a tax cut going into new equipment instead of truckers’ pockets.

The end result of this new investment is the trucking industry seeing a growing supply of big rigs at the same time that shipping demand has softened. Most carriers are seeing less challenges with trucking infrastructure this year, as greater equipment availability and decreasing demand are leading to less pressure to reduce profits in the name of ensuring timely deliveries ahead of peak shipping season.

2019 marks a sharp reversal from the 2018 trucking situation, when flowing cargo volumes tightened truck capacity, and buyers and suppliers wrestled to book transportation services. Some companies pointed to rising shipping costs as the reason for depressed earnings, while carriers increased rates.

The average spot market price to hire big equipment was down 18.5% in June 2019, from the same month a year ago, to $1.89 per mile.

Last month, there were about three loads for every available truck, compared to six loads per truck in June 2018. Overall shipment volume in the U.S. has dropped by 6% compared to last year, according to market analysts. 2019 has seen the sharpest year-over-year volume drop since 2009. In the past two years, through the summer of 2018, freight prices had been driven up by a capacity decrease in the trucking industry – as well as panic among shippers over trucking companies not keeping up with demand. In order to meet this unusual freight demand, truckers went on a buying binge and the market became oversupplied with capacity.

Carrier executives pointed out that truck orders will tighten up in the upcoming months, with bankruptcies also increasing rapidly among smaller regional carriers. At MTS Logistics, we will keep you posted on the latest trucking and shipping industry developments.