What’s Happening: Despite signs of a “bloodbath” in the spot market for trucking, investment in the production of new trucks is set up to hold steady even as shipping rates fall. This could be good news for the inflation, investment, and climate outlooks.

Why It Matters: In recessions, trucking investment historically falls by 40-50%, and takes years to recover. Investment in trucking and related vehicles makes up around 5% of private fixed investment in equipment, and .35% of GDP overall. If the industry manages the transition out of pandemic disruption well, it could prove to be a tailwind to the aggregate investment picture at the same time as falling logistics prices soften the goods inflation outlook.

The Background: Trucking is used to “bloodbaths.” 2008, 2015, and even 2019 all saw sharp reversals in freight rates that passed through to investment in new trucks first slowly, then all at once. Supply chain disruption — especially in last-mile trucking and logistics — was a key player in pandemic-era inflation. Logistics costs rose in response to a market where the supply of logistics services was falling just as elevated pandemic demand for durable and nondurable goods was spiking. Now that the pandemic is over, the industry is navigating demand normalization just as capacity to produce more trucks is coming online.

What It Means:

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