Business conditions in 2019 have been more challenging for carriers than 2018 – a year that held two of the best quarters of revenue in the history of trucking.
Tax cuts in 2017 boosted activity to white-hot levels last year, but tariffs threw cold water on it mid-year and accelerated the economy’s return to a more normal trend during 2019.
“We believe about 20% of the profitability from publicly traded carriers comes from these tax cuts,” said ACT Research President Kenny Vieth, who lead an economic session at CCJ‘s Solutions Summit in Scottsdale, Arizona, Tuesday.
“In the first quarter of 2018, the world was awash in manufacturing good news,” he said, adding tariffs quickly started to suppress that growth. “Tariffs have been the driver in slowing down the entire global economy.”
Tariffs and a looming trade war raise the risk of an economic recession, and Vieth noted that an industrial recession is already underway in the U.S., which has led to a freight recession across all segments.
“The evidence overwhelmingly suggests 2020 is going to be a very, very tough year,” he said. “Freight recovery is dependent on the speed at which equipment supply and freight demand are brought back into line.”
Active capacity is up 10% over early 2018 – the fastest fleet capacity growth since 1999 – but Vieth said re-emerging productivity trends negate a still-growing economy.
