Unemployment in the transportation sector was higher than the nation’s overall jobless rate in August, as historic tightness in the labor market eased slightly despite the U.S. creating more new jobs last month than economists had expected, according to the Bureau of Labor Statistics (BLS).
By the numbers, the unemployment rate in the U.S. transportation sector for August was 4.9% (not seasonally adjusted) in August, posting a higher level than its 4.6% for August 2022 and its pre-pandemic level of 4.8% in August 2019.
All those figures are higher than U.S. national unemployment, which rose from to 3.8% from 3.5% last month. In fact, BLS noted that employment in transportation and warehousing was one of the few variables to decline, in contrast to rising employment rates in health care, leisure and hospitality, social assistance, and construction.
One of the main reasons that transportation unemployment was higher than the national level was likely the collapse of Yellow Corp., the nation’s third-largest less than truckload (LTL) company, which declared bankruptcy on August 7, sacrificing some 30,000 jobs in the sector, logistics industry analysts said.
Another likely reason is that the overall freight industry is wallowing in the trough of a persistent freight recession, with excess carrying capacity outbalancing a softening of economic demand. That softening is intentional, caused by federal measures to fight high inflation by tightening interest rates and slowing both consumption and production.
Taken together, we are witnessing a large correction—or reduction—in overall employment numbers in truck transportation, according to an email from David Spencer, the VP of Market Intelligence at Arrive Logistics. “Trucking conditions are as tough as we thought they were. The spot rate remains below the cost to operate a truck and savings are running out quickly for carriers. It appears the cyclical nature of trucking continues,” Spencer said. “Looking forward I expect it to get worse before it gets better in terms of trucking conditions and employment levels.”
Despite the short term pain of monthly unemployment rises, it can lead to long-term gain for the overall industry, he said. “As tough as it is to see, capacity leaving the market can be a good thing for those who can survive the current environment. Ultimately, this trend is what will set up market vulnerability, enabling the next inflationary cycle. I’m still predicting this to occur in the later part of the first half of 2024 (Q2),” Spencer said.