As a freight shipper, you may have noticed the impact of the freight recession that has affected the nation. You might have questions about how this recession affects you and what you can do to survive it.

In the following blog post, Victory Freight debunks some of the myths that freight shippers might have heard about the current recession. As a leading third-party logistics (3PL) company, we can guide you with more understanding of freight recession. 

Myth 1: Freight Recessions are Rarely Experienced

A freight recession refers to a significant fall in demand for freight shipping services that happens more often than many people realise. We have experienced such downturns in 2008 and 2019, and currently, we are in another one. 

In both past cases, many freight carriers had to cut back and streamline their operations to stay afloat. This current recession, similar to the previous ones, has resulted in the closure of many carrier companies. 

Therefore, shippers should expect to encounter freight recessions in the future and seek long-term solutions that will help them navigate both prosperous and turbulent times consistently.

Myth 2: The freight recession is only caused by a sluggish economy and should be blamed entirely on it.

A slowing economy surely results in a freight recession. However, most analysts hold COVID-19 responsible for it. During the pandemic, consumer behaviour changed in an unprecedented way since more people were stuck in their homes and ordered products. This pattern was new but very comforting for people. It turned out to be a boon for the freight industry. Hence, the marketplace was full of new carriers who were ready to take the delivery services by storm. It also meant that carriers were able to elevate freight charges owing to capacity limitations. Even when COVID-19 ended, consumer behaviour remained the same and it left a greater capacity in the marketplace and carriers competing for loads. 

Additionally, many companies overstocked their warehouses during COVID-19, believing pandemic consumer behaviour was the new normal. Now they have more inventory than they can sell and don’t necessarily need COVID-level freight solutions. This also means that freight carriers compete for business. 

Myth 3: Shippers Receive Minimal Freight Rates During a Recession

There is a common belief that during a recession, shippers get lower freight rates. However, currently, there is actually more freight capacity available in the market than there is demand for it. This means that there are more carriers and trucks competing for business, resulting in lower rates being offered to attract loads while still keeping their businesses running. 

It is important to keep in mind that freight rates were elevated during the COVID-19 pandemic, so it may not be fair to compare current rates to those from that time. Regardless, it is crucial for shippers to focus on building strong relationships with carriers and finding ways to secure the best freight rates, whether during normal or turbulent times. This is the best approach for shippers to achieve continued success.

Myth 4: It Cannot Be Predicted When the Recession Will End. 

“It is a challenging task to forecast the end of the freight recession. Nevertheless, industry analysts propose that there may be some growth in the second half of 2024, albeit not expected to reach the levels before the pandemic.