Trucking Industry Experts Optimistic About 2021, Once COVID Is Over
The trucking industry stands poised for a solid start in 2021, building on an unprecedented 2020 during which the U.S. economy relied heavily on truckers amid the COVID-19 pandemic.
Sectors that are likely to see substantial gains in 2021 include final-mile delivery, homebuilding, and companies involved in and supporting the medical sector — including COVID-19 vaccine delivery.
“So much depends on the vaccine and how fast it is distributed to the general population,” American Trucking Associations Chief Economist Bob Costello said. “I think freight will remain decent in 2021. On the good side, the vaccine will help return to ‘normal,’ which means sectors that are currently hurting — like services and manufacturing — can bounce back, leading to more freight.”
Some of the industry’s largest trucking and logistics companies, including FedEx Corp., UPS Inc. and DHL Supply Chain, are involved in the global effort to distribute the vaccine. They’re supported by smaller carriers, including Massachusetts-based Boyle Transportation — a sub-contractor to UPS for vaccine deliveries — who also are joining the effort.
“There have been heroic efforts by the drug developers, the clinical trial participants and the regulators to get this far, but the execution will rely in large part on blue-collar transportation and logistics professionals,” company co-president Andrew Boyle told Transport Topics.
In a matter of just a few weeks early in 2020, the U.S. economy underwent a seismic shift, boosting industries that manufactured certain items — such as medical equipment — and taking a toll on those that were more service industry-related. The ripple effects were global and upset trade around the world.
It was also the year that the United States-Mexico-Canada Agreement was ratified. The COVID-19 pandemic began to rage before its full impact on trade could be tested, but the countries kept their borders open to trucking traffic that was designated essential. Trade with Asia, Europe and other parts of the world has continued throughout the pandemic.
One lingering issue for the incoming administration of President-elect Joe Biden will be the Trump administration’s trade war with China, and the tariffs Trump imposed on products coming in from that country. There are currently more than $300 billion in tariffs on products imported to the U.S. from China.
In an interview with The New York Times, Biden said he has no plans to immediately lift the tariffs on many imports from China or break Trump’s initial trade deal, noting he wants to maximize his leverage in future talks with the country’s leaders.
“I’m not going to make any immediate moves, and the same applies to the tariffs,” Biden said in Times writer Thomas Friedman’s Dec. 2 column. “I’m not going to prejudice my options.”
Biden also hasn’t said whether the U.S. would join a new China-backed trade pact — called the Regional Comprehensive Economic Partnership — that was signed in November by several Asian countries along with Australia and New Zealand. Asked at a news conference last year whether the U.S. would join the pact, Biden said he could not yet discuss U.S. trade policy because he had not taken office. “There’s only one president at a time,” he said.
Stateside, truck drivers started seeing a surge of pay increases in the second half of 2020 as carriers contended with capacity constraints amid high volume demand. These trends look likely to continue well into 2021.
“All indicators from drivers show that pay and compensation programs are their priority,” Priscilla Peters, vice president of marketing and training at Conversion Interactive Agency, told TT. “Drivers are not only interested in seeing improvements in their base or per-mile pay, they are also looking for carriers who are increasing ancillary pay for detention, tarp pay, fuel incentives and more.”
Peters added that she is confident that increases in driver pay will continue throughout 2021. She noted that fleets will compete for drivers in a tight market.
DHL also sees a likelihood the trend will extend well into 2021.
“Yes, we do expect this trend to continue well into next year,” Tim Podvin, senior director of carrier development and transportation solutions at DHL, told TT. “Particularly if business levels continue to be as strong as projected in the transportation sector.”
Podvin previously noted that the driver shortage and plans to increase driver pay were recurring topics of conversation among carriers, many of whom were having difficulty securing or retaining talent to better meet the surge in business as the country partially reopened midyear.
“In the current hiring market, increasing driver pay is usually the most effective way for companies to attract new drivers,” Scott Dismuke, director of operations at Professional Driver Agency, told TT. “As more people raise pay, it will force others to do the same to remain competitive.”
Dismuke added that increases in trucking rates make raising driver pay financially feasible. He ultimately thinks the economy will be a determining factor for how long this trend will continue.
“I do not expect it to continue past midyear 2021,” Transport Futures economist Noël Perry told TT, “[because it will be a] weaker market for freight.”
Late in 2020, the Federal Communications Commission returned a portion of the 5.9 GHz radio spectrum initially allocated for connected vehicle technology and other transportation uses back to telecommunications companies for future development of Wi-Fi networks. The U.S. Department of Transportation opposed the reallocation, but the FCC made the move on the grounds that the spectrum had not been developed despite being available for more than 20 years.
Truck sales finished 2020 on an upbeat note, and analysts are optimistic that sales will remain steady into the new year as freight volumes have remained steady during the pandemic.
“We like to say, ‘Fleets buy trucks when they make money,’” ACT Research President Kenny Vieth said. “With carrier profitability surging into the end of 2020 — and heading to record levels in 2021 — demand for medium-duty and heavy-duty tractors and trailers has responded in kind with equipment orders surging since September.”
This article originally appeared on Transport Times