Freight Recession – Freight and Diesel Slowdown
The United States has been able to escape a recession so far, but a freight recession has taken hold of the country. These slowdowns are often common, but it comes at a troubling time for the economy. A freight recession means that freight volumes have been declining for consecutive quarters, and fewer trucks are delivering across the country. This has been an overall trend of industrial activity in the world for the past few months, with global trade and manufacturing falling by 5.4 percent between September and January. In the US specifically, container imports have fallen by 23 percent from a year before, a key reason contributing to this slowdown as there is less demand for freight trucks.
US diesel prices have been greatly affected by the freight recession, falling by as much as 50 percent. This has placed pressure on the energy sector, which hasn’t had the best 2023, and crude oil is also being affected despite China’s high demand for the resource as of late. Analysts expect refining margins to continue to slide, and all of this was seen in transportation earnings that we received yesterday. UPS reported a decrease in first-quarter earnings due to slowed retail sales and lower package volume, and trucking company J.B. Hunt said they have been seeing unpredictability regarding freight needs and sapped demand for bulky products that are often moved in the freight industry. In the big picture, the freight recession is providing signs that the economy is slowing down and possibly heading towards a recession, leaving businesses concerned as margins become tighter for a backbone of the United States.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.