With the Federal Government shut down, SNAP benefits are at risk right now, and this could lead to a significant drop in consumer spending—and by extension, freight volumes—for as long as the shutdown drags on.
According to SONAR data, we’re already seeing freight volumes down 18.5% year-over-year.
October’s end usually kicks off peak season, but our data isn’t showing much of an uptick, and earnings reports from major companies aren’t projecting a big one either. Now, throw in the fact that about 45 million Americans depend on SNAP benefits. These folks live paycheck-to-paycheck and spend that assistance quickly on essentials, which directly drives demand for consumer goods and the freight that moves them.
If SNAP payments stop, we’re looking at a pretty significant drop-off in freight volumes. During COVID, we at FreightWaves studied how government stimulus programs spiked freight demand almost immediately. People who receive this kind of support tend to spend it fast—faster than other groups—which translates to more goods moving through the supply chain.
The market is telling two stories right now. Local distribution for big-box retail and e-commerce is holding steady, with volumes flat year-over-year. That’s a sign that everyday consumer retail is doing okay, which might be why the Federal Reserve isn’t panicking about the economy just yet.
But the long-haul side?
That’s a different picture—down 33% year-over-year. This segment is tied closely to industrial sectors like energy, manufacturing, housing, and autos, and it’s giving off vibes reminiscent of the 2008 Great Recession (even if we don’t have SONAR data from back then to compare directly). It’s concerning, to say the least.
On a slightly brighter note for trucking, capacity is exiting the market faster than volumes are dropping, which could mean we’re in the final stages of this freight recession—the last gasp, if you will. That’s positive for carriers, as it might help balance things out.
Freight brokers, though, are in a tougher spot. They thrive on high volumes and spot demand, and neither is happening right now. Without that short-term surge, they’re not getting the hits they need.
As the shutdown continues, the freight sector needs to brace for more potential declines. In the meantime, let’s hope for a quick resolution to keep goods—and the economy—moving.
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