Date: Friday, September 25, 2020
Source: DC Velocity
Shippers are continuing to face an uphill climb to secure freight capacity for their parcels as truck drivers continue to stay out of the workplace amid Covid concerns and pandemic disruptions, a pair of trucking reports found today.
The transportation industry analysis group FTR Transportation Intelligence said that its Shippers Conditions Index (SCI) for July fell into negative territory for the first time since August 2018, with a -0.36 reading.
The Bloomington, Indiana-based firm’s SCI tracks the changes representing four major conditions in the U.S. full-load freight market: freight demand, freight rates, fleet capacity, and fuel price. Combined into a single index number, a positive score represents good, optimistic conditions, while a negative score shows the opposite.
However, FTR expects a potential increase in trucking capacity to push the index back into the positive range by the fourth quarter and through 2021, according to Todd Tranausky, vice president of rail and intermodal at FTR. “It has been harder than expected to bring truck drivers back into the driver pool. This has created tightness in the truckload market that has bled over into the intermodal space,” Tranausky said. “It is unknown how long the present situation will last, as it may be related to retail restocking or part of a longer-term shift in spending away from services and toward goods. A shift toward goods would result in stronger freight demand and worse conditions for shippers.”
But another report released today said the impact of a lingering driver shortage may last even longer. ACT Research Co. said that although freight volume and productivity were high in August, vehicle capacity and driver availability were both in contraction territory, a combination that has pushed its Pricing Index up to 66.4, a two-year high.
Columbus, Indiana-based ACT’s For-Hire Trucking Index is a monthly survey of for-hire trucking service providers, where responses are converted into index numbers, such that the neutral or flat activity level is 50.
“The average age of US truck drivers is 55, and while we usually have some number of drivers near retirement who will just participate in peak rates, the calculus is different this year,” Tim Denoyer, ACT’s vice president and senior analyst, said in a release. “Driver supply should improve from here, but gradually, as driver schools are still challenged by social distancing. We expect driver pay to start increasing to address the shortage, but this process takes time. Meanwhile, the acute tightness of the past few months isn’t likely to ease much.”
The reports are the latest bad news for shippers and retailers, who are already reeling from economic shutdowns amid the pandemic. In reaction to tight capacity and driver shortages, major carriers like FedEx Corp. and UPS Inc. have recently raised their rates, forcing shippers to seek creative solutions to preserve rare capacity even as the annual holiday shopping peak season looms near.