Mullen: No Signs of Freight Recession, but Supply Chain Issues Holding Economy Back    

Merger and acquisition activity and an ability to pass along price increases were the drivers behind the strong second quarter growth for Mullen Group, said its chairman Murray Mullen, who also added that while the pace of growth will moderate, he doesn’t see any signs of a significant slowdown anytime soon.

“What about this freight recession investors are spooked about? I don’t see it,” Mullen said in a conference call with analysts.  “Demand is not collapsing. There’s less capacity to move available freight…our results should be just fine, especially with sticky freight rates.”

As Truck News reports, the company said revenues were driven by general pricing increases and steady customer demand in all four operating segments backstopped by consumer spending and overall economic activity that remained at elevated levels throughout the quarter.

“Our strong performance was achieved despite overall economic activity continuing to be negatively impacted by bottlenecks and supply chain disruptions, limiting growth in the economy as well as being a major reason productivity has deteriorated and inflationary pressures remain higher than normal,” he said.

Mullen explained that he anticipates the strong job market will keep consumer spending from crashing – a sentiment he said he hears from industry peers on both sides of the border.

“We have not seen any meaningful decline in demand,” he said. “I know the markets are anticipating the freight recession, and once social media gets a hold of it, everybody thinks it will happen until new data comes out that challenges the new thesis.”

However, Mullen cautioned, “We don’t see any growth. We can’t add growth because we can’t get equipment, can’t get people, and we’ve lost productivity.”

He feels there’s more supply-side risk than demand-related risk.

“Our warehouses are plugged, we can’t get rail service, we’re losing trucking capacity because of high fuel prices.”

But what really worries Mullen is the impact supply chain challenges have on independent contractors, especially when it comes to parts shortages.

“Where independent contractors are at real risk is the availability of parts,” he said. “They are not easy to get right now. If an independent contractor’s truck goes down because a clutch went out, it can be down quite a while and that’s 100% of your fleet.”

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