The CEO of Freightwaves warns that the "Largest capacity purge in history" is coming to the US commercial trucking market.
The freight industry is experiencing what experts describe as one of the most interesting times ever in freight—though unfortunately, not in a positive way for most participants. Motor carriers and freight brokers across the spectrum are feeling significant pain from weak freight volumes and a rapidly changing operating climate. What we’re witnessing appears to be the calm before a significant storm, with indicators pointing toward what could become the largest capacity washout in trucking history.
With the risk of the market eliminating 600,000 active drivers, the largest capacity purge in history may be coming, bringing COVID-like spot rates. The difference this time is that there won’t be a flood of immigrants created by Biden’s open borders, which offered an endless supply of truck drivers. The capacity relief valve for shippers and brokers is forever shut, meaning carriers will have to pay up in terms of higher pay and bonuses for truck drivers. Capacity will also be much harder to find.
The Great Capacity Purge is coming and there will be no relief valve for shippers or brokers.
. . .
When accounting for the overlap between drivers affected by non-domiciled CDL [Commercial Driver License] restrictions and ELP enforcement, plus undocumented drivers and restrictions on new hires, the total at-risk population could exceed 600,000 drivers—representing about 17% of active drivers, according to transport economist Noël Perry.
Carriers that rely upon immigrant labor or carriers that don’t qualify under the new rules will likely go out of business.
The combination of regulatory changes and prolonged freight recession conditions is creating an environment ripe for significant market disruption. Industry experts anticipate numerous bankruptcies among both carriers and brokers in the coming months as financial pressures mount.
There's more at the link.
In one sense, this is going to produce difficulties in distributing goods from manufacturer or importer, to wholesaler, to retailer. Shipments will be more expensive due to less trucks (and commercial drivers) on the roads. It may cause serious economic repercussions for many businesses.
On the other hand, US truck drivers who've long complained about illegal aliens and foreign drivers taking over the trucking business are already seeing improvements in their prospects. I've seen several drivers post on social media that they're getting rates 20-30% higher than before from spot brokers, and they look forward to this trend continuing. If, as the article states, up to half a million or more foreign and non-domiciled CDL holders are eliminated from the trucking market, it can only be good news for American workers wanting their jobs back - assuming they do want them back, and haven't moved on to work in other industries.
On the other hand, the decrease in such drivers might have repercussions for the US truck fleet as a whole.
The proliferation of non-domiciled CDLs has coincided with a dramatic increase in trucking capacity across the United States. Since the FMCSA permitted foreigners to obtain non-domiciled CDLs in March 2019, the industry has added more than 310,000 trucks to American roads.
It is not a stretch to believe that at least half of the new capacity has come from non-domiciled CDL holders. We know that 200,000 CDLs were issued, but it is unclear how many of these are still active and currently driving over the road.
Regardless, the industry has suffered greatly from the surge of new truck drivers and the sudden influx of capacity. These new participants have contributed significantly to market oversupply conditions, resulting in the longest freight recession in history ... As the DOT and FMCSA work to implement stricter controls on these licenses, capacity will certainly tighten. The question on the mind of every freight market executive: When will we feel it?
Again, more at the link.
It might soon be a good time to buy that used 18-wheeler you always wanted to convert into a gigantic travel trailer setup . . .
Peter
5 comments:
Also might be a good time for self-driving electric trucks to make an appearance, and open up a market for smaller trucks (vans) to deliver over shorter 300-500 miles vs 2000-2500 mile routes.
You can't undo 60 years of frivolous immigration law, with the last 20 or so featuring total lack of enforcement, and not expect pain. Higher trucking rates for safer roads? I'll take it. People paying more for lawn care and housekeeping , or heaven forbid doing it themselves in exchange for English in schools and halving EBT? I'll take it.
I live about 20 miles off of I-81 and I-64, and there are a huge number of 18-wheelers on the road all the time. I've seen some really horrendous big truck behavior. I'd love to know how many of those drivers are NOT US citizens and don't really understand the traffic laws or are unable to read signage.
As soon as good paying jobs are available there will be a rush to fill them. You can earn a lot of money for a good company driving... 6 digits easy.
Once the cheap labor from outside the country is gone those jobs will come back. It wasn't even that people didn't want to drive but that companies from outside our country were contracting with US companies to provide drivers and massively reduced rates. Out with the old in with the new cheaper contracts. Pain ensues as they and society find that it doesn't work as well even if its cheaper. Now more regulation to push back on closing that loophole in the providing services of driving.
They did to trucking what outsourcing coders to India did.. only instead of pissing off millions of users with buggy software and bad tech support we got drivers that cant read the traffic signs and were munching, grandma, grandpaw, mom and dad and kids with their 80,000 lb road machines of death. The reaction is a little more extreme it seems than general irkedness with programing outsourcing.
Long overdue, IMO. The problem with illegal immigrants is not wanting to assimilate, a contempt for our laws, and outright arrogance. One Sikh being interviewed, via an interpreter, has been here ten years and driving a truck for eight years.
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