The freight economy remains in the midst of a recession despite stronger-than-anticipated industrial activity in August. Industrial Production data published this morning by the Federal Reserve Board Industrial Production were a welcome relief for anyone looking for a break from a recent string of soft manufacturing numbers. Still, despite the August pickup, factory activity is down from a year ago and other manufacturing data remain tepid at best. The industrial sector’s woes are just the tip of the iceberg casting a chill over the freight industry. Consumer spending remains strong, but beyond the retail sector, the core drivers of freight demand are soft by any measure. Farm output has suffered this year from the combination of bad weather and soft international demand with American agriculture caught in the crossfire from the ongoing trade war. Trade surged earlier this year as importers rushed to move goods into the United States in anticipation of new tariffs, but inventories have built up as the implementation of the tariffs has been pushed back and sooner or later those inventories will have to be drawn down. If it proves durable, the sharp rise in oil prices over the weekend will push up costs for carriers at a time when many can ill afford it.
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