Fewer drivers, more freight to drive up prices
Shipping costs are projected to rise this year due to a decline in truck drivers on the road and an increase in freight demand, according to Chattanooga’s biggest trucking firm.
In its annual outlook, U.S. Xpress Enterprises projects contract and spot rates will increase from
8% to 15% in 2021 because of fewer drivers on the road and more shipping demand as the economy recovers.
“Spot rates will likely trend upward until the fall months, when they’ll ease prior to increase again as we enter the holiday peak season,” U.S. Xpress projected in its outlook released Wednesday.
Eric Fuller, president and CEO of U.S. Xpress, said the coronavirus pandemic hit the trucking industry “in ways we couldn’t have imagined a year ago, and those challenges will reverberate throughout 2021.”
“This will continue to be a challenging year, but I’m confident it will end on a positive note,” Fuller said.
The trucking company said reduced truck driver training and additional drug and alcohol screening tests have resulted in nearly 200,000 fewer drivers on the road.
Despite an initial drop in turnover last year, the annualized turnover rate at major truckload carriers rose 10 percentage points to 92% in the third quarter, according to the American Trucking Associations. The turnover rate at smaller truckload carriers rose 14 points to 74%.
Despite pay increases for many drivers, surveys of truck drivers by the Chattanooga-based online feedback firm Workhound last year found that many drivers remain frustrated by time spent without hauls and the complexity of compensation as loads vary.
“Complex pay structures and fluctuations in load availability leads to confusion among drivers about how best maximize their earning potential,” Workhound noted in its summary of comments from more than 50,000 drivers.
WorkHound co-founder and CEO Max Farrell said last year was unlike any previous year for the trucking industry but communication problems remained key for many drivers and their employers.
“The COVID-19 pandemic and major news events added unique challenges to how companies navigated the year,” Farrell said. “This only added problems to preexisting communication concerns between carriers and professional drivers.”
In its forecast, U.S. Xpress expects the economy to remain relatively weak in the first half of the year despite surging stock prices and hopes for more vaccinations.
“While Wall Street is bullish on a 2021 economic recovery, the ongoing pandemic and slow vaccination efforts will temper growth for the first half of the year,” the company said. “Inventory replenishment will remain a strong focus for shippers for months to come. Additionally, record-breaking holiday shopping will result in increased returns and more households will continue using online platforms for key purchases as physical retail remains shuttered.”