Yellow's bankruptcy is just the tip of the iceberg in the U.S. freight decline.

Every downturn in the freight industry plunges precarious freight companies into difficulty. This time, the downfall of the freight industry might be long-term and sustained, symbolized by the bankruptcy liquidation of Yellow, the largest bankruptcy case in the history of the freight industry. During the last freight recession, many trucking companies went bankrupt, including Celadon, which closed due to accounting fraud.

The decline in the freight industry began during the pandemic control period when consumers shifted some of their spending from goods to services such as tourism, which do not require truck transportation.

More critically, the formation of in-house transportation fleets by large corporations has dealt a fatal blow to the freight industry. Data from Cass shows that the proprietary fleets of major companies like Walmart and Amazon are eroding the freight demand that was previously met by leasing truck companies.

Cass indicates that the expansion of corporate-owned fleets is squeezing the living space of the freight industry. Until the growth momentum of these private fleets slows down, the freight industry is unlikely to see a positive turnaround.

Looking at the freight volume of the industry, including rail, truck, and other modes of transport, the Cass Freight Index saw another decline in July, marking not only the worst performance since July 2020 but also since July 2016. The Index fell by 8.9% compared to the same period last year and dropped 12% from the peak cycle in May 2021.

In the Cass Freight Index, truck freight accounts for more than half of the weight, followed by rail freight, parcel services (such as UPS and FedEx), and others. Data shows that UPS's daily parcel volume decreased by 9.9% in the second quarter and by 12.2% in June. FedEx's daily shipment volume in the second quarter fell by 18%.

The decrease in freight volume has dragged shipping rates to rock bottom. The Cass Truckload Linehaul Index shows that after seasonal adjustments, the spot and contract rates for full truckloads (excluding fuel and other fees) have declined for the 14th consecutive month in July, a 12.7% year-over-year decrease, and a 15.8% decrease from the peak in May 2022.

The Cass Inferred Freight Rates Index inclusive of fuel charges continued its downward trend in July, falling 21% from the peak in June 2022.

Between June 2022 and June 2023, diesel prices slid, exerting significant downward pressure on shipping rates. Recently, although there have been signs of a rise in diesel prices, the current prices provide weak support for shipping rates, and changes in fuel costs and other expenses have little effect on reversing the downward trend in the freight industry's volume and price.