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The economics of trucking during a pandemic – Taking the Hire Road

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Bob Costello, chief economist and SVP at the American Trucking Associations, and host Jeremy Reymer, founder and CEO of DriverReach, discuss the multiple factors spurring the driver shortage, how lifestyle is playing a role in recruiting, and why we might be on the upswing on this week’s episode of Taking the Hire Road.

The age-old driver shortage problem is just that — an age problem. It’s no secret that truck drivers tend to be older than workers in other industries, but the shortage sting has felt stronger the past year and a half largely due to an increase in retirements and the decreased ability to train new drivers due to coronavirus restrictions.

But Costello makes it clear that the pandemic isn’t the principal cause of driver shortages, explaining that it has persisted for years.

“It’s important to note that there’s no one reason for the driver shortage, which also means there’s not one solution,” Costello said.

Costello pointed to wages and proximity to home as major factors affecting the long-haul sector, calling its ramifications brutal. While long-haul employment has fallen, many have flocked to more locally based jobs to work less strenuous hours and be closer to loved ones.

Costello said the Drug & Alcohol Clearinghouse has also pushed around 60,000 drivers out of the industry. However, it’s not as disheartening as one would expect, considering that many have found greater opportunities outside of trucking. By way of example, he mentioned construction as an industry that is holding steady.

Costello concluded that changing lifestyle preferences are ultimately the factors that drive many truckers to pivot in their careers and that make it harder to recruit from younger demographic groups.

“In an environment where demand surpasses supply, what happens to price? It goes up, and it’s no different in the driver market,” Costello said. “Wages will continue to go up — and they should go up; no doubt about it — but if this was only about wages, this would be easy to solve.”

Costello does think it’s fair to place some blame on the pandemic for hampering trucking’s recovery. He cited the creation of about a million jobs nationwide in both June and July. But he said parallels can be drawn between recent COVID-19 upticks and the sluggish performance in August, when only 235,000 jobs were added. 

“If you look at that data, it’s very clear that the virus’ resurgence is the problem,” Costello said. “August’s jobs number was a wake-up call that it is still about the pandemic, and until we get it under control, we’re going to continue having issues. … Here in October, if we’re not adding 750,000 to 1 million jobs per month, then I’m probably going to reassess my outlook for the economy.”

Costello expects trucking employment figures to rise once more when the pandemic is under control. “We’ll see some of those folks again, especially with wages going up,” he said. “I suspect some will come back, but I bet there’s a whole bunch that don’t; they’ve probably found other jobs locally.”

As for now, Costello remains optimistic that economic productivity will continue to increase. Although the third quarter lagged behind the first and second quarters’ 6% growth, he expressed confidence in a stronger fourth quarter.

“Even with the supply chain problems, manufacturing is growing at almost 8% — I think it’s 7.7% through July compared to the same period last year,” Costello said. “The three big buckets of freight, retail, manufacturing and construction activity are all growing. That’s why I say make hay now, because this is an economy that is growing and the parts of it that are growing are good for trucking.”

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Click for more FreightWaves content by Jack Glenn.

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Jack Glenn

Jack Glenn is a sponsored content writer for FreightWaves and lives in Chattanooga, TN with his golden retriever, Beau. He is a graduate of the University of Georgia's Terry College of Business.