The Federal reserve interest rate is 4% with the 4th consecutive rate increase of .75% and the 6th rate hike this year. What does this mean for the trucking industry? This increase means it is going to be harder for trucking companies to get affordable lines of credit and loans for equipment. The more interest rates are the more truck payments will be. Not only does it have an affect of raising costs but it also slows down the economy.
Right now we are in a full blown recession regardless of what the White house might be calling this period. Recession means less discretionary spending ultimately leading to less freight volumes. Lower volumes equals lower rate per miles because capacity is beyond demand. The Feds have discussed slowing the rate of interest rate hike ultimately because of the shift in power in the house mostly due to the slowed economy to try and put a dent in inflation.
If the Feds do slow down the interest rates and get them back to lower levels, the economy will see stimulation driving back volumes and increasing the rates. This coupled with ability to buy equipment at discounted loan rates should help there be expansion in the trucking industry. If they don't stabilize rates, I would focus on getting direct customers in recession proof industries such as beer/alcohol, food, and retail. These sectors will not only be stable during a recession but have the tendency to increase. More people buy beer and groceries and stay home during a recession. Partnering with these type of customers will help to stabilize uncertain volumes during this recession period. It is also critical to win as many contracts with direct customers as possible. If you need help with that, reach out to our team. We can help build you a game plan and offer rates that will win you consistent freight business.
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