If there is unanimous consensus on any subject today, it is that 2020 was a rough year for everyone. Many, however, are forecasting better times in 2021. This is especially the case in the trucking industry.
Many forecasters and analysts who follow the industry have identified several factors that underlay these predictions. All taken together, they indicate more demand for freight shipments and less capacity to meet that call for more shipping. This, in turn, is seen as creating an increase in shipping rates and compensation for drivers.
Here are five factors driving the cautiously optimistic 2021 expectations:
Distribution of the Covid-19 Vaccines. As a larger part of the population receives vaccines, the lockdowns and slowdowns of 2020 will lessen and disappear in some areas. This means factories and other production facilities will be reopening and ramping up their need for raw materials and shipment of finished products.
Increased consumer spending. The expectation of another round of stimulus checks and the resumption of employment for millions will create new levels of demand for products that must be trucked from manufacturers to distribution centers to retailers and e-commerce destinations. There was a drop of roughly $500 billion in consumer spending in 2020 and regaining even a portion of those lost sales represents hundreds of thousands of truckloads of goods. Additional pressure comes from the fact that even with decreased spending in 2020, the lack of production means many consumer retail shelves are severely depleted and need restocking.
Resumption of investment in infrastructure, buildings, and other capital expenditures. Many companies, state and federal agencies, and other groups canceled or reduced trillions of dollars of capital spending and investment. Catching up on deferred investment, maintenance, and launching delayed projects will drive a significant level of demand throughout the year and into 2022. The entire logistics chain will be stressed trying to ramp up and meet the demands of these commercial and governmental expenditures.
Impact of the new Drug & Alcohol Clearinghouse compliance requirements. Industry staffing sources noted that the increased stimulus checks and benefits placed many drivers sitting on couches for many months of 2020. However, they also note that as many as 1-2 percent of licensed drivers may be benched because of the effectiveness of the new electronic database. This is before the implementation of any level of hair follicle testing. A conservative estimate of the number of drivers sidelined is put at 120,000 and estimates range to double that number in 2021.
Reduced training and licensing of commercial drivers. It is estimated that as many as 20 percent of all U.S. truck driver training schools are still closed and the 2020 turnout of new drivers was down 40 percent. The net effect of this one factor means at least 80,000 fewer drivers available to drive rigs today than just one year ago.
These and other pressures on the market are already producing record increases in spot rates in areas of the country. Many who track these numbers see this trend translating into higher contract rates. Those rate increases will also be used to incentivize drivers with higher pay to keep trucks on the road.