The logistics industry in the US has seen rapid growth during the pandemic due to rising consumer demand and online shopping trends. However, the boom has gone bust recently with falling freight rates, overcapacity and financial troubles. Truck investment is facing huge challenges as the sector goes into decline. Major players like Yellow Transportation have gone bankrupt, shedding jobs and capacity
Trucking industry revenue growth dropped significantly in 2022
The US logistics industry saw revenues grow around 33% from early 2020 to mid 2022 driven by pandemic stimulus and lockdowns. However, growth has stalled since with the Cass Freight Index down 5% and volume through ports 14% lower year-on-year. This reversal has made most truck investment plans unviable.
Large trucking companies are going bankrupt
Major trucking company Yellow Transportation filed for bankruptcy in Aug 2022, ceasing 99 years of operations. Around 20,000 small trucking firms have also closed down since mid 2022. The surviving companies are aggressively cutting costs and employees to stay afloat.
Warehousing construction dropped 40% year-on-year
The logistics infrastructure building frenzy is over as warehouses under construction plunged 40%, per Prologis data. Amazon had doubled its warehouse capacity during COVID but has now scrapped or delayed plans for 116 facilities. Other operators have slashed investment as well.
Truck driver union issues hampered restructuring
The management of bankrupt Yellow Transportation blames its demise on failed restructuring efforts blocked by the Teamsters truck union. Ongoing labor unrest and strikes at ports and delivery firms like UPS, FedEx are further hampering logistics operations and investment.
The US logistics boom has gone bust with falling consumer demand, excess capacity and financial instability. Most truck investment plans made during the pandemic frenzy are no longer viable. Companies that survive may return to growth in 2023 if consumer spending holds up.