Trucking Industry 2020 Review

December 21 2020
Trucking Industry 2020 Review

As this year is close to its end, we are starting to see more and more its impact over the trucking industry. This year has been very bumpy,uneven and challenging for the truck market, full of unexpected twists and turns.The industry witnessed tremendous changes when it comes to the manner in which they operate and the kind of trucks that are making their way to the market spaces.

Coronavirus and the nation’s response to the emergency are rapidly changing the day-to-day realities of fleet-based businesses in the United States. While several states are again considering stay-at-home rules, transportation, field service, utility workers, energy workers and many other fleet-based businesses have been deemed essential services and continue to operate, albeit in a vastly altered landscape.

What Happened during the past year 

Bankruptcy and driver shortage 

Over the past few months, several large and small trucking companies have closed their doors for business due to the harsh market conditions. In addition,  at least three thousand truckers are unemployed. Retail companies are moving fewer goods from one place to another, causing many trucking companies to lose out because of lack of work. 

“In February, we were coming off an all-time record unit year in 2019, and still going flat-out,” said Craig Bennett, senior vice president at Utility Trailer Manufacturing Co. “Then in March the bottom fell out, and numerous orders were canceled and delayed. We furloughed or laid off around 1,100 people and reassigned all other teams.”

“The driver shortage is now the determining factor and it will be for the foreseeable future until all of that gets resolved.” said Paul Kroes, Thermo King‘s market insights leader for North America.

Although , there is a light at the end of the tunnel. About 70% of those employees have since been rehired, and new employees were trained and added, said Craig Bennet

Some companies are choosing to go down the alternative route and merge with other companies. Many trucking companies are likely to move in this direction in 2021 if the market doesn’t improve. And if trucking companies don’t have any other alternative to turn to.

Relaxed hours of service due to the Covid-19 pandemic

The FMCSA has extended its COVID-19 emergency declaration until the end of the year to provide HOS relief to truck drivers transporting necessary goods in response to the pandemic. The exemption applies to drivers providing direct emergency assistance. The initial emergency declaration was issued March 13 and has been extended multiple times since. As a part of the COVID-19 vaccine preparations, DOT has established the appropriate safety requirements for all potential hazards involved in shipping the vaccine.

Technology improvement

 Not all of the effects of the coronavirus on the American transportation industry are negative. Some have had positive effects, and will influence trucking operations for years to come. So-called “contactless” and paperless technologies like electronic bills of lading, payments, and virtual communications between trucking salespeople and vendors/manufacturers have served to protect truckers and end users from the potential spread of infection.

Remote work offices

Trucking office management has also benefited from remote-work technologies such as video conferencing and virtual communications systems. Managers forced to work from home during the pandemic can easily remain in contact with vendors, employees, and contractors. Remote working has been shown to improve the work/life balance as well, and analysts from numerous industries suggest this solution will have long-ranging benefits far after the COVID-19 pandemic is past.

Changes in Pricing

During 2019, the pricing that truckers worked with experienced a significant decline because of the shortage of jobs. Trucking companies started to charge less for fear of not being able to get work at all. In 2021, the pricing that trucking companies are likely to change, either for the better or worse. If the industry experiences positive growth, the prices can rise back up to what they were before the decline.

Rising Fuel Costs

The U.S. average price per gallon fell from $3.079 per gallon in January to $2.559 in mid-December. That overall glide path was interrupted by modest increases in July and August, compared with the previous months. Those summer prices of about $2.43 held until late November when they climbed to slightly more than $2.50. According to industry analyst Phil Flynn, oil prices increased late in the year amid hopes that a rollout of COVID-19 vaccines would lift global fuel demand.  Fuel has always been one of the bigger factors when accounting for the expenses that trucking companies have to incur. And the rising costs of fuel have always been a matter of concern for companies operating within this industry. 

So What’s next ?

As with most of 2020, we don’t really know, as there are a large number of factors at play. It is expected that many of the changes being experienced in the trucking industry sector will remain long after the pandemic. As in addition to the health-protective benefits of adopting technologies and revamping procedures, the cost benefits far outweigh any potential drawbacks.

Vaccine distribution is the single biggest driver for broader economic recovery. And while there has been some positive news on that front lately, there is still a long way to go.