The COVID pandemic has impacted the trucking industry in some interesting ways. Large swaths of the economy shut their doors for a time, impacting consumer demands, purchasing decisions and methods (e.g. e-commerce), and resulting freight patterns. Consumer demand skyrocketed despite worker furloughs and layoffs, and for a short time (far too short in our opinion), truck drivers were heralded as heroes delivering the critical supplies Americans needed to combat the disease and to keep the economy moving. Since last summer, freight demand has roared back and has consistently stayed strong. Now with tight driver and equipment capacity, freight is stuck on ships and trailers awaiting warehouse space and workers to unload them. The supply chain is a fickle partner to the trucking industry, but the industry always seems to deliver, often in interesting ways.
One of these ways has been the explosive growth of new for-hire trucking companies, which, as pointed out by our colleague Avery Vice at FTR Transportation Intelligence has grown by 110,000 from July 2020 to July 2021, far outpacing previous year averages. While most of these companies likely don’t represent new capacity or persons new to the trucking industry, they do represent additional flexibility in the marketplace, as newly minted motor carriers reposition equipment to tight markets paying higher rates, leveling some peaks and valleys in the supply chain.
Meanwhile, strong and established trucking companies, unable to grow organically amidst a dearth of new equipment and drivers, are pursuing a merger and acquisition strategy to growth to ensure capacity to cover regular dedicated lanes. This too can be good for the supply chain as acquired carriers benefit from new efficiencies and often more established compliance and safety programs.
The trucking industry is saddled with an unfaithful and sometimes erratic bedfellow: the supply chain. But when the supply chain calls, we respond. STC is proud to work for an industry that is creative, adaptable, resilient, and ready for the next challenge. What remains to be seen is how this latest shock to the system will work itself out in the long term. STC is hopeful the supply chain will level-set and offer more predictability for those who are part of it, as the ultimate beneficiaries are all Americans. The lingering concern to keep a watchful eye over is how much the government desires to weigh in and force changes on the markets, which if not managed properly could upset the balance and create winners and losers and potential unintended consequences. No telling what’s around the bend but, we’ll be there with you, adapting, growing and engaging.