Trucking industry making the slow climb back
BLOOMINGTON, Ind. – While trucking conditions are improving, it will be some time before they get back to pre-Covid levels. FTR expects U.S. truck loadings to decline 5.7% this year. It shared its latest insights during a State of Freight webinar on Key Issues in Transportation July 9.
Avery Vise, vice-president of trucking with FTR, said the organization is anticipating truck loadings will climb 6% in 2021, but off low comparables posted this year.
But, added Vise, “We can’t ignore the fact that real-time indicators of activity are pretty strong.” In fact, he added load availability hit a nearly two-year high two weeks ago, according to spot market data from loadboard Truckstop.com. Loads pulled back slightly last week due to the U.S. holiday, but remain strong. Vise feels truck utilization has likely bottomed, but will take some time to catch up to the 10-year average of 91%, meaning capacity will continue to be readily available.
“There still seems to be a reasonable amount of capacity in the system to handle the freight demand we are getting,” Vise said. “We anticipate a steady improvement over the course of the next year.”
The Covid Effect
Trucking’s recovery will depend largely on the Covid-19 pandemic and how well the U.S. is able to get it under control. New cases are surging, especially in California, Texas and Florida – three states that contribute significantly to the States’ overall GDP.
“We could potentially become paralyzed as a nation.”
Eric Starks, FTR
Eric Starks, CEO of FTR, said there has been plenty of debate internally over which stats have the greatest impact on the U.S. economy, but new cases are the metric he watches most closely. While the death rate is decreasing, the number of new cases continue to rise, as does the positive test rate, debunking any belief the rise in cases is related solely to an increase in testing.
“We could potentially become paralyzed as a nation,” Starks warned, if further economic shutdowns are required due to rising cases.
Unemployment a concern
The U.S. unemployment rate has fallen to 11.1% from its high of 14.7% in April. However, just this morning another 1.3 million Americans filed initial jobless claims for the week ending July 4. “Even 16 weeks into this, we are still fairly close to double the record high of initial claims before the crisis,” said Vise, noting nearly 49 million Americans have filed initial jobless claims since the crisis began.
More than 18 million Americans are receiving unemployment benefits, up from a previous all-time high of 6.6 million, seasonally adjusted. Vise worries about what will happen when government subsidies stop flowing. Trucking in June added back a seasonally adjusted 8,100 payroll jobs, but that’s “just a fraction of the jobs we lost in trucking in April and March,” Vise noted.
Compared to February, U.S. payroll jobs in trucking are down by 86,600, or 5.7%.
The exception is the courier/messenger segment, which is up 6.7% compared to February thanks to increases in e-commerce.
Vise pointed out it could be that unemployed truckers are taking those jobs, which could make it challenging to bring them back to traditional trucking jobs.