Have We Been Experiencing a Freight Recession?
While many experts have argued we haven’t been in an economic recession for the last 12-18 months, the transportation space may be in a different spot. Over the last few weeks, we’ve seen results from the publicly traded motor carriers with decreased revenues, earnings, or both. There have been statements referencing a softening economy, tough shipping environments, and even recession. This isn’t surprising as many would argue we’ve been experiencing one for a while now. Freight rates have fallen dramatically in the last six months, freight volumes have also declined, and in data reports have shown that the number of truck drivers has declined (though we could argue a number of factors could be causing this)
As a CPA, we have a lot of conversations with our clients between February and April. This year we saw gratitude and appreciation thinking about how good 2021 and 2022 was for most carriers. However, we also saw a lot of worry, concern, and even fear when talking about how Q1 went, where rates are at, and how long they anticipate this to last.
Carriers have all been impacted differently depending upon their customer base, exposure to the spot market, and overall financial health. We’ve been advising clients to tighten things up, watch their discretionary spending, and make sure they have cash to weather this storm as economists are predicting we could see this continue into the Fall.
Andy is a CPA and trusted advisor with 15 years of experience providing tax, accounting, assurance, and consulting services to transportation industry owners and operators. He is a tax principal with CLA in the Minneapolis, MN office. He also consults with high net worth individuals and owners of closely-held transportation businesses on all aspects of tax planning, estate planning, and retirement planning. Andy is also the tax leader for transportation industry across CLA.
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