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What Would Our World Be Like Without Truck Drivers?

Just about every facet of consumers’ lives is made possible because truck drivers deliver goods on a daily basis. According to the American Trucking Associations, the trucking industry carried 72.5% of all freight transported in the U.S. in 2019, equating to 11.84 billion tons. If truck drivers were to stop operating, we’d be in big trouble.

Navigating COVID-19

During the current COVID-19 crisis, truck drivers have proven to fit the government’s “essential worker” title. National Truck Driver Appreciation Week took place on September 13-19, 2020 to emphasize the vital role truck drivers have played during the coronavirus pandemic. While many places of business such as restaurants, clothing stores, and bars, have shut their doors to contain the spread of the virus, local and federal authorities have requested the trucking industry continue to keep the supply chain in motion.

In the words of a trucker quoted in USA Today, “If the freight’s there, it’s got to move. If people are going to eat, the trucks are gonna move. If they need medical supplies, the trucks are gonna move. If we stop, the world stops.” Thankfully, the estimated 3.5 million United States-based professional truckers are continuing to keep the shelves of grocery stores stocked with food and household necessities for consumers, along with ensuring medical staff receives supplies needed to give proper healthcare.

What Would Happen if We Didn’t Have Truckers?

Many people outside of the trucking industry do not think about where all of their goods originate from, nor give a thought to the dire scenario that could be presented if truckers stopped operating completely. Consider the example of the week-long strike carried out by truck drivers across Brazil in 2018. CNN reported the results heavily impacted the country as the strike “prevented the delivery of goods to supermarkets and gas to petrol stations.” It even affected public transportation since gas stations ran out of fuel.

So, if truck drivers stopped operating here in the States or other countries around the globe, would chaotic disorder ensue? In short, the answer is yes, especially while we’re in a pandemic.

The first 24 hours would hurt the medical field the most. Due to the lack of delivery, medical supplies would become depleted. Hospitals would run out of basic supplies such as syringes and catheters. Therefore, if the trucking delivery network stopped, hospitals, clinics, and pharmacies would quickly run out of necessities. Looking for a check from your employer or a gift from a relative? There’s a good chance you wouldn’t receive it since the USPS, FedEx, UPS, and other package delivery operations would cease. Also taking place within a day would be the onslaught of food shortages and service stations would begin running out of fuel. Further, without manufacturing components and trucks for product delivery, assembly lines would shut down, resulting in the unemployment of thousands of people.

And that’s just the beginning.

In a matter of two to three days, ATMs across the country would run out of cash. Thus, banks wouldn’t be able to process transactions. Garbage would begin piling up in both great metropolitans and suburban areas. Essential supplies such as bottled water and canned goods would disappear resulting in even more food shortages, especially when consumers panic and hoard foodstuffs (we’ve seen it during natural disasters). Service stations would completely run out of fuel for all vehicles, including the essential working trucks. Imported goods shipped from other countries from the sea would remain in ports.

Within a week, due to the lack of fuel, automobile travel would come to a standstill. Hospitals would begin to run out of oxygen supplies. By the fourth week, the clean water supply would be completely exhausted, and water would only be safe for drinking after boiling. You might be wondering, “What’s a truck driver have to do with the water supply?” Everything. Every 7-14 days, truck drivers deliver purification chemicals to water supply plants. Without such chemicals, water cannot be purified and made safe for us to drink. Inevitably, the water supply plants would run out of drinkable water in two to four weeks.

Thank a Trucker Today

The future’s indeed bleak when you think of a world without our all-important, heroic truck drivers. The magnitude of a ceased trucker operation would produce a trickle-down effect that would ultimately impact everything—right down to our physical health. This information isn’t meant to frighten you. Instead, we hope it bolsters your appreciation for truck drivers internationally. They’re carrying out a job that’s difficult even when we’re not enduring a global crisis. Next time you meet a local truck driver, be sure to thank him or her for their service—because, without them, we’d lack the necessities and comforts we’ve come to take for granted.

How Working from Home is Affecting the Transportation Industry

COVID-19 changed just about every aspect of American society, including our work lives. Earlier this year, many offices and places of business transitioned to a remote work structure with a majority of employees working out of their homes. One of the results of this change is some people no longer have a daily commute. The initial lack of commuters on the road drastically impacted traffic patterns and the transportation industry as a whole. While traffic patterns are increasing again, the transition continues to impact truckers—who are now in higher demand. Keep reading to find out exactly how remote work impacts traffic patterns, demand, and the day-to-day lives of owners/operators.

Truckers Have the Roads to Themselves

While some U.S. cities are seeing lower traffic levels—a decrease by up to 63%—trucking continues to be steady. The pandemic increased trucking activity and boosted cargo volumes since the shift in March. For truckers, large chunks of time can be spent battling gruesome traffic, drastically lowering the productivity of the entire supply chain. In 2016, the American Transportation Research Institute determined an estimated $74.5 billion in excess operating costs could be blamed on heavy traffic. This impressive figure speaks to the extent to which traffic determines the effectiveness of the entire supply chain.

Peak traffic hours in the mornings and evenings can almost entirely be contributed to commuters. Without them, those hours don’t bring the same congestion. Trucking companies used to have to completely change their routes in order to avoid high traffic areas. Many companies even planned the locations of their facilities in order to avoid trucks having to cross through metropolitan hubs. With lighter traffic than usual in some areas, many truckers can now take more direct routes and get to their destinations much faster.

Less Traffic Equals Less Liability

Having fewer drivers on the road makes traveling safer for owners/operators. By having fewer cars on the road, there is a smaller margin of error when it comes to accidents and collisions. Busy roads and traffic have been linked to increased rates of reported low-speed accidents. A study conducted by the Department of Transportation in the state of Maryland confirmed a positive correlation in the frequency and severity of collisions in high congestion lanes. When there are more cars on the road, it adds an elevated level of unpredictability. When accidents do occur in heavy traffic, that collision is much more likely to reverberate and cause pile-ups.

Streamlining the Supply Chain

The work-from-home structure also necessitates additional supplies. Since people are in their homes all day, they’re using delivery services more frequently, thus boosting business for truckers. Because of this increase in demand, trucking companies are rapidly adapting to make it all work. As mentioned earlier, many owners/operators are trying to plan routes for more direct travel. Additionally, warehouse reconfiguration allows truckers to spend less time at inventory facilities, and more time getting everyone the supplies they need to thrive from home.

Getting Back to “Normal”

Studies by StreetLight Data note that traffic is returning to its previous levels, particularly in rural areas, at a quicker pace than originally expected. As more motorists return to their daily commute, truckers might see a return to pre-COVID conditions. Fortunately, the transportation industry as a whole has evolved during this period. Even after traffic picks back up, the industry has found new and creative solutions—such as redesigned routes, streamlined loading procedures, and overall supply chain optimization—to make the entire supply chain more efficient and profitable. Additionally, as the disruption continues, more and more people will remain in their homes, amplifying the demand.

While traffic may be starting to increase again, getting up to 90% of the pre-pandemic levels, most metropolitan areas are still reporting lower congestion rates. The advancements made during this new period will have ripple effects that remain far past this period of uncertainty.

Going forward, many companies are discovering that remote work is productive, and as everyone settles into working from home, it might remain that way. If working from home becomes the new standard, the benefits it’s had for the transportation industry can be further capitalized upon in the months, and possibly years, to come.

Mission Financial is your all-in-one resource for trucking financing and industry news. Check out our comprehensive blog for updates on the transportation industry.

How the Freight Industry Is Rebounding in the Wake of the Recession

The American economy took a serious hit in March, April, and May of this year, with unemployment spiking at nearly 15%. This percentage of people left without full employment in America was so large, you’d have to go back 80 years to find a comparable moment of economic strife. Much of the spike is attributed to the coronavirus pandemic, a serious public health crisis that required many industries to slow down or cease operations completely in order to prevent a widespread infection.

Luckily, there’s been good news on the job front. As of early July, unemployment decreased to 11%, indicating roughly 4.8 million people returned to work since the coronavirus pandemic began. This brings the rate of unemployment back in line with some more relatable markers in American history, not too long ago. The recessions of 1983 and 2009 both yielded unemployment rates of roughly 10%, which gives Americans who have lived through past economic downturns a small indication of how things might progress in America moving forward.

Employment in the Freight Industry

Trucking in America has gotten a lot of positive attention from the federal government from the very beginning of the pandemic. Truckers were declared essential workers by the White House with little delay. This kept owner/operators’ jobs secure, to some degree, but also created new challenges for workers in an industry becoming more isolated by the day—with truck stops and highway restaurants shutting down left and right due to the pandemic and necessary practice of social distancing.

The following months were a mixed bag for O/Os, with notable difficulties for freight owners and logistics companies. The American supply chain became severely lopsided overnight, with demand for medical supplies and food products spiking in urban areas, causing full truckloads to enter metropolitan areas at an increased rate, only to find there wasn’t anything to fill their trucks with on the way back out to a factory or distribution center (and we all know how fast you bleed money driving an empty semi-truck). This caused per-mile rates to be wildly inconsistent across different areas of the country, with some O/Os making money hand over fist, and others finding out they’d make more money if they chose not to drive at all.

Good News for Truckers As of July

We’re starting to see a steady rebound in trucking rates all across the country. According to data gathered by DAT Freight & Analytics, Los Angeles and Chicago have continued to improve, with substantial rate increases on nearby high-volume freight lanes.

Note: The rates listed below are averages from the beginning of June, based on actual transactions between carriers, brokers, and shippers.

  • Chicago to Columbus, OH, rose 19 cents to $2.34 per mile
  • Chicago to Detroit gained 15 cents to $2.78
  • Chicago to Allentown, PA, was up 13 cents to $2.32
  • Los Angeles to Denver jumped up another 25 cents to $3.09
  • A. to Seattle climbed up to $2.74

In addition to this good news, there was another increase on the lane from Charlotte, North Carolina, to Buffalo, New York, where the average rate increased by 20 cents to $2.31 per mile.

Prices from Atlanta down into Florida are on the way up as well. Produce season is starting to end in the southern states, so demand has begun to shift away from outbound and back toward inbound traffic. The rate from Atlanta to Lakeland, Florida, was up to $2.41 per mile at the start of June as a result.

Overall, 72 out of the top 100 van lane rates have increased, while 16 others maintained their previous levels. This makes it a great time to be on the road, and gives O/Os good reason to watch rate changes with a sharp eye in order to maximize their route efficiency.

Trucking’s Long Term Trajectory

It’s no secret the freight industry has been seeing troubling signs for a couple years running. Class 8 sales have dipped, and even before COVID-19 there were prominent news outlets writing about the freight industry being in recession.

Press surrounding trucking can be a tricky subject. It’s true transport stocks haven’t been doing well for a long time. The SPDR S&P Transportation ETF is down more than 24% year to date as of June 9, an abysmal return when compared to the S&P 500 and Dow Jones Industrial Average. This ETF is well-diversified, and a commonly used indicator for the health of the freight sector. The holding includes planes, trains, and auto companies. Uber Technologies (UBER) and Lyft (LYFT) are in the ETF now, along with the usual suspects, such as United Parcel Service (UPS), the Union Pacific railroad (UNP), trucking firm J.B. Hunt Transportation Service (JBHT), and JetBlue Airways (JBLU), among others.

While XTN is a good indicator of the transportation industry on the whole, it also includes a healthy percentage of some of the worst performers in 2020 like airlines and rideshare companies, both of which suffered monumental losses as a result of COVID-19.

The trucking industry on the whole hasn’t suffered the same level of constriction that airlines have, and the health of the industry isn’t well measured by the health of public companies. As a matter of fact, more than 95% of carriers have less than five trucks. The country is full of small, independent truck operators, and as long as rates increase, it’s expected they’ll come out just fine.

The bottom line is trucking companies are the lifeblood of America, and there’s no indication the demand for truckers is going to decrease any time soon. If you’re interested in getting started as an owner/operator, contact us at Mission Financial.

Improving Fulfillment Efficiency During the Pandemic

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
  • Fuel
  • 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.

How the Transportation Supply Chain Has Adapted to Aid in Coronavirus Relief Efforts

factory worker

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:

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Long-Term 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.

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