Trucking-Employment: US truck driver shortfall steeper than expected

The loss of upwards of 150,000 truck drivers since July is a “major contribution” to the dislocation that continues to plague US truck lanes and supply chains, according to Jeff Tucker. Photo credit: Shutterstock.com. US shippers and trucking companies are facing a severe shortage of truck drivers as the COVID-19 pandemic continues to sideline thousands of workers.

Not only is there a year-over-year shortfall in trucking employment numbers — the first in more than a decade — but the number of truck drivers at smaller fleets dropped precipitously just as freight demand rose, US data shows. The number of truck drivers at carriers with up to 100 trucks fell by more than 150,000 from July to October, tightening already scarce capacity, according to an analysis of Federal Motor Carrier Safety Administration (FMCSA) data by third-party logistics (3PL) provider Tucker Company Worldwide and shipper risk management firm QualifiedCarriers.com. “Overall, we’ve seen a 4.4 percent decrease in the number of truck drivers since July,” Jeff Tucker, CEO of both companies, said in an interview.

The FMCSA data analyzed by Tucker, based on multiple surveys conducted by FMCSA each month, represent the deepest view yet into the extent of a driver shortage sparked by the COVID-19 pandemic and recession. “It seems that when the federal subsidies ran out, a number of drivers just folded,” Tucker said, referring to expanded unemployment benefits that expired July 31. “This is the biggest downturn I’ve seen since we’ve been doing this research.” Tucker and Qualified Carriers began tracking US driver and carrier numbers in 2012 to determine the actual number of active carriers. Some larger fleets gained a small number of drivers in the same period; carriers with 1,001 to 2,500 trucks added 3,797 drivers.

However, the loss of 150,172 drivers at smaller operators throws a spotlight on the damage done to those carriers in the first months of the recession, when a quarter of US freight shipments disappeared overnight, Tucker said. “Those were brutal months,” he said. Truckload spot rates plunged as non-essential businesses shut down in March and April, and rates below £1 per mile led to accusations of “reverse price gouging” and truck driver protests in Washington, DC.

That changed rapidly as freight demand and spot rates soared in June and July, but it appears it may have been too late for some carriers. “When freight started picking up in June and July, it could have been that by July the cash position of these carriers was so bad they couldn’t afford to keep these drivers on,” Tucker said.

A growing deficit

According to non-seasonally adjusted US Bureau of Labor Statistics (BLS) data, for-hire truck transportation companies lost 77,900 production employees, including truck drivers and dock workers, between February and April. By September, trucking companies had added 45,900 production workers, but were still 71,000 employees short of year-ago payrolls.

That’s an improvement from the 91,800 year-over-year production worker shortfall trucking suffered in May, but still higher than the shortage of approximately 60,000 truck drivers claimed by the American Trucking Associations (ATA) for all of 2019 and 2018. The year-over-year shortfall actually began in February, before the impact of the COVID-19 pandemic and recession. Up until this year, the number of US for-hire truck drivers has increased each year since the 2008-09 recession, according to BLS data.

Truck driver numbers vary depending on the agency or organization collecting the data, the set of truck drivers included — i.e., for-hire only or private fleet and for-hire, Class 8 heavy truck or all trucks, etc. — and survey methodology. BLS data in 2019 put the number of heavy-duty tractor-trailer and Class 8 truck drivers at just shy of 1.86 million. The ATA has estimated the total number of commercial drivers at 3.6 million.

BLS data put the number of long-distance truckload production workers, almost all of which are drivers, at 442,400 in September, down 24,900 since February. “The driver shortage is as real as it was in 2017,” Shelley Simpson, executive vice president, chief commercial officer, and president of highway services for J.B. Hunt Transport Services said during the JOC Inland Distribution Webinar Nov.

11. As in 2018, driver pay is rising. “Pay can fix the problem in the short-term, but [in the] long-term we need to change the job,” she said. “We don’t think there’s necessarily a driver shortage long term, but we think there is a shortage of information and connectivity that would create a more efficient network,” and a more efficient network, with more miles for truck drivers largely paid by the mile, is what is needed to entice more potential truck drivers to get behind the wheel and keep them there, Simpson said.

Unusual dynamics

Typically, an economic recession leads to a glut of available truck drivers looking for work.

The 2020 recession is different. That’s largely because this recession was caused by a public health crisis, not a global financial crisis as in 2008. US gross domestic product plummeted 31.4 percent in the second quarter but rebounded 33.1 percent in the third quarter.

COVID-19 disrupted the US economy, but consumer spending has increased since April despite a leap in the US unemployment rate from 3.5 percent in February to 14.7 percent in April. By October, the national unemployment rate had dropped to 6.9 percent. Consumer spending increased 1.4 percent in September from August.

Higher spending on physical goods, rather than services such as restaurant meals and vacations, means more freight moving in trucks, and that means more need for drivers. However, the COVID-19 pandemic took a very large number of drivers off the highways, and carriers are having difficulty getting them back. The reasons for that difficulty vary by carrier and by driver.

It’s possible some small trucking companies didn’t take drivers off the books early in the recession, as Tucker suggests, but did so as subsidies ran out. In addition to expanded unemployment benefits, the Payroll Protection Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act safeguarded hundreds of thousands of trucking jobs. The loss of upwards of 150,000 truck drivers since July is a “major contribution” to the dislocation that continues to plague US truck lanes and supply chains, Tucker said. “You can’t lose 4.4 percent of the drivers in that 1 to 100-truck carrier range, that’s significant.” Many of these drivers, he believes, depended entirely on the spot market for their business.

“Nearly 25 percent of all shipments disappeared this spring,” Tucker said. “Many of these small companies — and there are a lot of one-, two-, and three-truck companies in the 1-to-100 group — depended on the spot market for front-hauls and backhauls. They had no customers; they were almost like day traders on the spot market.” After hitting recessionary lows, the truckload spot market has rebounded to record highs, but that hasn’t brought drivers back into truck cabs.

However, the number of trucking companies has increased, rising by approximately 88,910 from January through October, Tucker said. Most of the new carriers were small companies, which may indicate shifting capacity. “The one thing that will bring people back to driving is if this climate [of elevated spot rates] continues a few more months into the first quarter,” Tucker said. “Then you’ll see drivers coming back in.”

Contact William B.

Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.

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