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How Drivers Can Avoid Drug and Alcohol Violations

In 2020, the Federal Motor Carrier Safety Administration (FMCSA) proposed regulations that would require state agencies to block drivers with any drug and/or alcohol violations from renewing or upgrading their commercial driver’s licenses or permits. The proposed regulations would also prevent new drivers from being issued licenses or permits. In some cases, the new rules would grant agencies the authority to downgrade a driver’s license or permit within 60 days of receiving a drug and/or alcohol violation. 

Today, a new regulation requires states to ban drivers with violations from operating commercial vehicles until the driver completes a return-to-duty process. These regulations were deemed ‘The Drug and Alcohol Clearinghouse.’ 

From their start in January 2020 to the end of March 2021, states saw an astonishing 69,100 total drug violations and 1,552 alcohol violations. In the first three months of 2021 alone, there were 14,324 drug violations and 367 alcohol violations reported, and experts anticipate these numbers to grow with each passing year.

While the FMCSA’s Clearinghouse aims to safeguard our nation’s roadways from potentially dangerous truck drivers, some drivers fall victim to violations simply because they don’t know the new laws and regulations.

Drug and alcohol violations are on the rise

As expected, reported violations saw a 10.2% increase from 2020 to 2021. In 2021, the nation’s total number of drug violations was particularly shocking, with a total of 58,215 reported.

The Drug and Alcohol Clearinghouse broke that number down even further and found:

  • 31,085 violations involving marijuana
  • 8,765 violations involving cocaine
  • 5,082 violations involving methamphetamine

In terms of alcohol violations, the Clearinghouse saw a 26.74% increase from 2020. 

Overall, the Clearinghouse found 104,840 truck drivers with at least one violation since its start in 2020. 81,052 of the drivers are still prohibited from resuming operations, and, as of January 2022, only 13,050 of them have completed the requirements for return-to-duty eligibility.

In recent years, the FMCSA has vowed to double the number of random drug tests administered. This decree requires carriers to perform random drug tests on all of their drivers, including any contracted owner-operators. While this demand was labeled as a temporary statute, it will most likely be re-instituted again and again. The FMCSA is required by federal law to increase random drug testing by 50% if the rate of positive drug tests passes the 1% threshold. This change could cost up to $70 million for approximately 2.1 million drug tests.

6 drug and alcohol traps and how drivers can avoid them

On more than one occasion, truck drivers have violated regulations concerning drugs and alcohol because they don’t know or fully understand the law. 

Trucking professionals have found six common traps to watch for, including:

1) Sleeping/Resting in the sleeper cab after consuming alcohol.

According to the safety regulation 49 C.F.R. § 392.5, a driver is not allowed to have any alcohol in his/her/their system while having “physical control” of a commercial vehicle. The general definition of physical control is: to have immediate access to the keys and your vehicle in close proximity to you. However, the exact points of what qualifies as “physical control” are not fully specified within the regulation.  

Since the fine points of “physical control” are not defined, it is better to play on the safe side and avoid alcohol consumption while on the road. The regulation also applies when taking a 34-hour restart. So, suppose you decide to consume alcohol while you’re at home or in a lodge. In that case, we recommend storing your keys in a safe location to avoid being considered “in physical control” of your commercial vehicle.

2) Failure to proceed to a testing site immediately after testing notification.

The regulation 49 C.F.R. § 382.305 orders drivers to go to a test site immediately after receiving notice of their selection for random testing.

It is imperative to do precisely that in order to avoid receiving a violation. For example, suppose you are in the process of completing a non-driving, safety-sensitive task or function (e.g., unloading a trailer). In that case, you and your fleet manager (or someone with authority) are obligated to stop your task and ensure that you reach the designated testing site promptly. A few contingencies would not be subject to violation, but you will need to review the FMCSA’s regulations to determine them.

3) Failure to report to testing while off duty.

In reference to regulation 49 C.F.R. § 382.305, the same rules apply to drivers off duty. According to the FMCSA, drivers are subject to random drug testing while at home or on vacation. If you are selected for random testing, you must immediately proceed to the designated testing site.

Regarding random alcohol testing, the regulation does not state or require drivers to submit to testing while off duty.

4) Failure to respond to a medical review official.

A medical review officer is responsible for confirming a positive drug test that has been received from a designated laboratory. To complete the confirmation, the M.R.O. must contact the driver-in-question’s employer and ask that they notify the driver to contact the M.R.O. to discuss test results promptly. This is an opportunity for the driver to offer an explanation for the positive test results or to retrieve fax or email information to forward a copy of a prescription to the M.R.O.

5) Using medication that is prescribed to someone else.

In the event a driver tests positive for specific drugs, they would automatically be banned from operating a commercial vehicle until they follow subsequent protocol. In regards to controlled substances that are only made available by prescription from a licensed medical professional, a positive test is deemed okay. However, if a driver tests positive for a controlled substance but does not have a prescription for that substance or the prescription is expired, then they are subject to violation.

6) Legal marijuana use.

If you test positive for marijuana in a random DOT-mandated test, you will immediately be banned from professionally operating a commercial vehicle until you complete subsequent protocol. This rule also applies to legal marijuana usage and/or consumption since state laws do not have the power to overrule or void drug testing results under the FMCSA’s regulations.

Treatment resources every driver should know

If you or someone you know is struggling to overcome addiction, consider treatment through an inpatient or outpatient program.

American Addiction Treatment Centers by State

For free, confidential treatment referrals and information services any time, anywhere, visit SAMHSA’s website or call their National Helpline at 1-800-662-HELP (4357).

More like this:

What You Need to Know About the Drug and Alcohol Clearinghouse

The Dangers of Distracted Driving: How You Can Help

Older Drivers: How to Stay Safe Behind the Wheel

How the Russia-Ukraine Conflict Affects the Supply Chain

Throughout the past two years, supply chains have muscled through numerous challenges as the COVID-19 pandemic impacted industries all over the world. As Russia invades Ukraine, the world’s supply chains face more opposition. And while the problems are significant, new reports show they may worsen.

According to a Dun & Bradstreet report, 374,000 businesses worldwide use Russian suppliers, while approximately 241,000 businesses use Ukrainian suppliers. Out of all of those businesses, around 91.5% of them are based in the United States.

So how will this ongoing conflict continue to affect our supply chains? Which industries will be hit the hardest? And what can we anticipate going forward? We’ve got all the answers here.

What is the Russia-Ukraine Conflict?

On February 24, 2022, Russia initiated a full-scale military invasion of Ukraine. Since then, the death toll has reached well over 200, explosives have ravaged the country, and millions of Ukrainians have fled to neighboring countries. This growing conflict has spread well beyond Ukraine and thoroughly disrupted the world’s shipping and freight industries. 

Since the start of the invasion, Russian forces have caused shipping routes to be cut off, logistic firms to suspend services, and air freight rates to hit an all-time high. All of this has caused severe impacts on the global market, and many industries are feeling the overwhelming sting of this war.

Biggest impacts on the supply chain

The most affected industries include:

1. Fuel

At this point, we’ve all seen the astronomical prices at our local filling stations. As of March 11, the United State’s national average hit $4.33 per gallon, And in states like California, Hawaii, Nevada, and Oregon, people are paying more than $5 per gallon. These extreme prices have started to impact other parts of the economy as well. For instance, drive share and shipping companies have increased what they charge consumers to counteract fueling costs. Other industries that rely on fuel, like farming and construction, have also had to rethink their budgets, leading to higher prices at the grocery store and layoffs on job sites.

How the Gas Shortage has Affected the Trucking Industry

2. Raw Materials

Ukraine has slowly become one of the largest raw material suppliers in the world. They exported several materials, such as chemical products, minerals, transportation equipment, and other products. Since the invasion, Ukraine has been forced to increase the cost of its exports. This has caused many countries to slow down the manufacturing of electronics, homes, and vehicles. In some cases, companies have had to shut down production. Ukrainian allies have also ceased trade with Russia, thus losing access to large amounts of nickel, platinum, and 10% of the global copper reserves. These elements play essential roles in producing semiconductor chips, automobiles, jet engines, medicine, etc.

3. Shipping & Transportation

Another industry affected by the Russia-Ukraine conflict is shipping and transportation. Freight companies have started rerouting ground, ocean, and air shipping to avoid Russia and minimize fuel costs. This has led to longer transportation times and higher shipping costs for consumers.

For example, imports leaving Asia take approximately four hours longer to reach their destinations since the cargo jets can no longer fly over Russia. These jets use up to 20,000 pounds of fuel per hour of flight. And with fuel being more expensive, freight companies have no choice but to raise prices for consumers.

 4. Automotive

Since the start of the pandemic in 2020, the automotive industry has struggled with production and inventory shortages. Unfortunately, these troubles don’t seem to be subsiding anytime soon. The sudden increase in the price of fuel, steel, aluminum, and nickel has placed further pressure on the already fragile industry. The more expensive materials force automobile and automotive part manufacturers to slow down or cease production until prices stabilize. Meaning consumers will also continue to experience low inventory levels.

What can we expect moving forward?

As the conflict in Ukraine continues, trucking rates and other transportation costs could continue to increase as the price of oil rises. However, the overall outcome of this invasion is filled with a lot of uncertainty. For this reason, supply chains must prepare and improve their operations by “balancing investments in dedicated teams, processes, and technologies that will enable their organizations to implement end-to-end risk management,” says an analyst from Gartner.

More Like This:

How is the Microchip Shortage Affecting Truck Prices in 2022?

Where Did All of the Trucks Go?

How will the Trade War Between China and the U.S. Impact the Trucking Industry?

Trucking Action Plan: What You Need to Know

On December 16, 2021, the White House announced a comprehensive plan to recruit new truck drivers to help the supply chain recover from the current shortage while improving current working conditions to promote driver retention. This plan, coined the Trucking Action Plan, has been broken down into a series of steps, and the current administration hopes to institute it over the next 90 days.

Many owner operators have been left wondering what this plan is and how it will affect them and the industry they work for. This article will break it all down and explain what drivers can expect to come their way over the next 90 days.

What exactly is the Trucking Action Plan?

Officials describe the Trucking Action Plan as a way to “lay the foundation for a next-generation trucking workforce that will strengthen U.S. competitiveness and support millions of good driving jobs for years to come.” The plan also follows the lead of the recent infrastructure legislation, which passed in November of 2021 and aimed to address current industry concerns.

The current action plan, which will take effect through a series of steps over the next 30-, 60-, and 90- days, offers six key points, including:

  1. Offering trucking industry jobs that appeal to military veterans.
  2. Supporting pilot programs that train and license new drivers to deliver across state lines.
  3. Offering women more professional industry positions.
  4. Instituting more easy-to-install apprenticeship programs.
  5. Funding/providing assistance to states for improving their CDL processes.
  6. Implement sessions with drivers, carriers, and industry unions to discuss concerns and enhance the workforce.

In addition to the current driver shortage and supply chain struggles, the Trucking Action Plan directly responds to a recent poll from the Consumer Brand Association. This poll found that 90% of respondents feel the trucking capacity should be increased in the new year to assist the supply chain demand, and 80% of respondents think their senators should be responsible for fixing current and future trucking industry issues.

Many respondents also gave suggestions on how to solve the most common issues that the trucking industry faces. They include:

  • Allowing reasonable increases to truck weight limits
  • Creating systems that would send empty trucks to available loads
  • Government funding driver recruitment and training programs
  • Offering flexible hours and service requirements to drivers
  • Government funding for the production of new heavy-duty trucks

What changes can we expect to see in the new year?

In the new year, truck drivers and fleet owners can anticipate quite a few changes in the industry. The main changes will affect the recruitment process for new drivers, but owners/operators can also expect significant changes to the workforce, hoping that driver retention will improve.

Recruitment of More Women and Veterans

During the Trucking Action Plan announcement, White House officials discussed that they intend to focus on the potential labor pool of over 70,000 military veterans when it comes to driver recruitment. Currently, veterans equate to more than 20% of the transportation industry. However, the White House plans to increase that number by working with the Veterans Employment and Training Service (VETS), the Department of Veterans Affairs (VA), and other veterans’ service organizations to match military veterans and their spouses with jobs in the trucking industry. A separate task force will also encourage more women to start careers in the trucking industry. 

Reformed Training Programs

Regarding training for these trucking positions, the DOL is working to establish Registered Apprenticeship programs that would allow new drivers to earn compensation as they go through training. The Department of Transportation (DOT) is also working to improve the CDL process by reducing the time between drivers passing their tests and receiving their licenses. On top of that, the DOT hopes to provide grants to states who improve their licensing process by updating their IT infrastructures. For now, the Federal Motor Carriers Safety Administration (FMCSA) will provide over $30 million to help states expedite their CDL process and send all states a “toolkit” on how to complete specific expedite actions. The White House also announced a new pilot program that will allow truck drivers under 21 years of age to drive on interstate highways.

Improved Driver Experience 

On top of recruiting new drivers, the Trucking Action Plan will aim to support the existing drivers by improving the quality of the jobs within the industry. Currently, America’s truck drivers move over 70% of the nation’s goods, but these same drivers lose up to 40% of their drive time due to delays, which means less income. To lessen these losses, the DOL and DOT plan to construct a compensation study to better understand how long drivers are on the road versus how long they spend waiting on loading and unloading processes. These transportation agencies will also begin regular listening sessions with drivers to use the collected feedback to push regulatory action and improve the overall quality of the various trucking industry positions.

Last updated: 12-21-21

Want more information like this? Check out these articles:

What Truckers Need to Know About the Vaccine Mandate

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How the Supply Chain Problem Will Affect the Holiday Season

What Truckers Need to Know About the Vaccine Mandate

On November 4, the Department of Labor’s Occupational Safety and Health Administration announced that employers with 100 or more employees must either ensure the complete vaccination of their staff, or obtain negative COVID-19 test results weekly. This ETS (Emergency Temporary Standard) requires full vaccination for all employees and paid time off for those needing to get vaccinated during their workday. And while the vaccination mandate goes for all covered employers, it does offer the exception for those willing to establish and enforce weekly COVID-19 testing along with mandatory face coverings while at the workplace. However, this alternative still upset those working in the trucking industry and the supply chains, which are currently fragile, leading to several legal challenges.

So, what does this ETS mean for drivers and others in the trucking industry moving forward?

How does the vaccine mandate affect businesses?

When the Biden Administration announced their latest vaccine and testing requirements, many private businesses, including travel-dependent industries, were left worried about the effect the mandates could have on their businesses. Specifically for the trucking industry, many drivers threatened walkouts and resignations to disrupt further the strained supply chains that have been suffering since early this year. However, as previously mentioned, there are a few exceptions to the requirements.

The current ETS regarding COVID-19 requirements for workplaces with over 100 employees include:

  • Businesses must ensure total vaccination for all employees come January 4, 2022.
  • Employers must provide paid time off to their employees obtaining the COVID-19 vaccine(s).
  • On January 5, 2022, all unvaccinated employees must wear proper face coverings while at their place of work, as well as provide weekly COVID-19 tests with negative results.
  • These rulings will supersede any and all state or local laws, including “laws that ban or limit an employer’s authority to require vaccination, masks, or testing.

Who is exempt from the vaccine mandate?

With the trucking industry facing a severe driver shortage of approximately 80,000 drivers, White House and OSHA officials knew they would need to offer some exceptions. With hopes to avoid further driver depletion and supply chain disruption, which is responsible for things like food, fuel, medicine, and even the COVID-19 vaccine, they developed a shortlist of exemptions. 

These exemptions include:

  • Workers who do not report to a workplace where other people, including employees, clients, and/or patrons, are present.
  • Those who do not interact with persons at their point of departure or destinations.
  • Workers who operate alone (aka drivers who are alone in their cabs)
  • Remote employees
  • Exclusively outdoor workers

To the American Trucking Association’s delight, these exemptions apply to a large portion of the commercial truck driver population and provide a sense of security to the industry as a whole. Overall, the mandate would only apply to drivers operating in teams or those required to interact with others at their loading or unloading stations.  

What about international and cross-border truckers?

For drivers who cross borders to deliver goods, the mandate requirements are different. As of right now, both the U.S. and Canadian governments are requiring non-citizens to be fully vaccinated, regardless of their reasons for entry. And come January of 2022, the Department of Homeland Security will require all foreign travelers coming into the country to provide proof of total vaccination, an extension to the non-essential traveler requirement, which started in November of 2021. To meet this requirement, one must be fully vaccinated with any vaccine, including Pfizer, Moderna, Janssen/Johnson & Johnson, AstraZeneca, Covaxin, Covishield, Sinopharm, or Sinovac. However, if the vaccine requires two doses, the last dose must be administered within 14 days before entry.

Want more information like this? Check out these articles:

Are Truckers Included in the Third Vaccination Group?

How Truckers Can Prepare for the Holiday Season Amid COVID-19

How the Supply Chain Problem Will Affect the Holiday Season

How Does Prop. 22 Affect App-Based Drivers?

Rideshare Employees vs Independent Contractors

In November of 2020, California passed Proposition 22, an initiative that would allow certain rideshare and delivery companies to classify their drivers as independent contractors. The statute overruled California’s Assembly Bill 5 (AB 5), which was signed over a year prior in September of 2019. AB 5 instituted a three-factor test for acquiring independent contractor status. 

To be categorized as an independent contractor, the bill requires the person/employee to be: 

  • Free from a hiring entity’s control in regards to their performance and work completion
  • Performing tasks/work outside of the hiring entity’s usual course of operations
  • Engaged in an established trade, occupation, or business of the same nature as the work performed

The passing of AB5 and its test led to an abundance of gig economy workers being labeled as employees instead of independent contractors. This classification change took a toll on benefits, wages, and other occupational aspects. So, what does Proposition 22 mean for rideshare and delivery employees?

What’s the Difference Between an Owner/Operator and an Independent Contractor?

How does Proposition 22 affect app-based drivers?

Proposition 22 was a California ballot initiative that responded to the state’s recently passed Assembly Bill 5. AB 5 codified the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles that required employers to classify workers as employees unless they met the qualifications of an independent contractor according to the bill’s “ABC test.” And while AB 5 included exemptions from the Dynamex test for certain occupations, app-based rideshare drivers were not among the list. Since the bill’s passing, rideshare companies and delivery services have faced numerous legal suits disputing driver classification. With Proposition 22, companies like DoorDash, Uber, and Lyft could continue classifying their California drivers as contractors. 

More specifically, the proposition allows these companies to label their drivers as independent contractors so long as they don’t:

  • Provide specific dates, times, or a minimum number of hours a driver must work
  • Require drivers to accept specific delivery requests
  • Prevent drivers from taking employment with other rideshares and/or delivery services or any other lawful business

In exchange for this allowance, the proposition requires these rideshare and delivery businesses to offer specific compensation and benefits for their drivers. The initiatives’ statement of purpose declares that it intends to enact labor policies specific to California rideshare companies and drivers. These policies will protect the legal rights of rideshare drivers and ensure that they are afforded employment protections and benefits, including minimum wage, healthcare subsidies, automobile accident insurance, and more.

Proposition 22 also states:

  1. Rideshare drivers are entitled to 120% of California’s mandated minimum wage for their engaged time (i.e., the time between accepting a service request and fulfilling/completing said request) in addition to 30¢ per engaged mile.
  2. Rideshare companies will provide drivers who average a minimum of 15 hours per week with a healthcare subsidy that is consistent with the requirements stated in the Affordable Care Act.
  3. Rideshare companies will provide occupational accident insurance (with at least $1 million in coverage) to drivers for medical expenses and lost income resulting from an injury sustained while active on the company’s app.
  4. Rideshare companies must obtain automobile liability insurance (with at least $1 million in coverage) to protect and compensate third parties that sustain any injuries and/or losses caused by a driver during their engaged time.

How the PRO Act Could Affect Owner/Operators

Why was Proposition 22 declared unconstitutional?

While companies like Uber, Lyft, and DoorDash praised the passing of the ballot, others were not so enthused. Some even saw the proposition as unconstitutional, including Alameda County Superior Court Judge Frank Roesch. In August of 2021, he ruled in favor of a lawsuit filed by the Service Employees International Union, calling the initiative “unenforceable.” He stated that multiple sections negated specific California laws, including a stipulation that required a seven-eighths majority for amendment approval, making any attempt at change nearly impossible. The judge also agreed that the proposition’s ban on workers’ rights to collective bargaining violated California ballot measures that limit single subject provisions.

Despite the judge’s ruling, the proposition remains in effect. The Protect App-Based Drivers & Services Coalition (PADS) and other committees and companies in favor of Proposition 22 plan to appeal the ruling to keep it in effect. However, other organizations, like the “No On Proposition 22” coalition, are fighting against those in favor and working to have copycat bills in other states overruled.

What are the pros and cons of Prop 22?

As previously mentioned, Proposition 22 would give rideshare companies the right to classify their employees/drivers as independent contractors and guarantee things like minimum wage, occupational benefits, and more. However, there are some concerns in regards to the effect this initiative could have on would-be employees.

The pros and cons of Proposition 22 include:

PRO: Drivers will have guaranteed minimum earnings, calculated at 120% of minimum wage.

CON: Earnings are based on a driver’s engaged time and do not cover the time spent waiting for a service request.

PRO: Drivers will receive a 30¢ reimbursement for engaged miles.

CON: Reimbursements will not be given for gas, maintenance, cleaning, or necessary PPE (i.e., disposable face masks, sanitizer, etc.).

PRO: Employers will subsidize 41% of healthcare at a weekly average of 15 hours (engaged time). At 25 hours or more, employers will subsidize 82%.

CON: On average, ⅓ of a driver’s time is spent waiting for a service request, meaning it could take at least 20 hours to reach the 15-hour requirement.

PRO: Rideshare companies are required to provide occupational accident insurance (with coverage equaling at least $1 million), automobile liability insurance (with coverage equaling at least $1 million), and disability payments. Accidental death insurance will also be made available to the driver’s spouse, children, and/or other dependents.

CON: Insurance coverage and disability payments will be dependent on a driver’s engaged time. For instance, if an accident occurs while the driver is awaiting a service request, the coverage may lapse. Regarding disability payments, the driver will only receive 66% of their average weekly earnings (calculated from the month before the sustained injury).

In addition, rideshare workers would not have access to paid paternal/family leave, paid sick leave, or unemployment compensation or benefits with Proposition 22. However, there is no way of knowing whether or not this will become an amendment in the foreseeable future. The Legislative Analyst’s Office also said that with the passing of Proposition 22, app-based companies wouldn’t be forced to pay their employees as much, which would keep fares and fees low for customers.

Where Did All of the Trucks Go?

Inventory Shortage Continues to Disrupt the Auto Industry

The COVID-19 pandemic has affected numerous industries and led to several issues, including a vehicle shortage that has rocked the automotive industry. To combat financial loss due to global shutdowns, dealers pushed incentives and financing offers to encourage buyers. Once government stimulus checks were distributed, consumers were more than happy to invest in new and used rigs. While this feeding frenzy helped dealers keep their heads above water during the stay-at-home orders, they didn’t anticipate a global microchip shortage that would cause significant production delays upon reopening. 

With this supply not keeping pace with demand, and manufacturers prioritizing smaller vehicles for individual buyers, commercial fleet operators are left feeling the sting from this shortage. So, what can we expect moving forward? Let’s find out. 

-> Used Truck Prices Continue to Skyrocket

What’s causing the vehicle shortage?

There are a few things responsible for the current state of the automotive industry. For starters, the microchips used in many vehicle components are manufactured overseas, with Taiwan contributing 63%, South Korea at 18%, and China at 6%. With the world being globally affected by the pandemic, many manufacturing plants ceased production until cases slowed down. Natural disasters have also impacted the domestic inventory. In February of 2021, Texas was forced to halt production and close a Samsung plant due to severe freezing.

Aside from the microchip insufficiency, dealers have also played a role in this vehicle shortage. At the start of the pandemic, many sellers struggled to move inventory due to quarantine restrictions and stay-at-home orders. Instead of losing their businesses, they chose to offer extreme incentives and too-good-to-be-true financing plans. Unfortunately, they kept these deals running for a little too long, and their inventory was cleared out or severely depleted. And before the stock was able to circulate back into the lots, the semiconductor shortage hit and took down new vehicle production with it. So, where do we go from here?

-> How the Gas Shortage has Affected the Trucking Industry

How is the auto industry responding?

As we navigate the lingering effects of the COVID-19 pandemic, manufacturers and the U.S. government are working to solve this shortage issue. Below, we will break down their plans.

  • Automaker Action Plan: Currently, automakers are working to fulfill dealers’ needs and buyers’ wants by continuing to build out vehicles and forgoing the components that require the semiconductor microchip. Manufacturers are also allocating what they have in the way of microchips to high-demand vehicles and adjusting the availability of certain automobile features, packages, and options. While this action plan offers some much-needed relief, it is not enough to solve commercial fleet operators’ problems. 
  • Government Action Plan: Fortunately, the U.S. government recognized the geopolitical nature of this scarcity and acted early in resolving the issue. With the majority of the microchips being produced in China and Korea, our government needed to invest in domestic semiconductor production to regain the upper hand in inventory levels, which is precisely what they did. The U.S. Senate passed a $190 billion legislation package to compete with foreign tech, with $54 billion allocated to domestic manufacturing of semiconductors and telecommunication equipment. While the bill still needs to survive the House of Representatives, President Biden has voiced his support for the bill.

When will fleet inventory return to normal?

Within the first half of 2021, auto sales have mostly recovered despite the technology shortage. Unfortunately, the sales of commercial vehicles have not responded in the same manner. So far, only 14% of vehicles were sold to fleet consumers. Now, automakers are having to prioritize microchip distribution to recuperate inventory levels. Many are allocating supplies to higher-end models and leaving commercial operators at the mercy of a waiting list.

Moving forward, it’s unlikely that we will ever surpass the industry’s previous standards or return to normal inventory levels. According to industry insiders, the microchip shortage could last another four months, and while recovery efforts are vast, they’re not enough to meet the ever-increasing demand. However, companies and manufacturers are predicting supply improvements by the first quarter of 2022. While there is no sure way of knowing the exact numbers, operators should be prepared to face this shortage until 2023. 

-> Owner Operator’s Guide to Financing During a Pandemic

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