ILMA ’21: US trucking issues here to stay
Author: Amanda Hay
PHOENIX (ICIS)–Trucking issues topped a long list of supply-chain concerns at the Independent Lubricant Manufacturers Association (ILMA) annual meeting and there are few signs of relief.
“This is a challenge like we’ve never seen before,” Bob Costello, chief economist and senior vice president at the American Trucking Associations (ATA), told delegates at Tuesday’s Managing Shipping and Transportation Challenges session.
Costello pointed to year-on-year strength in three main drivers of truck freight: Retail sales (up 20.6%), single-family housing starts (up 23.2%) and manufacturing output (up 7.6%).
“These are not only increasing, they’re increasing nicely,” Costello said, adding that inventories at the retail level are near historic lows.
Manufacturing output is slowing a bit and Costello’s forecast is just under 7% for the year.
How are loads down?
“Supply, supply, supply,” Costello said, meaning availability of both trucks and truck drivers.
Total for-hire contract revenue per mile is up 17.5% in August/September.
“We’ve never seen this,” he said, adding that spot market rates are up by 25.5% for those two months.
Yet fleet counts are declining, with a 5.5% decline in 2021 compared with 2020, which itself was down 2.4% from 2019, according to ATA data.
Trucking lines are reducing truck counts because of the inability to add drivers, selling parked trucks and independent contractors going to the spot market.
“If you were to go back in time and show me this slide (5.5% reduction in 2021), I’d say we’re in a recession,” Costello said. “Obviously, we’re not. We can’t get enough drivers.”
Costello said one ATA member typically buys 100 new trucks every year, but this year they will get none.
Part of the issue is chip shortages, but Costello said that a large original equipment manufacturer (OEM) said that the chip shortage is masking several other supply-chain issues.
“I’ve got fleets telling me they can sell a three-year-old tractor for almost as much as they bought it for new,” Costello said.
Additionally, companies are taking parts from other trucks to keep fleets moving, he said.
Costello said the driver shortage is not new, but is getting worse and driven by demographics and lifestyle.
The average age of long-haul truck drivers is well over 50 and predominantly male, despite females accounting for 47% of the US workforce. New trainees average 35 years old, so the age issue is not improving.
Lifestyle is growing as an inhibitor to attracting drivers, who would rather spend more time at home and be freer in their downtime – meaning they would rather not be drug and alcohol tested – Costello said.
With drivers leaving the industry, the average weekly earnings are increasing at five times the historical average, Costello said, but it goes only so far.
“The best we have done is stop the hemorrhaging,” he said.
Long-haul drivers were down by 21,200 in 2020 and another 200 in 2021, while local truck drivers rose by 5,000 in 2020 and 11,700 in 2021, according to the ATA.
E-commerce delivery workers have grown from 555,000 in 2017 to nearly a million in 2021. These jobs allow workers to be at home every night and they do not randomly drug test like long-haul companies, Costello said.
Jim Mancini, vice president of North American surface transportation for CH Robinson, echoed Costello in saying supply is the main driver.
The trucking market is seeing high fleet utilisation and when that happens, any disruption has an exponential impact on shippers.
Weather and other disruptions, particularly on the Gulf Coast, take months to improve compared with a couple of days previously when the market was not as tight.
Moving to other modes, like rail, does not help as the interdependency creates further disruption, he said, adding that labour shortages result in load/unload times ballooning to two to three hours.
Neither speaker sees improvement in the near term.
“The only way this gets better is the economy slows down, but I don’t see that happening,” Costello said.
Mancini stressed the importance of being flexible, spreading out shipments through the week and optimising your equipment’s use in a day.
“Do everything you can to eliminate waste in load/unload times,” he said.
Asked about driverless technology, Costello said it is moving along and he expects to see an autopilot option for highway trucking in three to five years.
“If any of you are waiting for autonomous trucks, you’ll be out of business. You are not going to take the driver out of the seat for a very, very long time.”
The ILMA annual meeting runs through Tuesday in Phoenix, Arizona.
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