State of the Transportation Market

 

After a chaotic 2020, all industries are hoping a “return to normal” will happen sooner rather than later. We thought this would be a good time to check in with the transportation market, to see where the trucking industry stands today.

Labor Challenges

During the COVID-19 pandemic, there was a reduction of nearly 95,000 trucking jobs. According to C.H. Robinson, while we’re starting to see increases in the total number of trucking jobs, long-haul trucking is still struggling, with most truckers returning to the short-haul and specialized load portions of the industry.

Even still, as of February 2021, trucking jobs overall are down 3% compared to February 2020. More truckers are retiring early and fewer new drivers are joining the field, particularly as most driving schools are not yet operating at full capacity. As a result, experts expect to see an increase in driver compensation and bonuses to help encourage more young people to consider the trucking profession.

Freight Rates

According to a recent report from TCI capital, the four factors that affect the trucking industry the most are:

  • Inbound container shipments
  • Load volume
  • Truck capacity
  • Fuel prices

With the exception of truck capacity, all of those elements are currently up. Current load-to-truck ratios are 7.82, compared to 4.87 on average back in April. Experts believe that high demand and the lack of truck capacity mean that rates will remain high for the foreseeable future.

Economic Impact on the Industry

With life “returning to normal,” economists continue to project a domestic economic rebound, with a current forecast of 6.8% annual growth. If we see growth in retail, housing, and manufacturing, we can also expect to see an increase in freight demand.

The industry is also expected to receive a boost from three stimulus packages that will result in additional freight. And, as retail continues to play a strong role in 2021, it should result in prolonged freight demand.

The Ongoing Impact of Winter Weather

The trucking industry is still feeling the effects from the winter weather that impacted large parts of the country this past February. As we mentioned above, the high load-to-truck ratios are holding steady as the industry struggles to try to catch up with the backlog that occurred following the storms.

It remains to be seen how potential summer storms could impact the industry as well, during this ongoing recovery period.

 

We’ll continue monitoring the trucking industry and report back here on any significant updates.