Trucking in the Year Ahead

Feb 1, 2021

After the turmoil of 2020, many crave some consistency and predictability for the year ahead in terms of the economy and transportation. While there’s reason to be optimistic as we enter 2021, many factors are at play that bring uncertainty to the industry.

First is the continuing COVID-19 pandemic. In parts of the country, cases surge; hospitals are beyond capacity. Governors lead their states with differing levels of restrictions. Plus, it remains to be seen how President Joe Biden’s efforts will combat the virus in the long term. Any retraction in commerce as a result of a spike in cases and necessary shutdowns could hinder the transportation industry like it did in spring of 2020. Ultimately, the speed at which the vaccine can be distributed will have a significant impact on the country’s COVID-19 strategy in the coming months.

A second—and troubling—risk factor for the industry is the capacity constraint caused by the truck driver shortage. Industry wide, many older drivers retired early in the pandemic, and others have had difficulty renewing or getting new commercial driver’s licenses due to closures of state motor vehicle offices. Moreover, thousands of drivers have been disqualified from driving since the Federal Motor Carrier Safety Administration’s Drug and Alcohol Clearinghouse launched in January 2020. According to Fleet Owner, the Drug and Alcohol Clearinghouse has already culled more than 40,000 commercial drivers from the industry who have either failed tests or quit before testing knowing they would fail.  

To combat the driver shortage, some carriers are increasing pay, moving to hourly pay, creating predictable work schedules, and allowing more home time to help attract and retain drivers. This is a continuation of the 13 percent increase in driver pay the industry has experienced over the past couple of years. Shippers can help as well, particularly by doing all they can to reduce detention time when a truck arrives to load or unload. Some carriers should adapt the job of truck driver to be more appealing to a new generation of younger drivers rather than trying to fit new drivers into the older generation model of trucking.

Finally, the industry faces the regulatory uncertainty of a new presidential administration and Democrat-controlled Congress. On Inauguration Day, President Joe Biden signed an executive order to freeze all regulatory activity—any Trump administration measure that had not been published on the Federal Register before Biden’s inauguration was halted. Among those affected by the executive order include the U.S. Department of Labor’s January 6 final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act, an issue that has long impacted trucking. The industry will also watch how Biden’s Department of Transportation (DOT), led by former Indiana mayor Pete Buttigieg, will handle two pilot programs initiated under the Trump administration: the hours-of-service (HOS) Split Duty Period Pilot Program to pause the 14-hour clock, as well as an under-21 military CDL pilot program.

In addition to assessing Trump’s midnight regulations, Biden’s DOT may give consideration to new regulatory initiatives, including mandating truck speed limiters, developing Compliance, Safety, Accountability (CSA) safety fitness ratings, creating sleep apnea criteria for drivers, and determining whether driver detention time should be regulated. Trucking may also be impacted by Biden's environmental and sustainability regulations and infrastructure plans. 

Overall, experts predict trucking demand will increase through 2021 as the economy recovers and capacity remains tight due to regulatory pressures and the driver shortage. FTR Transportation Intelligence forecasts truck loadings to increase more than 5 percent in 2021 after suffering a 4 percent decline in 2020. Between higher contract and spot rates, carrier profitability surged into the end of 2020 and is headed to record levels in 2021. In fact, FTR anticipates that spot and contract rates could climb 10 percent on aggregate this year. And as the vaccine allows suffering sectors—like services and manufacturing—to rebound, that will only mean more freight for the transportation industry. It is likely that 2021 will see a healthy and more stable truck freight market—as long as carriers are able to fill the seats with safe, professional drivers.

For more on the transportation and logistics industry outlook, read our white paper.