Trucking Crisis Drags on Industry

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On-road freight transportation in the United States is in the midst of a crisis as the COVID-19 pandemic and other disruptions have compounded a driver shortage that is several years old.

The situation is contributing to a growing number of supply chain disruptions undercutting the economic recovery and hampering operations of lubricant suppliers along with many other types of businesses, according to a speaker at a recent lube industry conference, who added that he sees scant prospect for the situation to improve in the near term.

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“We really haven’t seen a time like this,” American Trucking Association Chief Economist Bob Costello said Oct. 12 at the Independent Lubricant Manufacturers Association Annual Meeting in Phoenix. “You bring everything together with the pandemic and supply chain issues really stemming all the way from Asia to – really globally – and it’s a challenge like we really haven’t seen before.”

Speaking as part of a panel discussion on the topic, Costello provided a detailed picture of how freight trucking activity has stalled in 2021. Based on a survey of member companies, ATA found that for-hire truckload contract loads – which represent most of the freight carried in the U.S. – were down 3.9% through the first nine months of this year, compared to the same period of 2020. That followed a 1.2% drop for all of 2020.

It’s not for want of freight to ship, Costello added, noting that the U.S. economy has rebounded from last year based on a variety of indicators including retail sales, home construction and manufacturing output. He forecasts that the latter will rise 6.7% this year.

“There’s a lot of freight out there, so the demand side of the equation is pretty good,” he said.

Part of the problem is a shortage of drivers, Costello said. That shortage already existed for a number of years before COVID-19, and the health crisis seems to have caused the situation to worsen as some drivers stopped driving out of health concerns and others reevaluated priorities concerning work.

On top of that, equipment shortages are now a significant issue. Many trucking companies are having difficulty buying heavy-duty truck tractors this year, partly because of the same computer chip shortage that is hamstringing the car industry but also because of other problems.

Costello cited the example of one association member company. In a typical year it purchases 100 new tractors. This year it will not be able to purchase any.

“You have an equipment shortage, but then you throw it in with a driver shortage and it’s a recipe for disaster,” he said.

The dearth of new tractors is also impacting the industry in other ways, some of which further contribute to the equipment shortage. Companies are cannibalizing vehicles to get parts needed to conduct repairs. Demand for used tractors has surged to the point that three-year-old units are reselling for almost their original price.

Costello noted that the driver shortage preceded the pandemic, and he contended that it is caused by a number of factors. Drivers as a group are relatively old, so the industry has been losing large numbers of workers to retirement. The profession attracts few women – females make up 47% of the overall workforce but account for just 7% of truck drivers, he said – meaning it is drawing on a reduced labor pool. The industry has lost 67,000 drivers to regulations requiring random tests for drugs and alcohol in circulatory systems and has moved too slowly working them through the steps required to resume work.

Pay rates were identified as a problem in recent years, but Costello said the industry has made genuine efforts to make salaries more competitive. Since 2019, the average weekly pay for long-distance drivers rose five times faster than it had preceding years, and yet the shortage did not improve.

“If it’s all about pay and paying these drivers more, we should be attracting more people to this industry,” he said. “We are not. The best we’ve done is stop the hemorrhaging.”

Costello maintained that another issue appears to be a major deterrent to attracting more drivers: lifestyle. The number of nights away from home turn off many from long-distance driving, and testing for drug use does not help, though Costello noted that the ATA supports such rules. He pointed out that people who might consider driving a truck have other options, such becoming couriers and messengers, a profession that swelled from 550,000 to nearly a million since 2017.

“These jobs – driving a van and bringing a package to you – they are not required to take random drug and alcohol screens,” he said. “You know, a lot of states are starting to legalize marijuana. They’re like ok maybe I can make more money on the road, but I’m at home on the weekends, I can use marijuana on the weekends. Obviously a lot of people are taking these jobs.”

Costello and other speakers concluded that there is not an easy or quick solution to the driver shortage and that the best companies can do is strive to manage the situation.

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Market Topics    Transportation    U.S.A.