Originally published at: Truckload capacity is falling faster than demand - FreightWaves
Truckload demand has collapsed, largely due to the loss of transcontinental freight to intermodal, but tender rejection and spot rates remain on par to slightly higher than last year, an indication that capacity is under far more pressure than demand.
Well there is one small bit that has affected that.
Tariffs
Specifically companies have over the past 6 months to a year have been trying to build up inventory to beat the tariffs.
You double your normal inventory, you artificially inflate shipping capacity. And some places have tripled their inventory trying to avoid the tariffs.
Then when the tariffs actually hit, or the warehouses literally have no room for anything, then shipping demand is going to plummet.
Regardless of whatever else is going on in the economy.
As far as the decline of shipping not outstripping capacity, my understanding is quite a few truckers have been yanked from behind the wheel, sometimes literally, due to immigration status/language skills.
You pull 5 to 10% of drivers off the road over the course of 2-3 months, capacity is going to take a bit of a hit