Is The Trucking Crisis Showing Signs Of Easing?
Recent data from Truckstop.com shows a potential easing of the trucking crisis with, most importantly, the shortage of available drivers diminishing. But with supply chains facing their own problems and concerns over a global recession looming, is this really the end of the trucking crisis?
Trucking is an integral part of the US economy, with fluctuations in production and consumption directly impacting the demand for the transport of goods. When demand increases, so does the demand for those to transport these goods. Hence, data on trucking can be a very good indicator of economic activity.
Recently, challenges in global supply chains, such as lockdowns in China, trade tensions between the US and China, and the Ukraine crisis, have hampered the transportation of goods. This alongside the shortage of drivers has meant that trucking has taken a hard hit. All this has been reflected in data collected on the trucking industries with it showing these supply-side constraints. But things are looking up.
Truckstop.com have complied millions of data points from the last few months. The most important indicator of recovery is the spot freight market which shows the proportion of the market for which the participants negotiate an individual transaction for each load. The data shows that there was a rapid increase in spot freight market rates following the end of Covid lockdowns in February 2020 with this cycle peaking in January 2022. This shows the potential for growth within the trucking industry, provided that companies can meet this rise in demand.
Meeting this demand is looking more and more likely each day with drivers being rapidly trained and put into work within the industry. Programmes such as the federal apprenticeship initiation are starting to take fruition. Most critically the data shows that this is leading to the shortage of drivers diminishing. This is good for the industry and consumers as shippers no longer have to compete with other companies to find truckers to move their products, which could lower the price of the goods.
Additionally, ports seem to be getting more efficient with the number of ships waiting outside of ports in Los Angeles and Long Beach being reduced to less than 40 from over 100 earlier this year.
But with all these opportunities within the trucking industry, there are still some very significant challenges that the industry faces. Although out of lockdown China is still experiencing large supply bottlenecks, the main one being congested ports. For example, northern Chinese ports are seeking vessel alternatives to reduce congestion in southern ports so that goods can be taken off ships and into trucks more quickly, but this is dependent on the supply of trucks on the other side.
Additionally, on the demand-side inflation could also be harmful to the industry. The rapidly increasing cost of diesel has already seen rising costs impact consumers, subsequently, demand could fall reducing the profitability of the industry. This situation could be made even worse if the country falls into a recession.
The trucking industry finds itself at a cross-road, with signs of the crisis within the industry easing but it is also important to note the challenges that lie ahead. Already there have been calls to improve the quality of labour for many truckers up and down the country, specifically workers asking for pay rises. For an industry that plays such an integral role in our economy, and most importantly its recovery from the last few years, the sector needs to tackle these challenges head-on and ensure that this is the end to the trucking crisis.
Photo: Marcus Lindstrom/Getty Images