No industry has gone without challenges during the COVID-19 pandemic, and the Transportation Industry has been no exception. During these unprecedented times, Truck Drivers received the recognition they deserved for risking their health to keep our supply chains moving. Their role has been instrumental in getting essential goods to the consumers. The question remains, though, how has this pandemic affected the transportation industry and what’s still to come?
Amid shutdown and shelter-in-place orders, we saw an increase in loads for essential items, as supply chains were fighting to keep up with demand. In fact, the Federal Motor Carrier Safety Administration temporarily waived driver hours-of-service limits for carriers transporting essential goods and emergency relief. Unfortunately for companies not carrying these items, the reduction in consumer spending has kept demand low for nonessential goods – creating a financial hit for several of these transportation companies.
In what normally is a high-turnover industry, drivers have stayed put as the growing unemployment level left few options. This resulted in record low turnover for drivers, resulting in fewer training costs and accidents. As the economy rebuilds, this turnover rate is expected to last at least through the end of the year.
With a large percentage of the population unemployed or working from home, drivers have experienced less traffic on the roads. This has allowed shorter trip times and additional deliveries. More bodies at home also lead to a spike in e-commerce, prompting an increase in last-mile deliveries.
Near the end of 2019, before the crisis, there were already signs in place for a slowdown in the economy, which would affect the transportation industry. According to Jean-Dominique Bonnet, Mobility Principal Consultant at Frost & Sullivan “The market for medium- and heavy – duty trucks already was supposed to drop [approximately] 30% pre-COVID, and now it is dropping 40%.” He continued on to say, “My take is it will end 50% lower compared to last year. That is a lot, but not a disaster.” This is not predicted to be a lasting downturn though, as the industry anticipates an increase in freight volumes over the coming years.
When companies experience financial strain like this, spending is drastically cut back. This unfortunately means that a lot of these companies will not have the capital to invest in more sustainable efforts. We consequently could see up to a three-year delay on any emission reduction plans.
Although it has been a struggle for several transportation companies to stay afloat during this crisis, it is predicted that they should be planning for growth in 2021 and 2022. In hopes to retain drivers, there is speculation that companies will face pressure to raise driver pay in order to retain these workers when volumes bounce back.
It is also predicted that e-commerce will have an impact on the mix of vehicle types for some businesses. While e-commerce buying behavior may not continue at the current magnitude, it is still predicted that the levels will remain higher than they were pre-COVID. Last-mile transportation vehicles, such as delivery vans, will become a vital asset to transportation companies.
One good thing that for sure has come out of this experience is that these drivers have finally received the public appreciation they deserve. ARL Network President Ron Faherty commented “Being a firefighter, I was looked at differently after 9/11. I would hope truck drivers continue to be looked at differently after this pandemic.”
Our operations at The Shippers Group would not be possible without these drivers, and we are so grateful for their continued hard work throughout these challenges.
For more information on changes to the Transportation Industry, check out Transport Topics article, “How the Coronavirus Pandemic Might Reshape Trucking’s Future”, by Katie Pyzyk.
The Shippers Group is a leading national third party logistics company located in 6 states. In addition to 3PL warehousing services, the company also provides contract packaging, ecommerce and transportation management services.