U.S. Xpress, Inc. (USX) recently released trucking industry forecast highlighting key economic developments and shared updates of the industry. U.S. Xpress is one of the largest asset-based truckload carriers by revenue in the United States.
The trucking industry has been among those sectors which get an early and harder hit by the pandemic leaving majority of the drivers jobless among other issues. With return of the economy towards the normality which although happening at a slower pace but will ultimately result in higher freight volumes. That surge in the freight volume will increase the requirement of hiring more drivers. The driver turnover in the industry already remained significantly higher in recent months. But that also exacerbated because of a recently introduced Drug and Alcohol Clearinghouse and by the lower enrolments on the CDL schools.
Other major issue highlighted by the company in its forecast was diminishing truckload capacities. The company argued that bankruptcies of the carrier companies increased four times in 2019 compared to 2018. Increasingly rising insurance premiums have also been adding to the difficulties of small carriers which have already been hobbling. At the same time new truck orders also remained reducing until just recently. But that recent surge in new truck orders is significantly lower than replacement demand level calculated by most of the analysts. In order to align itself to the pace of increasing freight demand, trucking industry needs to be considerably accelerating new truck order.
In its forecast, USX also urged to address the issue of overwhelming load volumes in the coming quarters. With significantly higher tender volumes over the past year, freight business remained growing at an extraordinary level. And pandemic also came disturbing the volume cycle of the freight market as it already missed the usual summer lull. And now many industry analysts have been expecting higher freight volumes with scenario to remain persistent through next year.