You must be aware that there is an economic recession going on all over the world. While the economy in Germany has officially entered recession, it is worth noting that the economy in the UK as well as US and other parts of the world is also facing a slowdown which means that the shipments have been reduced. Now, it is worth noting that people were expecting an economic recession but we now see that a freight recession has also been seen which is because of the freight rates as well as lower demand.
Now, we have a new report from the experts in the freight industry who say that 40% of the freight recession is now over, which means that the industry is slowly getting back to normal but they also say that the recession in the freight industry will continue until the end of this year. At the recent Bank of America conference, JB Hunt Transport Services “highlighted the ongoing freight recession as it warned there are no green shoots in demand nor changes in its record low bid compliance levels”.
A senior research analyst, in a report, said that “the next few quarters are likely to reflect an extended bottoming process as we grind through the trough of the cycle.” and added that the second quarter will be “much like the difficult Q1.” Still, “investors should not lose focus on an early-cycle inflection into 2024” which tells you that they believe that the recession will be over by next year and that the shipping industry will return to normal in the next 6-7 months.
The Baird Analysts said that “The pace of capacity exiting the market is accelerating with small carrier profitability under growing pressure”. “Given the historically wide spread between spot and contract rates, contract pricing has continued to deteriorate through the end of the bid season. Implementing the latest bids represents a clear headwind in both Q2 and Q3.” and also added that May rates are down by almost 24% from the same time last year. Analysts added that “Freight recessions that coincide with broader U.S. downturns are notably worse with respect to degree/duration and implies we are likely less than halfway through this freight cycle contraction,”
