{"id":2517,"date":"2020-10-10T16:51:20","date_gmt":"2020-10-10T16:51:20","guid":{"rendered":"https:\/\/quicktransportsolutions.com\/blog\/?p=2517"},"modified":"2020-10-10T16:51:22","modified_gmt":"2020-10-10T16:51:22","slug":"the-trucking-sector-continues-to-be-impacted-by-covid-19","status":"publish","type":"post","link":"https:\/\/quicktransportsolutions.com\/blog\/the-trucking-sector-continues-to-be-impacted-by-covid-19\/","title":{"rendered":"The Trucking Sector Continues to be Impacted by COVID-19"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">If there is one current truth, it is that 2020 has been an unprecedented year. It has been over a century since we last dealt with something of this scale, and perhaps not even then. When was the last time we had a global pandemic combined with a near-Depression level recession and this kind of social unrest? These are certainly extraordinary times.<\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">                              <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fortunately for those working in the trucking and\ntransportation sectors, goods must still be taken from one place to another.\nAnd now, more than ever, truckers are needed to deliver essential supplies to\nthose who need them. This has kept trucks moving, but still the trucking\nindustry has been hit from multiple angles from this crisis. Trucking companies\ncontinue to struggle to <a href=\"https:\/\/quicktransportsolutions.com\/blog\/the-best-way-to-lower-fleet-operating-costs-during-covid-19\/\">figure\nout how to cut costs<\/a> and survive during a global pandemic.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While there was a fair amount of pent-up demand after the\nCOVID-19 shutdown, other sectors of the economy are dragging on the industry.\nRetail movements are solid, but the manufacturing sector has undergone a fairly\nsizable contraction, which has decreased the number of freight movements\nrequired in the sector. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Digging Deeper into the Numbers<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The shutdowns caused by COVID-19 started in March and\nresulted in an immediate and substantial contraction across the board. No\nindustry and no sector of the economy was spared. This initial shutdown lasted\nfor over six weeks with a reopening beginning in May in some states. By June we\nsaw a big jump in economic numbers as people spent money after being in\nlockdown. Spot freight rates reflected this dynamic.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The problem is the disparity between consumer and industrial\nsectors. There has been a clear difference in both sectors, as financial help\nfrom the government, additional employment benefits and PPP loans. We also saw\nthe CARES Act, stimulus checks and other efforts to prop up the consumer\neconomy. New home sales are also up across the board. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The main problem is in the industrial sector, which is\nsignificantly below where it was before the pandemic. Whether you look at core\nindustrial production or manufacturing, the numbers are down. Durable goods\norders have also taken a big hit. Even with the increase in consumer metrics,\nthe gap is wide. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interested parties can see the disruption that the supply\nchain has gone through as the pandemic has progressed. You can see this\nhighlighted in the overall inventory-to-sales ratios. Inventories are incredibly\nlow while sales are quite high. We may see a situation where the retail sector\nrequires a massive infusion of inventory. Will this further prop up the\nnumbers?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The fact is low inventory levels put pressure on the\nmovement of goods. The transportation sector has also seen a big increase in\nfreight traffic coming out of California. The question now is whether or not\nthe strength we see now will continue. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The Big Question Mark<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Considering this is an unprecedented situation, no one knows\nhow it will all play out. It may be too early to say if the sector\u2019s strength\nwill continue. Some analysts are quite pessimistic, but the data may still show\na solid recovery. We could still be looking to mid-2021 until we see even a\nbasic normalization. This is especially true in light of what is going on with\nmanufacturing. The largest part of freight movements come from the\nmanufacturing sector. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Some analysts believe the retail surge from restocking and\nstocking for the holidays might give the industrial and manufacturing bases\ntime to catch up. Still, this may be an overly optimistic point of view. With\nunemployment claims still high and economic disruption still as far as the eye\ncan see, it may not be until 2022 that we see any meaningful normalization.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">One only need to look to freight rates to see the full\npicture. The spot market as been on a roller coaster ride for most of 2020.\nRates were up for a brief period during the start of the pandemic, but then\nbottomed out in April. Loads were down almost 60% year over year. For an April\nreading, rates were down nearly 25%. Then the market shifted again in May and\nJune. The data has simply been all over the place. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Other Factors at Play<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A broader look at the trucking sector will reveal other\ninteresting details. Dry van, for instance, has remained especially strong\nthroughout the pandemic. Load volume in the dry van segment has been 40% higher\nyear over year. A lot of the movements in the dry van category can be\nattributed to the automotive market, which has been seeing brisk sales after\nthe spring shutdown. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Consider, however, that the spot market does not represent the overall freight market. The overall freight market has still not fully recovered despite the jump thanks to the movement of essential goods. With the inventory side so lean, manufacturing still has not picked up the slack. Freight research firm FTR believes that rates will be down this year compared to 2019, but that they will rise in 2021. <\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">                              <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A big reason behind rising spot rates is the always-familiar\ncapacity problem. Capacity is currently running tight across the trucking\nindustry, regardless of trucking company size or type. But why? The main factor\nis that not all the truck drivers lost during the pandemic have been brought\nback into the fold. Compound this with a pre-pandemic truck driver shortage and\nyou can see where the problem is. Simply put, it isn\u2019t for a lack of trucks, it\nis for a lack of truck drivers. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But with the trucking industry considered essential during\nthe pandemic, why is it that fleets had been slow to add drivers back into the\nmix? Well, there are many reasons, with the biggest one being nagging\nuncertainty, but that isn\u2019t the only problem. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>A Fear Among Fleets<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fleet managers are also dealing with federal assistance,\nwhether it be unemployment payments, PPP loans, or stimulus checks. When\ncombined, these stimulus measures may have put less pressure on truck drivers\nto return to work. After essentially being paid to stay home, many operators\nmay be less inclined to make the effort to get back into the cab. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There is also the new drug and alcohol clearinghouse to\nconsider. While it has been quite successful in doing its job, it has\ncontributed to the truck driver shortage. From January through July, nearly\n30,000 truck drivers tested positive for drugs or alcohol or otherwise refused\na test. This represents a large chunk of people who cannot currently be tapped\nto help fill the employment rolls.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There are also some inflow issues related to licensing and\nhiring. According to the <a href=\"https:\/\/www.cvsa.org\/\">Commercial Vehicle\nTraining Alliance<\/a>, social distancing and COVID-19 problems in some states\nhave resulted in 40% less CDLs being issued in 2020. The bottleneck in the\nbureaucracy is causing major problems. As a result, fewer truck drivers enter\nthe market. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another aspect can be seen in the impact COVID-19 has on\nolder truckers. It is highly likely the industry has seen a big wave of\ntemporary or permanent retirements due to COVID-19 as older truck drivers\ndecide it is not worth the risk to continue driving and potentially contract\nCOVID. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Finally, analysts are seeing a lot of competition within\ntrucking segments. Consider that local delivery has grown 9% since February.\nWith so many more people at home ordering goods and not going out, the local\nsegment is exploding. This generates competition among fleets who are all\nlooking for the same truck drivers. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the end, FTR projects that trucking rates will be down around 2% year over year once all is said and done in 2020. As vaccine development ramps up and pharmaceuticals take up more space in reefers, we could see the refrigerated segment make a big uptick in the final quarter of 2020, but don\u2019t see any huge moves. It is highly likely the trucking industry will not see any significant growth until at least mid-2021. <\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\">                              <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the end, provided the economy improves and we don\u2019t see a\nmassive third wave of the virus, the overall transportation sector should\nimprove by leaps and bounds. Expect to see both truck drivers and fleets get\noff the fence and get back to work in the market, especially if everyone else is\ndoing it and there is money to be made. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>If there is one current truth, it is that 2020 has been an unprecedented year. It has been over a century since we last dealt with something of this scale, and perhaps not even then. When was the last time we had a global pandemic combined with a near-Depression level recession and this kind of &#8230; <a title=\"The Trucking Sector Continues to be Impacted by COVID-19\" class=\"read-more\" href=\"https:\/\/quicktransportsolutions.com\/blog\/the-trucking-sector-continues-to-be-impacted-by-covid-19\/\" aria-label=\"Read more about The Trucking Sector Continues to be Impacted by COVID-19\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":2297,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2517","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-trucking"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Trucking Sector Continues to be Impacted by COVID-19 - Quick Transport Solutions Trucking Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/quicktransportsolutions.com\/blog\/the-trucking-sector-continues-to-be-impacted-by-covid-19\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Trucking Sector Continues to be Impacted by COVID-19 - Quick Transport Solutions Trucking Blog\" \/>\n<meta property=\"og:description\" content=\"If there is one current truth, it is that 2020 has been an unprecedented year. 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