As numbers continue to rise for coronavirus cases in the united states, the trucking industry is prepping for continued stagnation. Many experts are having trouble making predictions on the future considering the unknown variables. Here are some interesting updates and trending news stories that should be your focus as a fleet manager these next few months.
What is causing the Decline in Shipping?
In 2018 the freight market was flourishing. 7.8 million jobs were trucking-related (3.5 million of which were drivers), and profits were up almost 100 billion by the end of the 4th quarter. This led to predictions of future market growth to come into play, causing an influx in growth spending from each individual organization. More money to spend partnered with optimistic forecasting lead to an increase in supply for new vehicles, drivers and warehouse workers.
Mix this increase in supply of workers with an extensive trade war and you start to see some problems with continued growth. Overall, the trucking industry was down 6% at the end of 2019 when compared to 2018. That means each company had the available drivers and trucks, but not enough products for them to carry. The ongoing tariff hikes throughout the year on incoming shipments from China (which made up 20% of overall freight market for the U.S.) caused uncertainty in the stock market which lead to a lot of companies clutching their pearls.
“Weakness in the market is continuing from 2019, when at least 795 trucking companies failed and 24,000 trucks were removed from the nation’s capacity”, according to Donald Broughton, principal and managing partner of data firm Broughton Capital.
COVID-19 enters, stage left. The timing for this pandemic could not be any worse. Amidst all the other uncertainties within the trucking industry, a virus causing government issued social distancing affects each of our most popular shipping ports on both sides of the country. With recent estimates stating that the US hasn’t seen the peak of infections yet, then it’s safe to say even more consumer purchasing will decline over the next few months.
Weston LaBar, chief executive of the Harbor Trucking Association, gets more specific: “Business is down 60% to 70% for the last week of February and into March (2020). The coronavirus has already cost our industry millions upon millions of dollars in lost productivity and administrative costs.”
More companies are forcing their employees to work from home these next two weeks to quickly combat the coronavirus from getting worse (as they should), but that doesn’t stop the fact that this disrupts the everyday behaviors of consumers and could lead to even less spending for goods and services.
What are some Positives for the Trucking Industry?
High demand for “essential” products is spiking over the past week. Products like toilet paper, paper towels, bottled water, hand sanitizer, disinfectants, beef, poultry, pork, and even alcoholic beverages are being snatched off the shelves as soon as they are stocked. Grocery stores like Costco, Walmart, Publix, Kroger, Sam’s Club are struggling to fill the demand. Hospitals and medical supply companies are also in desperate need of restocking products due to the drastic increase in emergency attendance.
The only way to fix the high demand is to increase the supply of trucks delivering to these locations. Freight companies could take advantage by picking up the slack in the food and healthcare industry. States like Texas temporarily removed government restrictions on alcohol delivery trucks so they will be able to ship other products to help with this transition.
AUSTIN, Texas — On Sunday, Gov. Greg Abbott waived state laws that prohibit alcohol industry trucks from delivering supplies to grocery stores, providing grocers with another private sector option to keep shelves stocked.
The future could create opportunity for fleets with low overhead costs. Smaller fleets will have an easier time surviving the upcoming months because they don’t have to power the warehouses or continue paying benefits to a large driver pool. While the world takes the next two weeks off, larger fleet companies will have to find innovative ways to stay afloat. The good news for the shipping industry is that fleets with six or fewer trucks make up 91% of all fleets in the United States. We may see larger fleets (who have solidified themselves in the market) outsourcing the work to independent owner/operators to combat their high overhead costs.
Our Heroes are Ready for Battle
Drivers around the country are banding together to work extra hours to deliver the products that are in high demand. Considering the median age for drivers is 45, they are willingly putting themselves at risk delivering our essential goods and services while we stay home and wait for the results of this outbreak.
Late Friday, the Federal Motor Carrier Safety Administration (FMCSA) issued a national emergency order, the first time in the agency’s history, to suspend hours-of-service (HOS) regulations for commercial vehicle drivers hauling essential coronavirus equipment and supplies in all 50 states.
Hours of service (HOS) is a term referring to the number of hours that a commercial motor vehicle driver may work per day, or week, or other period as mandated by the Federal Motor Carrier Safety Administration (FMCSA)
A lot of these drivers will be putting in 12-hour days and working in shifts to quickly get medicines, medical supplies, and food to the necessary parts of the country. Fleet managers are focusing on keeping them healthy with plenty of disinfectant and wipes to use for their cabins.
Large truck stops like Pilot are doing their part to make sure they give drivers a safe place to take a break during these long hour hauls. They are cleaning and disinfecting high traffic areas like restrooms, counter tops, dining tables, and even exterior portions of their buildings where drivers are known to congregate.
“In addition, we provide hand sanitizer dispensers for public use near the restrooms at our locations and have implemented a fresh cup policy for all refills including using a new cup to pour drinks into personal mugs,” a Pilot spokesperson said.
Dock and warehouse workers are also practicing social distancing. Requesting that drivers remain in their cabins and allow workers to handle loading up their trucks without the necessity of coming in direct contact with each other.
The Next few Months Will be Difficult
Drivers will be working extra hours which could lead to stress and fatigue. It is extremely important that they do not overwork themselves during this trying time, otherwise we may see a spike in accidents and driver mistakes. Fleet managers should double up drivers (if they are not showing signs of sickness) to keep each other focused and alert while these emergency shipments are being delivered long distances.
It’s extremely hard to predict what the future will hold because it all depends on how long the coronavirus outbreak will last. Experts say the expected peak for coronavirus in the United States will hit mid-April, but that is only if everyone practices social distancing. Some beaches in Florida are packed with people carrying on like nothing is happening in the world. This type of behavior could exacerbate the containment of the virus.
The aftermath of COVID-19 will likely decrease global movement of goods and services for an unknown period while fleet managers work diligently to make up the difference. It will also hurt employment for drivers/workers, impact future production of entertainment goods, lower consumer spending, and expose weaknesses in fleet supply chains around the world. It is important to prepare for this possible volatility in the market by reaching out to markets in need for products you don’t normally ship, putting in place social distancing and disinfecting techniques suggested by the CDC, and showing patience when drivers are reacting to the overall stress.
If you are worried about your drivers being out on the road, the best way to ease your worries is by using one of Encore’s fleet roadside assistance plans. We will take the stress out of a breakdown and get your employees back to work so they can continue being the heroes we need them to be.