Why Industry Experts Predict a Trucking Bloodbath in 2019
Trucking industry experts are tasked with making forecasts and predictions that reflect the immense changes occurring in this growing industry. With new technology and endless innovation, trucking companies have certainly seen major shifts in recent times and have had to adapt to new practices, regulations, and market demands.
With all of these rapid changes, industry experts have made both good and bad predictions about what’s to come. One of the most headline worthy was their notion that a “trucking bloodbath” was on its way at the close of 2019. So, what does that mean, will it likely prove true, and what can be done?
What Is The Trucking Bloodbath?
Multiple noteworthy publications have covered the so-called “bloodbath” and the numbers associated with it. In simple terms, “bloodbath” is the word some experts are using to describe the cut jobs that are leaving some truckers out of work.
What makes these conclusions worth looking closer at is the mere disagreement amidst industry leaders. For the past several months, as some experts talk about the “bloodbath”, others have repeatedly pointed out statistics that support an opposite viewpoint and problem: a truck driver shortage.
Business Insider is one source that has written multiple articles on the topic, with one piece from July that shared an alarming statistic: “At least 2,500 truck drivers have lost their jobs in 2019 as the transportation ‘bloodbath’ unfolds.” The article went on to list bankrupt trucking companies, mostly small firms with many employing under 50 truckers each.
Those who do not agree with the view that massive, widespread job loss and bankruptcy is actually the problem–rather, while they admit some truckers are losing their jobs and some smaller businesses are closing their doors, they say this is only a symptom of a market shift.
In other words, thanks to the massive $800 billion trucking industry and the extreme forecasts of increased demand for the past few years, opponents to the “bloodbath” perspective explain that it all has to do with companies’ aggressive response to the planned increases in demand.
Another article from Business Insider put it this way: “When demand is high, trucking companies tend to buy lots of trucks and hire new drivers in anticipation of profits to come. But then, once the supply of trucks and truckers catches up to demand, rates fall, making that investment hard to pay off.”
It’s all part of the economic cycle, which is why some bigger picture experts are refusing to use terms like bloodbath or disaster. While job loss is unfortunate, it’s at no fault of truckers themselves. It has to do with companies’ ability (or, perhaps, occasional inability) to predict how many trucks and drivers they need on the road, and when demand can’t meet supply, they have to cut that supply back.
What’s Actually Going On?
Here’s a look at the facts that both sides can agree on:
- Drivers have lost jobs in recent months due to companies’ overcalculations regarding how many trucks and drivers they actually need on the road for the time being.
- Some smaller trucking companies have gone bankrupt due to overestimation of upcoming demand, causing them to have lost money on their investments. Being smaller firms, some didn’t have the resources to recover.
- The economy has also weakened, which worsened the issue of overcapacity and made it even more difficult for small companies to react and recover as they began to forecast lost income. Just consider that trucking loads were down over 50% in June compared to a year prior and rates dipped to over 18% in that same period.
With these facts in mind, it becomes easier to see how each side is drawing their own conclusions. Some experts are looking only at current numbers, seeing the weakening economy and smaller companies that are struggling to dial things back in response, assuming that more job loss and bankruptcy is on the horizon.
Others see this as a typical part of the economic cycle with overcapacity being a normal and expected occurrence given the extreme anticipation of a massive truck driver shortage and substantially increased demand that simply didn’t happen as companies originally thought.
The point is, both viewpoints are based on fact, but the conclusions you can draw from these numbers and trends will depend on how you look at the overall picture.
Stay prepared.
In any case, staying up-to-date on what the experts are saying can go a long way in helping you be prepared and stay competitive. For unbiased trucking industry news you can trust, signup for the Suppose U Drive newsletter by clicking here.