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What is a Freight Recession?

Photo credit: Jim Allen/FreightWaves

What is a recession?

One of the textbook conditions for recession is two consecutive quarters of contraction in a particular metric. The status is most typically applied to gross domestic product (GDP), a measure of overall economic output, to gauge whether an entire country’s economy is in a recession. However, the headline GDP number does not apply to all industries, which may be performing better or worse than the overall economy to all industries. Certain sectors — freight included — may be performing better or worse than the overall economy.”

How is the freight industry different?

Economic segments that typically aren’t large enough to tip the overall U.S. economy into recession impact the freight industry disproportionately. For example, heavy machinery and components tied to the industrial and construction sectors can significantly affect freight volumes, while economic activity linked to the service sectors can be enough to uphold economic expansion. Large sectors of the economy that generate relatively little freight volume include education, technology and health care. In addition, while consumer spending — the largest part of the economy — generates freight activity, a massive portion of consumption is of products that have been miniaturized or otherwise generate little freight demand. Consider how many iPads could fit in a 53-foot semi-trailer.

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How do we know if the freight economy is healthy?

Freight volumes are a real-time indicator of demand while seated truck availability is likely the best way to visualize the capacity to handle it since truckload is the largest domestic transportation sector. When there are consecutive quarters of decline in freight volumes, this can be considered a freight recession. This typically means that both freight volumes and tender rejections are low, suggesting there is overcapacity in the industry. Low tender rejection rates are indicative of spot rates that are low enough to encourage the acceptance of previously agreed-upon contract rates, which typically lead to lower contract rates during the next round of negotiations. Those market conditions are associated with truckload carriers seeing their margins diminish and portions of their fleets going idle.


A key segment to monitor to measure the health of the freight market is manufacturing. A contraction in year-over-year growth for industrial production typically coincides with declines in freight volumes. Another way to evaluate whether we are in a freight recession is to look at railroad traffic volumes, excluding coal and grain (which are impacted by noncyclical factors). After excluding coal and grain from railroad traffic, what’s left is a fairly representative sample of the freight economy.


  1. Mike

    There is no freight shortage, there is an overabundance of trucks, and these future owner operators keep hitting our shores wholesale to make a killing in the US freight markets. That is what is going on. Go through a truck stop some day, most of the folks do not even speak English. There is no relief in site, and the rates will continue to collapse. The inmates are running the asylum.

    1. Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! IMHO

      “The inmates are running the asylum.”

      So true ! From the carrier level all the way up to the top !

      Reading that had me laughing so hard I literally spat out my coffee , LOL !

      Note to self : don’t drink while reading Mike’s comments , LOL !

      In my humble opinion ……..

  2. Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! IMHO

    BINGO !

    Thanks Heavyweight Champ , you nailed it !

    The Dave child is looking for attention . If you analyse his characteristics , he portrays himself as authoritative , abusive , a know it all , and defending something that I appear to menace . He also attempts to belittle and discredit through mockery .

    He’s probably a “carrier” and quite a disgrace to those sharing that title . The change in regime that I keep on proposing is a menace to his . If truck drivers unite he would no longer be in business .

    What the undisciplined child doesn’t appear to understand is that the more he responds to my comments , the more he draws attention to my cause . Notice that often he will not comment on the article itself , he will comment on my comment(s) , its length , etc . He’s an ignorant greenhorn in this particular type of activity . Rather than putting the article at the center of the stage by commenting on “it ” through his comments , he puts me at the center of the stage . I couldn’t be more pleased .

    Bad publicity is good publicity (wink) . I got this clown commenting on me rather than on the article when I comment .

    Apparently I need to post longer comments to remain in the spotlight , LOL !

    I posted this reply to your comment here rather than underneath your comment HC , too take more space on the thread . (wink)

    In my humble opinion .

  3. Elvis Durant

    Technology like??? ELD? AUTOMATED TRUCKS? BUNCH OF NONSENSE SENSORS ON THESE NEWER TRUCKS THAT keep your truck parked at a Repair shop more time than running on the road???

    Incredible that this trucking industry has relapsed back to the 1800s…..

  4. Dave

    Noble1, technology will determine the winners and losers on a micro scale by lowering individual costs of the company adopting it.

    See how I said a that in ONE short sentence and not a Bible sized posting 😂

    1. Heavyweight Champ

      Dave why are you being such a fucking idiot ? Read Noble1’s comment . It’s fucking profound . He’s speaking about making a change on a micro scale that would have a profound effect on a macro scale . His comment is on topic . Yours is a stupid fucking taunt off topic .

  5. Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen picking driver pockets ! IMHO

    As a little celebration to celebrate my calls commented and posted on “Why is GDP not useful for looking at freight conditions in the economy?” on Freightwaves January 5th & 6th , AND to emphasize what I wrote in my prior comment up above :

    A little music is called for ! Hmmm a song with some meaning , YEAH !

    John Schneider Tom Wopat sing Just The Good Ole Boys Final Nashville Now Show Google it !



    In my humble opinion ………..

  6. Noble1

    Perhaps focusing on how to diversify in order to prevent the contraction effect is the innovation these freight lack .

    They’re suppose to be well aware of the cyclicity in their sector & industry . Though their conventional thinking and business model renders most of them victims of their business cycle . They should offset the cyclical contractions through innovative diversification .

    When rates increase they know it will attract capacity/incite competition . Eventually that capacity will become an excess and will outweigh demand . The over supply will negatively affect rates . Though they continuously position themselves to remain dependant and thus vulnerable on those freight rates . Why ?

    Technology will not prevent booms & busts , at least not based on the way technology is currently being applied . However, technology can certainly help offset and prevent one from being a victim of the earnings constraint those cyclical swings may cause .

    Most of these freight carriers are ineffective at offsetting cyclical earning contractions in their business . Their typical excuse is that they aren’t immune to “large cyclical swings” . To me that suggests bad management . You need to implement a counter reaction in your business model to offset potential earning constraints resulting from those cyclical swings . The “problem” isn’t the cyclical swings . The problem lies in how management lacks the savoir fair to respond to those cyclical swings .

    Therefore , effectiveness leads to efficiency , not “technology” per se . The technology that facilitates an increase in efficiency came from someone’s mind . It first began with an idea to do something differently ,thus more efficiently . Once this “idea” is proven then you develop/create an application etc just like what is currently being done on so many different levels in different fields .

    This leads to one main reason why I keep saying that if truck drivers were to unite , they could take this industry by storm . Most of the so called leaders aka major carriers are sleeping at the helm . Uniting would transition into taking candy from a baby .

    Each and everyone of you are an incredible underappreciated asset and victims based on your dependency to rely on another that views you as an expendable expense . Your collective ideas would render your competition uncompetitive . They wouldn’t stand a chance . This recent technological revolution in the industry demonstrates how incompetent and uncoordinated they are .

    A simple ELD has demonstrated this . Now they’re slowly restructuring to become more efficient . Some adapted way before ELD’s became mandatory . Some are still having difficulty . Then another constraint arises . Nuclear verdicts , and then Insurance costs . Then what ? Always something else . Now they want to put cameras in your face while driving . Then what ? Etc etc etc .

    Unite and lead collectively . Take your industry back and position yourselves at the helm . Or vote for a democrat and hope that they will level the playing field between the haves and have nots . Co-determination is one way of having a little more say at the top . However, why not just take complete control instead ?

    Booms & Busts are a “normal” part of the so called “designed” model . That “designed” model can certainly be influenced to change , or you can simply create one that adapts to that one which will render you prosperous no matter which direction their model swings .

    In my humble opinion …………

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Anthony Smith

Before FreightWaves, Anthony received his Bachelor’s and Master’s degree in Economics from New Mexico State University. Anthony started his career off in tech as a Commercialization Associate where he identified and evaluated emerging technologies and innovations. Anthony transitioned to a Corporate Economist & Consultant where he advised CXO leaders and Fortune 500 companies on economic analysis, industry trends and internal strategy. Anthony’s clients varied from construction, trucking, industrial, software, manufacturing and retail industries. Anthony most recently worked in-house as a Corporate Economist for a building products company. He led analysis around M&A, pricing sensitivity, competitive intelligence and annual sales forecast for the executive team.