The U.S. economy may be slowing down — a 'freight recession' sent diesel prices tumbling

Courtesy of
Uber Freight
Truck drivers move 70% of America’s goods by weight.

The U.S. is seeing a “freight recession,” meaning fewer trucks delivering goods across the country.
The slowdown in deliveries comes as diesel prices have dropped by roughly half since last year.
The American Trucking Association’s truck tonnage index dropped to the lowest since August 2021.

The freight recession in the U.S. trucking industry has dragged diesel prices down by half since last year, signaling a broader slowdown in the economy.

The key industrial fuel, which is used to power machines as well as trucks, began to dip during a warmer-than-expected winter, and the slowdown has been exacerbated by diminishing factory output and weaker demand for on-hire trucks, according to the Wall Street Journal.

Wholesale diesel prices in New York Harbor tumbled to $2.65 a gallon from $5.34 last May, per the Journal. Benchmark diesel futures, meanwhile, have plunged nearly 25% in 2023 to $2.53 a gallon, and domestic demand is down 8.4% since the same time last year.

Meanwhile, recent indicators show a steep declines in freight. The American Trucking Association’s for-hire contract truck tonnage index dropped to 95.8 in March from 101.3 the month prior, hitting the lowest level since August 2021.

And in an earnings call last week, JB Hunt executives sounded the alarm on a “freight recession” as the shipping company missed earnings views and reported across-the-board drops in volumes that sent revenue per truckload down by 17%. 

Executives had previously forecasted a rebound in industrial activity by the second half of 2023, but in the call, they said a recovery looks less certain due to the broader economic slowdown.

“It’s just a question of when and what position will we be in when our customers start ringing our phone again in ways that they have in the past,” JB Hunt CEO John Roberts said.

Outside of the trucking sector, other recession signals continue to flash.

The Conference Board’s Leading Economic Index declined further in March, suggesting that a recession will hit in the middle of this year.

At the same time, the most recent reading on the New York Fed’s Recession Probabilities Model puts the odds of a downturn at 57.7%, the highest mark since 1982.