With the recent freight recession pulling the price of diesel fuel down by around 50% since last year, experts say that the US economy is certainly slowing down.
Diesel has long been the country’s primary industrial fuel and is used to power heavy machinery and modes of freight transport like trucks and cargo trains. However, the demand for diesel began to falter over the winter months thanks to temperatures that were warmer than normal.
Indeed, around this time last year, wholesale diesel prices at New York Harbor dropped from $5.34 to $2.65 a gallon. Currently, benchmark diesel futures have also gone down to $2.53 per gallon, a drop of around 25%. Total demand for fuel in the United States has also gone down by 8.4% over the past twelve months.
A Steep Decline
Likewise, part of the economic slowdown has been attributed to much lower factory output as well as a decreased demand for on-hire trucks in the freighting industry.
According to the most recent figures in the American Trucking Association’s for-hire contract truck tonnage index, the need for on-hire trucks dropped to around 95.8 in March, falling from February’s 101.3 and the lowest the index has been since August 2021.
At the same time, executives at the Arkansas-based logistics and transportation company JB Hunt made an ominous statement in an earnings call last week, pointing out a freight recession as the firm reported plunging volumes across the board, as well as missed earnings views. As of last week, the company’s revenue per truckload had fallen by around 17%.
Prior to this, company executives forecast a rebound in industrial activity throughout the US by the second half of this year. However, they have changed their tune due to a more widespread slowdown in the economy.
Feeling the Pinch
Industries beyond the trucking sector have also seen indicators showing that a recession is drawing near.
One such indicator is the decline of the Conference Board’s Leading Economic Index back in March which essentially forecasts a recession occurring sometime in the middle of the year.
The latest reading of the New York Federal Reserve’s Recession Probabilities Model also puts the odds of an economic slowdown at 57.7% – the highest mark recorded in over 40 years.