Trucking in June 2020

As Johnny Carson use to say, “there are hills and valleys.” Right now, the trucking industry is in a valley, a big valley. But the goods news is, there is only one way open and that is UP!

Rates are at rock bottom and more than 88,000 jobs disappeared in the truck transportation sector in April, a 5.8% drop from March, both the steepest drops on record – part of a record-setting 20.5 million job loss across the country, as the nation’s unemployment rate rose to 14.7%.

According to a May 8 Bureau of Labor Statistics report, 88,300 jobs were lost in the truck transportation, as the entire economy suffered due to COVID-19 pandemic lockdowns and stay-at-home orders.

Those are not all drivers, though most surely are, given that around 60% of trucking payroll jobs are drivers.

I started driving back in 1965 but the government started reporting employment data for truck transportation in 1990, and the closest we have come to this degree of job loss in trucking as best as I can remember was back in April 1994 due to a Teamsters strike against 22 trucking companies when 49,700 drivers lost their jobs. Aside from that, the biggest decline was 26,000 jobs, in January 2009.

But in just one month, trucking has shed a larger percentage of its payroll force than it did during the industry's five worst consecutive months of the Great Recession.

But the numbers don’t tell us are what’s going on with leased and independent owner-operators. We know that a large share of them are idled, but that does not necessarily mean they are out of business. In addition to the Paycheck Protection Program and other federal assistance, many creditors are putting near-term obligations on hold.

In addition, these numbers do not include private fleets, only firms that are in the business of moving goods for compensation.

Now for the Good News -Parcel and Local Delivery is UP!

Meanwhile, parcel and local delivery so far is holding up well. The segment formally known as couriers and messengers added 1,800 jobs in April, making it the U.S. industry with the second-strongest job growth in April.

Only seven "industries" posted any job growth at all, and two of those are the U.S. government and the U.S. Postal Service.

The slight job growth squares with the underlying dynamics of families having goods delivered that they otherwise would have bought in stores and businesses sending items to newly-remote workers.

Warehousing and storage is interesting because it was one of just a handful of industries that recorded significant job growth in March. The early stages of the COVID-19 crisis likely saw greater demand due to the depletion and restocking cycle for food and paper products.

Since late March, though, the overall demand has become a much greater issue. Some might have expected this sector to hold up better because of online purchasing, but while e-commerce probably has grown dramatically in the past couple of months, it cannot offset the broader economic hit as more than 30 million people have filed for unemployment benefits.

I think the new normal will be smaller companies with smaller trucks doing the Final Delivery business.