Trucking freight and equipment

Trucking freight and equipment markets have already hit bottom and won’t dig deeper, but the bounce back upward will be slow. Freight markets and the related equipment demand have bottomed out, but recovery will be slow, a transportation forecaster told trailer dealers here Thursday.

But the good news is that the current activity level, while low in the cycle, is not so bad compared to previous downturns. The trailer dealers knew their market and overwhelmingly confirmed the spike. Starks noted that trailer prices have decreased slightly but not significantly since the peak, and he doesn’t anticipate carriers getting much of a pricing break in 2024.

Consumers also have felt the sting of post-coronavirus price increases and, while the inflation rate in the cost of goods has come down, prices have not. There is no quick fix on the inflation environment, but we have seen a drastic renormalization within goods—which is a positive for our industry.

The COVID-driven surge in online shopping led to significant growth in warehouse space to support local delivery, and keeping warehouses stocked has likely generated some excess supply in the system. However, with no real growth in demand, “we have a very manageable inventory environment. Without growth in demand, it’s really tough to stay out of a recessionary environment for portions of the markets.

As you look out over the next few quarters the numbers are positive, but they’re not very positive; The rapid declines in backlogs need to be seen in a broader context, namely that backlogs have essentially returned to normal levels from record highs. Likewise, “replacement level” demand for equipment means 2024 will be the low year in the cycle but will still run well above the lows during the Great Recession.

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