For over a year now, online shopping has accounted for more retail purchases than those in traditional brick and mortar stores. From even that point of dominance, there are some reports that online shopping surged as much as 248% at the end of May. That’s drastically changed supply chains around America, and it’s one of the reasons why the freight industry in general, which has been given the attention it needs to stay operational throughout the pandemic, has continued to stay so stable, and even grow during a time that other industries have languished.
Where are the Bottlenecks in America’s Supply Chain?
While it’s true that America’s been short on trucking manpower for some time, there are additional reports that overall demand for truckers has decreased, thanks to a shift in supply chain demand. As mentioned in previous articles on our site, global demand for gas and petroleum products has diminished greatly, so much so that tanker traffic is nearing an all time low in the states. This shift has in effect counteracted the global increase in online shopping. Even still, packages from some retailers and geographical locations are still slated to reply months after their expected delivery date. So what gives?
Warehouses are Still Getting Up to Speed
In some areas, truckers are effectively waiting for warehouses to increase efficiency enough to deal with the new normal level of input and output. Warehouse reconfiguration, the integration of robot technology, and always-on scanning are just some of the ways that warehouses are trying to meet the new demand, but it’s not an instantaneous adjustment.
Semi-Truck Drivers’ Routes Are Less Efficient As a Result
Empty trucks are a big problem all across North America at the moment. There have been reports of Canadian carriers driving empty trucks to the U.S. to pick up food items to transport back north, said Stephen Laskowski, president of the Canadian Trucking Alliance. Normally, they’d be full of manufactured goods from Canada to deliver to the U.S., but according to Laskowski, the demand has shifted in a way that that simply isn’t feasible. Hiccups like this have a widespread effect on the trucking industry. In one place, driving empty trucks might result in more total miles needing to be driven in one particular area, which can drive up trucker’s average pay per mile (which is an effect we’re starting to see in the majority of States.
Where Truckers Have Been Finding Help
The Federal Motor Carrier Safety Administration (FMCSA) has expanded its national emergency declaration as of the middle of last March in order to provide hours-of-service regulatory relief to commercial vehicle drivers transporting emergency relief supplies in response to the coronavirus pandemic. The “FMCSA is providing additional regulatory relief to our nation’s commercial drivers to get critically important medical supplies, food, and household goods to Americans in need,” FMCSA Acting Administrator Jim Mullen said March 18. “The nation’s truck drivers are on the front lines of this effort and are critical to America’s supply chain. We will continue to support them and use our authority to protect the health and safety of the American people.”
Expansion to the FMCSA’s hours of service include:
- Medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19
- Supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap and disinfectants
- Food, paper products and other groceries for emergency restocking of distribution centers or stores
- Immediate precursor raw materials — such as paper, plastic or alcohol—that are required and to be used for the manufacture of essential items
- Equipment, supplies and persons needed to establish and manage temporary housing or quarantines
To make sure those drivers who are on the road have a safe place to stop, shop and rest, the National Association of Truck Stop Owners has said its members intend to remain open and continue to serve the professional drivers who are transporting supplies and goods in support of COVID-19 emergency relief. The American supply chain changes in efficiency every single day, but the American government has continued to roll out support for truckers at a rate that’s kept supply chains largely intact, and the trucking industry stable.
If you’re interested in helping important supplies reach American citizens, contact us for more information about how to start financing your new semi-truck.
We’ve been seeing a great level of support across the country for truckers who have been putting their lives on the line to keep essential items on the move throughout the COVID-19 pandemic. The White House has made trucking one of its top priorities, offering truckers more control over their hours in order to meet the increased demand for medical equipment, personal protective gear, and household staples that the pandemic has temporarily placed upon the nation. In the face of unprecedented unemployment in America however, we’ve still seen more and more businesses calling for more people to work moving freight.
The Call Hasn’t Actually Been Answered Yet
Here’s what sounds like great news: the national driver shortage is over temporarily. At first glance, this sentence might seem to indicate that the freight industry has finally succeeded in bringing younger blood into the job, and we’ll finally start seeing more millennials and even Gen Zs piloting their own big-rigs. Unfortunately, that isn’t exactly the case. Yes, it’s true that America is no longer short on truck drivers for the moment, but that’s expected to change once the COVID-19 pandemic subsides, and we’ll be right back where we started— with less truckers on the road than we need.
There Aren’t More Drivers, Supply Chains have Just Changed
The reason we’re no longer short on drivers, is that the country actually has a lower demand for trucking services than it did in February. It’s impossible not to notice that gas prices have plummeted since sheltering-in-place has become the new normal, and that’s taken a toll on the trucking industry, resulting in tanker and flatbed traffic that’s well below the usual mark. Luckily, certain shipments like those devoted to restocking grocery and home stores have thrived during the crisis so much, that the net result is that the current supply of truck drivers in America currently perfectly aligns with the demand.
What Happens When Supply Chains Normalize
Industry professionals emphasize that the fundamental problems that contribute to the national driver shortage haven’t been affected by the pandemic. Truckers are all overwhelmingly male, and older than the average American worker. Furthermore, truckers are known for being more prone to unhealthy lifestyle habits, including a higher risk of obesity and tobacco use according to the CDC. So far, we’ve only seen small cultural changes in the system that might change things for the better, and who’s to say whether those things will be enough to counteract some estimates that expect America to be short 105,000 drivers by 2023, and 160,000 drivers in 2028. When the pandemic subsides in America, it’s expected that tanker and flatbed traffic will return to normal, which means that plenty of industry veterans will have to be pulled back onto their usual routes. The result of this is a supply chain that will be short the same number of drivers as it was in February— around 80,000 drivers depending on the estimate.
Short Term Hiccups
There’s been news of older truckers calling it quits for the sake of health. With the high mortality rate of the coronavirus, it’s a perfectly understandable decision, but it’s one that will undoubtedly result in exacerbating the national driver shortage issue.
DMV’s have also been shuttered for some period of time in America, and it’s only recently that some have begun to offer their usual full range of services. While the Federal Motor Carrier Safety Administration has done their part by effectively extending the date of driver’s active CDL’s for a couple of months, it’s been impossible to allow new drivers to apply for a CDL without maintaining social distancing guidelines. As a result, the pipeline of new drivers has effectively been stopped up for the past month and a half.
Here’s the Good News…
Most DMV’s are now open (although often through appointment only) in the majority of American states. Driving tests aren’t available everywhere, but it’s likely that you’ll be able to find one within driving distance through your local DMV website. Also, a national driver shortage won’t necessarily have strong negative ramifications for every member of the industry. A shortage in labor will likely drive the average wage for truck drivers up, a trend we’ve seen not only in the short term, but also in the past couple of years. Additionally, the shortage only indicates that demand isn’t being met, not that the industry isn’t growing on the whole. The National Bureau of Labor Statistics predicts the numbers to increase by 5% through 2028, which is on par with other industries on the whole. So, will COVID-19 eliminate the driver shortage? Likely not. What is true however, is that the shortage isn’t necessarily something that drivers and dealerships need to worry about.
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The American people have done their part in helping recognize the importance of truckers and their impact on everyone’s quality of life during the coronavirus pandemic. The White House wasted no time making sure that truckers across the country could work the flexible hours required to keep Americans stocked with essential supplies like groceries, fuel, and medical equipment. That was only the beginning of the story, however. While truck drivers have been responsible for critical supplies reaching their required destinations, they’re only one part of a very big puzzle that’s responsible for keeping thousands of Americans safe during the pandemic.
There have been dozens of quick adaptations that have saved American lives, like Ford taking the steps to produce respirators for COVID patients, Lamborghini shifting to start producing personal protective equipment, or 3M’s efforts that have resulted in almost double the output of infection-preventing N95 masks. Here’s how transportation and supply chain operations have shifted their focus to continue helping America.
Increased Demand for PPE
A major aspect of the trucking and freight industry is the production and maintenance of vehicles. Ever since the outbreak, new sales have generally been at a standstill, with so many people uncertain about their own financial futures. This means that global demand for things like axles and driveshafts aren’t particularly high, which prompted one manufacturer— Dana Inc., to pivot their resources to support something more immediately necessary: protective face shields for medical professionals.
Many medical professionals around the world have reported having to use and re-use personal protective equipment that was only designed for single use, creating a huge uptick in demand for products like N95 face masks, which are known to effectively block common germs from entering through the respiratory system. Plastic face shields, which look a lot like frontal visors, are a good stand-in when N95’s can’t be located, and At Dana Inc.’s Maumee, Ohio Advanced Manufacturing Center, they’ve dedicated 10 of their 3-D printers to make parts for face shields while also doing the work to source the other components needed to complete the face shields. The truck manufacturer has been managing to put out around 500 of these masks per week in Maumee, donating them to hospitals in need.
Automotive Companies Joined the Shift
Similar operations have been moving ahead full-steam for popular automakers like Ford and GM, with Ford reporting it shipped over 1 million masks to medical professionals and first responders at the end of April. General Motors have pooled together more than 30 of its engineers, designers, buyers and manufacturing team members to help with product development of the face shields, which includes sourcing materials and equipment, and planning the production process. They expect their plant in Michigan to produce 50,000 masks per day, once the program is fully online.
“The first people we called were those who work with fabric vehicle components,” said Karsten Garbe, GM plant director, Global Pre-Production Operations. “In a few days, the company’s seat belt and interior trim experts became experts in manufacturing face masks.”
Other Challenges Facing the Industry
While the supply of PPE remains critical, it doesn’t do much if the supplies don’t reach high-infection areas in time. Whenever 3M doubles their output of masks, that means that someone’s got to find twice as many trucks to get those masks to the front lines where they can help people. That’s posed some serious hurdles for freight companies. Global Logistics have shifted altogether, as consumers all around the world have started buying different products through different vendors, causing widespread disruption to what we would call the standard supply chain in America. This has challenged logistics companies in a serious way, and has put pressure on freight companies to find personnel capable of adapting to changing circumstances rapidly— a survey conducted across 235 companies found that 79% of the respondents worry about recruiting people able to handle the increasing pace of change within the industry. Further, 37% of respondents mentioned lack of leadership as the biggest hurdle to succeeding in a post-COVID world.
Supply Chain Operations Keep Moving Forward
It’s taken a lot of work to keep supply chains strong enough to get products like N95 masks and face shields to hospitals far, far away from manufacturing plants in places like Michigan and Ohio. When the pandemic first spread to America, UPS’s healthcare division found itself in a unique position to provide support for initiatives that were critical in reducing the virus’ spread. In partnership with the Federal Emergency Management Agency and President Trump’s coronavirus task force, they became one of the key transporters of vital sanitation equipment and kits used to test the virus. The public and private sector have taken huge steps together in creating new logistics tools that help keep truckers on the road as well.
Learn more about the effects of the pandemic on the transportation industry:
The coronavirus pandemic has already had large, quantifiable impacts on the American economy and transportation industry. Sales of personal automobiles dipped strongly in April and have been slowly bouncing back through May. Heavy-duty truck manufacturing has been on the decline as well. To state the obvious, few people are flying, and there’s still a significantly reduced number who are now renting cars or commuting to work. This has significantly changed cash flow in America. Here’s our take on how the economy is functioning currently, and how we expect things to change in the near future.
Expect to See More Trucks and Vans on the Road
Gas and oil are at a historic low, which makes it more likely that we’ll see a shift in which vehicles yield the best ROI for different industries. With cost of operation becoming less of a factor, it will likely become more feasible for companies large and small to rely on conventional gas vehicles, rather than saddling the cost of new hybrid technologies. The possibility of increased infrastructure spending in America could also mean more trucks and vans on the road to build that infrastructure.
There May be Fewer Vehicle Manufacturers
According to an article by trucks.com, there’s already been existing pressure for the auto and truck manufacturing industry to downsize. Mergers like the one between Fiat Chrysler and Peugeot, and the possible merger between Nissan and Renault could result in less total manufacturers left independent, and less true competition as a result.
The article speculates that a combination of the current economic shock with general changes to consumer behavior and government policies could further encourage consolidation between manufacturers.
Class 8 Sales Might Continue to Dip
April’s Class 8 sales in 2020 were half of what they were last year, but that was at a time when uncertainty was particularly high in America as to what the impact of the pandemic would be on the economy, and many American buyers and business owners were unsure of when they’d see financial support from the government and how much that would be. ACT Research has long forecasted tough times ahead for class 8 sales however, and this will have a strong impact on dealerships. As we’re currently expecting a prolonged period of lower truck sales, it’s expected that some smaller dealerships will lack the capital to adapt their model quickly enough to remain possible.
Logistics Fleets Will Be Everywhere
For almost two months now, much of America has been depending on online retailers to meet their needs, rather than their brick-and-mortar counterparts that haven’t been allowed to operate. Digital logistics operations and e-commerce giants such as Amazon and Instacart have had waves of traffic driven in their direction, and this massive shift that could potentially stick to some degree, creating a need for even more local and last-mile transport providers.
New Programs for New Cars?
In 2006, the cash for clunkers program was hugely successful in keeping the transportation industry healthy in the midst of a general recession. Many are calling for a similar program to be launched in 2020, and some analysts are expecting governments and manufacturers to follow through with something similar.
If such a program were instated, the program could encourage auto plant growth, offer safer and more efficient vehicles to the lower end of the income scale, and take plenty of the country’s worst polluters off the road.
Supply Chains Will Work Differently
Already we’ve seen a huge shift in how global supply chains function in relation to the American people, before COVID-19 was even a factor. The trade war with China has been stop and go for years now, and recently there’s been rhetoric from the White House indicating that Chinese-American trade might continue to dwindle. This affects the traffic coming in and out of major American port cities and cargo hubs. To make a long story short, there’s going to be more or less work depending on which state you’re based in as a trucker, depending on how things settle.
What All This Means for Trucking
Trucking has continued to be supported by the Federal Government since the beginning of the COVID-19 outbreak. There has already been news of large companies like Walmart hiring truckers at phenomenal rates. Insofar as most freight companies have seen a maintenance in demand for their services, or even an increase in some areas, it’s expected that the price per mile for truckers will remain high, even after the pandemic ends and businesses reopen. The Wall Street Journal reports that PPM for hiring a big rig is up 12% since March 1st, meaning that you won’t have to change jobs to make a little more money in trucking.
In general, these shifts indicate a change in how and where truckers will make a profit, not that profit is set to decrease for truckers on the whole. While there may be rough times for dealerships ahead, there isn’t necessarily much indication that they’ll do much better or worse than other industries will.
The trucking industry has been doing well in the short term, despite some challenges. Support from the federal government has kept land freight stable, and truckers logging hours. Now is a great time to enter the trucking industry, so make sure you get help from a financial lender to get started.