It almost seems like 2021 has flown by. As we all reoriented our lives in the face of the COVID-19 pandemic in 2020, 2021 has felt like some sort of strange year of hybrid-normality. And we say hybrid-normality because there is a lot that is still not normal. Many countries are still struggling under the weight of COVID-19. And even for those that aren’t life – and the economy in many cases – remains volatile.
As such, industries of all shapes and sizes are dealing with major disruptions. And this includes trucking companies and those working in the transportation sector. Industry insiders believe that the fourth quarter of 2021 is going to be a bumpy ride. So, what can a trucking company expect as we close out the year? Read on!
Truck Driver Pay and Productivity
In the first bit of trucking industry news we are covering, fleets are recording an interesting trend. As pay increases have hit record levels, truck driver availability has dropped on average by 29%. This comes on the heels of news that 83% of all North American trucking companies had raised pay for their truckers.
The percentage of fleets who saw truck driver availability decrease, particularly in the spot market, was similarly high at 57%. All told, only 14% of fleet surveyed recorded an increase in driver availability. While many companies have been successful at keeping cabs filled compared with prior years, overall trucker availability continues to decline. Much of it is the result of truck drivers converting higher earnings into time off.
If even a fraction of the capacity decreases, this is going to impact mileage and load counts across the industry. Many trucking companies report that higher truck driver pay could be impacting productivity. There may be something to the fact that higher pay does not necessarily mean higher productivity. Instead, truck drivers who control their hours may simply work less to have more work-life balance.
It’s Not Just About Truck Drivers
Truck driver availability is not the only thing the trucking industry is grappling with. Motor carriers of all sizes struggle to add capacity because of equipment shortages, supply chain issues, changing regulations, and other challenges resulting from a global pandemic. The shortage of materials, which in many ways is related to supply chain issues, has caused a huge materials backlog, which impacts fleets, vendors, and OEMs. Motor carriers are simply making the best use of what they have.
As a result of this backlog, truck prices have soared in the past 12 months. Small fleets and owner-operators find it increasingly difficult to purchase equipment at prices that can sustain their business. And with the added recruiting costs that comes with addressing staffing issues, small fleets simply cannot afford it. Some companies are simply seeking a higher return on their capital instead of adding new capacity.
While it is too soon to say how all this will play out in 2022, no one is expecting the global economy to lose steam. While COVID-19 continues to ravage economies, the global growth spurt from countries coming out of lockdown is expected to continue. As a result, don’t expect these capacity, pay, and productivity issues to go away any time soon.
How Did the ELD Mandate Impact Pay?
Many trucking researchers have found that the ELD mandate has corresponded nicely with the increase in truck driver pay. For the first time, trucking companies had quick and efficient ways to measure their truck drivers’ productivity and profitability. They could now more accurately measure what a truck driver was worth. Many postulate that the average truck driver wage would not be where it is today without the ELD mandate.
The fact is, even with paper logging, there was no way to tie the disparate pieces of data together to properly determine hourly efficiency. Now, with the reams of data produced and analyzed by ELDs and their attendant systems, fleet managers can better quantify – and thus pay – their truck drivers.
Still, pay and productivity are not the only pieces of news we are covering. The final quarter of 2021 is going to be awash in news, from a looming vaccine mandate to port backlogs and a holiday shipping crush. How will the transportation sector cope?
The Port Backlog is a Huge Headache
Did you know that there is currently a queue of over 60 shipping freighters floating off the coast of California waiting for clearance to dock? That represents a minimum backlog of over two months, which essentially means to clear it out there would have to be two months with no ships coming in. As we are sure you can guess, that isn’t going to happen.
Even after the ships are unloaded, the backlog of cargo containers still must be delivered. And with the market already at a max truck to truck driver ratio, don’t expect getting those shipment deliveries to come any easier. It is likely to be a tough market for shippers and the brokerage community over the next few months.
In fact, with the holiday shipping crush looming, consumers should expect significant delays. Getting your Christmas shopping done early has never had more importance than it does this year. As motor carriers ask for more money and fleets ask for more flexibility, delays are all but inevitable. Demand has simply spiked way too much over the past year as the great economic bounce back has progressed.
How Will the Vaccine Mandate Impact Trucking?
In other news, President Joe Biden has charged the Occupational Safety and Health Administration (OSHA) with developing a quasi-vaccine mandate rule. The rule would require all employers with 100 employees or more to ensure their workforce is either fully vaccinated or showing weekly negative tests. And while little progress has been made on the rule since it was announced in September, businesses and trucking interests are already coming out in opposition to the mandate. Overall, the rule is expected to impact more than 80 million unvaccinated workers.
The American Trucking Associations (ATA) has pushed back against the rule, stating that the mandate will have unintended consequences for the industry. The ATA did go on to say that its members and drivers remain committed to the COVID-19 vaccine rollout, they reject a mandate as they worry it will cause further disruption in a supply chain that is already severely disrupted.
So far, the vaccine mandate doesn’t seem to have taken hold for trucking companies. As of this time of writing, 91% of trucking companies surveyed stated that they had not instituted regular COVID-19 testing and almost 60% said they do not plan to. A further 52% said they had no plan to institute a mandate.
The ATA went on to point out the 100-employee threshold, asking why it was that only large companies had to vaccinate their employees. Whatever happens, the new rule still must make its way through the Federal Register before it takes effect. And with governors in multiple states lining up in opposition, only time will tell how it will play out.
Infrastructure Punted Again
You would be hard pressed to believe the U.S. Senate passed a comprehensive infrastructure bill a month ago. Why? Because here we are in the third quarter still talking about it. With Democrats fighting amongst themselves on how and when it should pass, the new deadline is October 31.
The U.S. House of Representatives was initially set to take up the bill at the end of September, but when progressives rebelled, House Speaker Nancy Pelosi had to remove the legislation from consideration. The main sticking point likes with two moderate Senators who have objected to a separate “reconciliation” bill Democrats are trying to pass.
The problem lies in that Democratic leadership has linked both the infrastructure bill and the reconciliation bill together. And while fighting still occurs over what should be included in the reconciliation bill, the infrastructure bill is held hostage.
Even more, which version of the infrastructure bill passes matters. The House version contained an insurance premium hike for trucking companies, while the Senate version does not. It is expected that once passed, these matters will be addressed in conference.
Well, have you got your popcorn ready? It turns out that the last three months of 2021 are going to be quite a wild ride. And as developments on all these events unfold, we will keep you up to date here at the QuickTSI blog.