Freight recession puts brakes on the trucking industry : The Indicator from Planet Money Today, we power up our CB radios to find out what's roiling the transportation services sector, and talk to a trucking company operator who's feeling what one regional bank called a freight recession.

Freight drivers feel the flip-flop

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So I was reading the latest Beige Book report from the Federal Reserve, and it made me nostalgic for truckers.


I thought you were going to say penny candy or something. So why are you thinking about truckers?

SMITH: So this may sound weird, but when I grew up in the 1970s, the coolest people in the entire world were truckers. There were trucker songs on the radio, like (singing) we got a great big convoy.

And there were trucker movies like "Smokey And The Bandit," and I even got a CB radio for Christmas so that I could sit there all night going - (imitating CB radio operator) breaker one-nine, breaker one-nine, this is Animal Spirit here.

WONG: Was your CB name Animal Spirit, even as a child? You were born to cover economics.

SMITH: No, I can't remember what it was, but I thought that one would be funny for our economists in the audience.

WONG: Well, I did enjoy that little Easter egg, Robert. But what does this all have to do with the Beige Book?

SMITH: Let's just say that one particular story in the most recent Beige Book will make sure that all you good buddies get your ears on because we got the 10-17 about the trucking industry trying to keep the shiny side up.

WONG: I didn't understand any of that, but I'm really excited.

SMITH: It's the Beigie Awards. Our eight-times-a-year salute to the art and science of telling stories about the economy. I'm Robert Smith.

WONG: I'm Wailin Wong. And just because the Beige Book is an economic report with a boring name doesn't mean it's boring inside. Today on the economy's favorite awards show, we tell you who put the pedal to the metal and delivered the best anecdotes.

SMITH: (Through CB radio effect) After the break, 10-4.


SMITH: It's always good to remind people how this awards show works. There are 12 regional banks in the Federal Reserve System. Each one carefully studies their local economy and brings back little stories of what they see. They collect these stories in the Beige Book, and we tell you the best ones.

WONG: And now, for the moment we've all been waiting for - the winner of the Beigie Award.


WONG: The envelope, please.


WONG: Oh, my. It's the Atlanta Fed.


SMITH: Coming to the stage is Chris Oakley, the regional executive for the Atlanta Fed, based in Jacksonville. We spoke to him last Friday.

WONG: This is actually the fourth time that Atlanta has won this award - amazing.

CHRIS OAKLEY: Hey, thank you so much. We are excited to accept this fourth award. I guess that makes us the Katharine Hepburn of the Beigies.

SMITH: The similarity is remarkable.

OAKLEY: Your audience can't see us, but if they could see me, they would probably think that as well.

SMITH: So the winning entry is about - well, as we hinted at the beginning of the show, it's about truckers. But that's not why you won exactly. It's because you used a word that we all dread - the R-word, (whispering) recession.

Here, allow me to read it. Quote, "Demand for transportation services softened on balance over the reporting period. Trucking contacts noted significant year-over-year declines in freight volumes and revenue amid what some referred to as a freight recession."

WONG: Now, we should note that a freight recession doesn't necessarily mean a whole economy recession. It just means that some in the transportation industry are seeing demand shrink, less money to go around.

SMITH: Chris, why do you think we are seeing a freight recession?

OAKLEY: So a couple of things that I'm thinking there. One is - and this won't surprise you - an increase in spending on experiences, things like travel and eating out and so on. Money's still being spent. It's just not being spent on goods that have to be moved.

SMITH: If people are spending more on services than on goods, services don't come in trucks and don't come in containers, you know? And so the less you spend on things that are transported around, that hurts the transportation industry.

OAKLEY: Exactly.

WONG: The other factor in play here, Chris told us, is inventories. Businesses stocked up on goods in the warehouses over the last few years, and they've been working through selling all those extra items. He's hearing that some of that is already clearing up.

OAKLEY: Some glimmers of good news - early reads that some of this may be normalizing, but a little bit early to say. So we're watching that very closely. We'll continue to ask our contacts about it.

SMITH: But I'm sure that things still don't feel great out on the nation's roads right now, and we wanted to see how a freight recession was affecting those on the front lines. So we knew just the right guy to call.


DEMETRIS WASHINGTON: Yes, sir. How are you doing? Good morning.

WONG: Demetris Washington (ph) owns a single truck in North Carolina. His company has the fancy name of Nomadic Transx. We interviewed him last year when he was just getting started in the business. Demetris had been lured into the freight industry by the high rates people were paying to move cargo.

SMITH: But it's been a bit of a rough year since then.

WASHINGTON: Trucking industry has hills and valleys, and so right now we're in a valley - more like under the water in a lake, basically. And yes, there is a freight recession.

WONG: Demetris says when you own a truck, you are bidding on jobs, and you have to accept the going rate per mile. And that rate has been dropping.

WASHINGTON: They do not pay enough money to cover your diesel costs, I mean, aside from anything else. So if I'm - if I have a load going 500 miles, they want to give me $900 for a 500-mile load. And every 500 miles is costing me anywhere between 6- and $800 in diesel.


WONG: Demetris says that lots of people like him got into trucking when the rates were high during the pandemic. Now he hears about those people selling their trucks.

WASHINGTON: And yes, you can pick up a cheap truck. But here's the problem - I got to find a driver. I got to put - I got to have $5,000 at a minimum up front to get, you know, tags, you know, insurance. With the current truck that I have barely paying for itself, the question is, is this the right time to buy a truck?

WONG: I feel like, no, it is not the right time to buy a truck. And, you know, the key during a recession is just to keep your business afloat, and hopefully when the trucking rates start to go up again, you'll be set. But staying afloat gets more difficult every day.

SMITH: During our interview, Demetris keeps checking his texts. He has someone driving the truck he owns, and the rig has been stopped at a checkpoint in Alabama. And I guess they found some sort of mechanical problem.

What's happening?

WASHINGTON: Compressor has a air leak and I just had a - so I'm sorry. This is just via text message.

SMITH: I'm so sorry to hear it. This sounds like a bad thing.

OAKLEY: Yeah. I mean, it's trucking. I mean, that's kind of all you can really say. It's trucking. This is why you need a lot of money in reserves. And this is why you also can't get too high, too low on whatever's going on because, you know, last week was a good week, right? Well, this week is not.

WONG: Demetris says he's tried to stay optimistic. And as Chris Oakley from the Atlanta Fed said, trucking could bounce back in the second half of the year.

SMITH: It's such an uncertain time, and some people are even saying that what they're seeing right now in the economy is what they call a rolling recession. In other words, different industries are going through dips but not all at the same time.

WONG: Guess we'll have to read the Beige Book and see.

SMITH: Yeah.

WONG: Anyway, congrats again to the Atlanta Fed for their win.

SMITH: And it turns out Wailin, Chris and I are about the same age, and he remembers the whole trucking craze.

OAKLEY: We had the exact same experience. My dad also had a CB radio, and his handle was Doorknob, which is, like, the worst dad joke of all time.

SMITH: Oh, because it's a handle.

OAKLEY: Exactly.

SMITH: Yes, I love it.

OAKLEY: Yeah, those were interesting times and interesting language being used out there.

SMITH: Keep the bugs off your glass and the bears off your tail. We'll catch you on the flip-flop.


WONG: Nice, Robert.


WONG: You should challenge him to write his entire next Beige Book entry in trucker talk.

SMITH: I think a lot of us who grew up in the '70s would enjoy that.


WONG: (Through CB radio effect) This episode of THE INDICATOR was produced by Julia Ritchey with engineering by James Willetts. It was fact-checked by Sierra Juarez. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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