4 Must-Have Coverages for Transportation Firms
Transformation firms face many risks, both on and off the road, requiring thorough, 360-degree coverage.
While the transportation sector has always been the lifeblood of the U.S. economy, its importance doesn't make it immune from recessionary pressures when the economy gets tough.
The U.S. recorded a 0.9% decline in gross domestic product (GDP) during Q2 2022 compared to Q1, which followed a 1.6% contraction in Q1 compared to Q4 2021.*
Although the National Bureau of Economic Research has yet to declare that we're in a recession, economic fears affect the transportation industry. A corresponding drop in consumer spending is certain to have a negative impact on demand for transportation services across the country.
For now, demand for transportation services remains strong, aided by the U.S. government's COVID-19 stimulus payments that boosted consumer spending during the pandemic. But if demand for goods decreases over the coming months, lower freight rates are likely to follow.
"Trucking is often a leader of what is going on in the economy," noted Mike Mitchell, area president for RPS, in Charlotte. "Because if people aren't buying things, then things aren't going on trucks.
"Around June 2020, trucking and freight rates really started picking up as the world began to first emerge from the pandemic and trucking was in high demand," remarked Mitchell. "Those high rates carried into 2022, but now we are starting to see freight rates come down from those peaks."
Mitchell continued, "That doesn't mean that freight rates are struggling — they remain healthy for now — but some of the supply chains we've experienced over the last couple of years are starting to level off, and some rates are dropping as a result."
Despite the numerous headwinds that persist in the industry, Mark Gallagher, vice president, national Transportation practice Leader for RPS, remains very bullish on the opportunities for transportation operators moving forward and insurance providers alike.
"Trucking and transportation have always been the lifeblood of America's economy and we still foresee growth and opportunity continuing into 2023," he said. "Those insurance providers that are positioned best through market access and speed of product delivery will find growth opportunities in any market cycle in meeting the needs of a wide array of transportation clients."
Learn more about what's next for the Transportation industry in the RPS 2022 U.S. Transportation Market OutlookDOWNLOAD REPORT