One of them is Makena Trading Corp., a Pembroke Pines, Fla.-based trucking company that does business as Makena Express. Reports indicate that Makena filed for bankruptcy this week, its petition stating that it has up to 49 different creditors that are waiting for restitution.
The company cited covid as the reason for the bankruptcy filing, adding that it still owes its truck drivers back wages. Makena operates eight tractors and nine drivers, hauling general freight such as beverages, paper products, and electronics.
Another to bite the dust is DFI Systems Inc., a Virginia-based building fabricator and trucking firm that employed 90 people.
After failing to make payroll, DFI fired all of its employees, including six drivers, all of whom are still owed two weeks' pay after the Emporia-based company ceased operations.
Citing soaring lumber prices, DFI made the costly decision to move its company headquarters during covid, but was unable to find new investors, creating a "perfect storm" that forced the company to close up shop in late March.
(Related: Another factor negatively impacting the trucking industry is diesel exhaust fluid [DEF] supply issues, this being a major problem last spring.)
These are just two examples among a growing many, which point to a freight market downturn or recession.
FreightWaves was reporting last spring that it anticipated a freight recession, citing an analysis by SONAR, the site's high-frequency freight data and price reporting platform and the market's leading freight market analytics and pricing system.
The site says it received incredible backlash for even suggesting that a freight recession could be looming, but here we are a year later seeing everything that was predicted eerily coming to pass.
"The freight market is one of the most volatile markets on the planet," says Craig Fuller, CEO of FreightWaves. "Hot markets can turn ice cold in a flash, particularly after the federal government and central bankers flooded our economy with so much liquidity and then proceeded to institute the fastest monetary tightening cycle in history."
"Hindsight is 20 / 20, and now the debate over the freight market downturn is a thing of the past. The freight recession has come, and carriers, regardless of whether they operate in the contract or spot markets, are having to contend with it."
Many executives both at carriers and brokers have stated that the current freight market is "among the most challenging of their careers," to further quote Fuller, who says that SONAR data was pointing to this all along.
The last time the United States suffered a freight recession was in 2019, just prior to covid. At the time, it was called a "trucking bloodbath" due to the excess capacity that flooded the market in response to the electronic logging device (ELD) mandate.
Now, the situation appears to be even worse, with tender rejections on the verge of dropping below 3 percent – the outbound tender reject index is currently at 3.05 percent. In 2019, the low was 3.86 percent.
"Truckload carriers should prepare for a brutal bid season," Fuller says. "Shippers are going to claw back most of the contract rate gains they paid during the pandemic."
"No one really knows what direction the U.S. economy will head during the next three quarters of 2023, but there is plenty of reason to expect that the 'Great Purge' in trucking will continue for the foreseeable future."
Is all this carnage just temporary, or will the economy get a whole lot worse? Find out more at Collapse.news.
Sources for this article include: