The interesting thing is that despite all of the fear of the coronavirus pandemic for the past five or so months, the trucking industry continues to recover and shows no signs of slowing down in its race to get back to normal. The evidence is not only good for the truckers on the road, but for all stakeholders in the transportation industry, including truck manufacturers and dealers.
Freight Rates Keep Rising
But a month ago, freight rates finally broke pre-pandemic levels for all three types of shipments. What is interesting and completely shatters all expectations is that the rates continue to rise at an extraordinary rate.
According to DAT Freight Analytics:
- Dry Van averaged $2.04 per mile in July, a 45 cent increase from the trough in May, a 24 cent increase from the beginning of the pandemic, and a 20 cent increase from July 2019.
- Flatbed averaged $2.20 per mile in July, a 30 cent increase from its trough in May, a 6 cent increase from the beginning of the pandemic, and about a 7 cent decrease from July 2019.
- Reefer averaged $2.30 per mile in July, a 37 cent increase from its trough in April, a 19 cent increase from the beginning of the pandemic, and a 12 cent increase from July 2019.
- While flatbed rates are still slightly below last year, DAT predicts rates are only going to get stronger. DAT predicts dry van, flatbed, and reefer at $2.21, $2.26, and $2.42, respectively for August 2020. In August 2019, rates decreased for all three forms of freight.
These increased rates show an increase in consumer confidence in the economy. Now that the initial shock of the pandemic and the strongest of the stay-at-home orders have ended, and as people go back to work and generate income, demand for luxury goods such as computer monitors is increasing.
Outbound Volume Tender Index
The Outbound Volume Tender Index (OVTI), courtesy of Freightwaves, is a system of measurement for how many loads are sent out to travel.
- 10,000 is the baseline.
- In early March when there was a run on toilet paper and cleaning supplies, the OVTI was 10,800.
- In mid-April, the OTVI dropped to approximately 9,000.
- In mid-June, it was 11,170.
- As of this writing, it is at 13,909. This is the second time in the Index’s history that it has exceeded 13,000.
The increase of the rate per mile over time, compounded with more loads being sent out, indicates that trucking is a much more lucrative market than it was at the beginning of the year.
Tractor and Trailer Sales
During the height of the pandemic, both tractor and trailer sales were impacted harshly. Come the summer, the number of sales for both new trucks and trailers have skyrocketed, even beyond the amount for the same month last year.
According to various studies from Freight Transportation Research Associates (FTR) and Americas Commercial Transportation Research Company (ACT):
- June 2020 tractor sales were about 15,750, over double from May 2020’s numbers and 20% larger than June 2019’s numbers.
- July 2020 tractor sales totaled about 20,000. This is about 28 percent higher than June 2020 and double that of July 2019.
- June is normally the weakest month for trailer sales, but sales this June were 13,400. This is over double from June 2019 and triple May 2020. Compared to April 2020, where trailer says were a meager 250, trailer sales increased over fifty-threefold.
The industry is in a prime position for dealers, as new trucks and trailers are flying off the lot despite the glut of used assets on the market. More money is changing hands now in the transportation industry than it has in a very long time, perhaps ever.
Job Market
The Bureau of Labor Statistics (BLS) is constantly updating its data set in terms of monthly employment in the trucking industry. We posted that the industry only lost 1,200 jobs in May, but the data was still pending.
It turns out, the trucking industry actually gained employment in May, an increase of 1,800 jobs. This brought the total job numbers up to 1,432,600.
The numbers for June and July are still pending, but if it is similar to what happened with May, the preliminary numbers that indicate gains are also underestimated.
Unlike the previous metrics that have already gone above and beyond pre-pandemic levels, employment in the transportation industry still has a ways to go before it reaches the pre-pandemic count of 1,527,300 jobs. April was the hardest hitting month for the industry, shaving off over 90,000 jobs from the industry.
The current estimations for July pin it at 1,438,600 total employed people. But with the increased demand for goods from customers and assets from truckers, it is only a matter of time before the numbers stabilize above the threshold.
Interested in seeing the numbers for yourself? You can check them out at the BLS webpage.
Conclusion
The pandemic does not appear to have an end in sight. We were wrong on our prediction of the pandemic ending, but in the end, the trucking industry has been able to mold around the current epidemic and recover despite the current goings-on in the world. Truckers and dealerships are wearing facemasks, maintaining social distancing protocols, and making sure deliveries are made on time.
