By all measures, the U.S. economy is slowly stumbling toward recovery after the devastation wrought by the COVID-19 pandemic. Year-over-year spending shows steady growth in a variety of economic sectors, but one industry is sounding alarm that the reality may not be as rosy as the government would have consumers think.
The freight trucking industry offers a glimpse into the real-time changes in the economy because so many of the goods buyers want are trucked from one place to another. In 2021 and 2022, shortages of drivers led to tremendous log jams that resulted in shortages of all sorts of regular goods.
Now, the industry is signaling that peril lies in too comfortable of a feeling about the recent reports of a growing economy. Experts in the industry point to several factors that are indicators of a looming problem. The shortage of available truck drivers has long been a point of focus as a concern in the industry, but at least one leader says it isn’t a shortage of drivers that causes the problem, but rather a lack of retention of drivers that has led to the shortage.
The trucking industry, or any form of transportation moving goods, is the ultimate economic indicator of where the country is heading. “It provides very valuable insights into the health of where the economy is going and into the mindset of the consumer.” https://t.co/rqHotEHgwv
— ZitoSalena (@ZitoSalena) November 6, 2023
President of the Owner-Operator Independent Drivers Association Todd Spencer told a Fox station in Virginia recently that plenty of new drivers come into the field each year to offset retirements. He said the problem is that the long hours and extensive unpaid time frequently lead to turnover.
The second side of the problem Spencer identified is the number of trucks on the road right now. During the pandemic, American consumers spent a lot more than usual and due to lockdowns, used delivery services at a higher rate than before. The trucking industry expanded, adding hundreds of thousands of trucks and drivers. Now that the spending spree is declining to normal habits, there are too many trucks for the available cargo.
The result is declining profits for truck companies. In turn, they offer fewer benefits and lower pay to drivers, leading to even more turnover as drivers jump from one company to another or leave the industry altogether.
A closer look at what consumers are buying highlights the problems for trucking companies. Among the most expensive items consumers buy is food -which has skyrocketed in price in the last few years- and fees -which have seen the largest jump in any spending category since 2021. Among the items that are not selling are big-ticket purchases such as appliances.
Rising fuel costs are also pinching the pockets of trucking companies and independent operators. Higher shipping costs for freight inevitably are passed on to consumers which could ultimately result in a recession as consumers limit spending.