Overcapacity continues to put downward pressure on rates and trucking jobs as more drivers are being forced out of the industry before they can be saved by a new upcycle.
According to the latest numbers from the Bureau of Labor Statistics, more than 1,000 trucking jobs were eliminated from the economy in August. This marks the fifth consecutive monthly loss, which was preceded by a five-month growth streak.
David Spencer, vice president of market intelligence at Arrive Logistics, told Land Line that August’s trucking jobs numbers reflect a trend of drivers and carriers “throwing in the towel” after attempting to get through a rough and lengthy downcycle. Spencer noted that recovery from the freight recession is not coming fast enough for many, and the near-future outlook remains bleak.
“Anecdotally, there is no reason to believe we would expect much excitement in the spot market through the remainder of the year based on how easily Labor Day was handled by the capacity in the market,” Spencer said. “With our forecast currently pointing to a significant rate recovery still being another 9-12 months away at best, it would make sense we continue to see a reduction in market participants from the carrier side.”
That is consistent with the OOIDA Foundation’s latest freight market update released last week. In its report, the Foundation states that volume and demand are flat while operating costs are high, leading to an overall negative future outlook.
Revised numbers reveal little changes to trucking job losses in the previous two months, with a decrease of 2,000 jobs in July (compared to the previously reported loss of 2,400) and a decrease of 1,100 jobs in June (compared to the previously reported decrease of 900).
Rounding second base and headed to third for 2024, trucking jobs are down by more than 8,000 for the year, with a net loss of nearly 13,000 during the current five-month losing streak.
Total employment in trucking is virtually the same as it was this time last year. Last August, tens of thousands of trucking jobs were lost in the immediate aftermath of Yellow Corp.’s bankruptcy. Although many of those lost jobs would resurface elsewhere in the following months, overcapacity has not only prevented a full recovery but also forced the number of jobs back to where they were when Yellow went under, with further losses anticipated.
Accounting for all transportation sector jobs, employment rose by 8,000 jobs.
The transportation sector’s net increase is mostly the result of a relatively large rise in jobs in three subsectors: transit/ground passenger transport (up 4,500), warehousing/storage (up 3,900) and air transportation (up 2,500). Employment in other subsectors was mostly stagnant, with significant losses in only three subsectors: trucking, water transport (down 1,300) and pipeline transport (down 1,300).
Updated data revealed significantly lower job numbers for the transport sector as a whole. Employment increased by 5,600 in July, a dramatic drop from the previously reported gain of 14,000 jobs. June’s revised numbers showed an increase of 10,900 jobs, half of the previously reported gain of 21,900.
Transportation jobs are up by 104,000 for the year, having dropped only once, in January.
Month to month, wages increased in August and were up year-to-year. Average weekly earnings of all employees in the transportation and warehousing sector went up by more than $4 to $1,170.02. Compared to August 2023, hourly earnings increased to $30.79 from $29.49. Accounting for only production and nonsupervisory employees, average weekly earnings increased from $1,095.38 in July to $1,101. Hourly earnings increased by $1.16 from August 2023 to $29.36.
Across all industries, employment increased by 142,000 jobs, with revised numbers showing 86,000 fewer jobs were added in the previous two months than previously reported. However, the unemployment rate dropped by 0.1 percentage points to 4.2% after four consecutive months of increases. Compared to the previous year, the unemployment rate for transportation and material-moving occupations increased from 5.8% to 6.0%.
Overall employment numbers over the last few months indicate a cooling down of the job market, which could further push the Federal Reserve to cut the interest rate during its next meeting on Sept. 17 and 18. In June, the Fed decided to keep the key rate at between 5.25% and 5.5%, suggesting more consistent data is needed before lowering the rate. Inflation has lowered twice since then, with the next inflation report due Sept. 11. LL
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