The economic and operational effects of COVID-19 on the trucking industry have been challenging and devastating. Many have warned the true storm for the trucking sector has yet to arrive, and the effects witnessed to date have been warning signs of what’s yet to come.
Not all operations have been equally affected, but tough times are on the horizon for some trucking companies. The early impacts of the pandemic were at ports, as containers shipped in from China were affected there first.
As lockdowns happened and with events canceled, companies that specialize in moving concert and trade show exhibit items were affected the most. Some fleets dedicated to hauling equipment for events have noted that economic hardship. Others in similar sectors have reported equal occurrences.
THE HARDEST-HIT SECTORS
The food industry has been especially hit hard. Many restaurants and bars have had to close, except for takeout outlets who have stayed afloat. This has left food-service trucks with dwindling sources of income. The International Foodservice Distributors Association predicts the industry will lose $24 billion during the last three months of 2020as the pandemic closes eateries, hotels, and schools.
Another group affected are those who service the automotive industry. Many manufacturers have enacted temporary shutdowns, which affects fleets in more than just their shipments. This limits their supply of new parts for trucks when they need repairs.
Those servicing some of the retail sectors may also struggle. Malls and retail stores are closing at an astounding rate worldwide, slashing demand for the transportation of various goods. While online shopping and delivery could offset the losses faced by trucking companies to a degree, it will take a while for the playing field to level.
THE SECTORS BENEFITING FROM THE PANDEMIC
Of course, fleets who haul sanitizer, toilet paper, groceries, and home office supplies are staying exceptionally busy. Some fleets are even adding more freight to their rosters to keep their trucks running, while others are expanding their operations to keep up with demand.
DAT Solutions has noted that urgent retail orders continue to drive up spot rates for reefer and van equipment. The company says nervous shoppers buy as much as they can for every trip, and retailers are relying more on spot market providers to restock shelves rapidly when other truckers face delays.
Now that a significant part of the world’s population is home, families are also cooking more often. This means that freight demand for grocery and food-related truckers will continue to soar, creating a new market trend many can capitalize on if they’re quick on the uptake.
As retail takes a downward turn, an increasing number of people are shopping online and relying on curbside pickups. Amazon has reportedly been so busy that it’s hired another 100,000 staff members to keep up, while Walmart has enlisted the help of another 150,000 employees.
PREPARING FOR THE UPCOMING RECESSION
While many experts are hailing these changes as a ‘new normal’, it’s important to remember that a recession is looming. If countries put in place secondary lockdowns as the second wave of COVID-19 hits, freight won’t be flowing at the same time. The trucking industry will eventually recover if this proves to be the case, but the time frame for this recovery will depend on how long the virus takes to peak, and how long the recession will last.
WHAT TRUCKING COMPANIES CAN DO
What can fleets do to counteract the potential effects of a second wave? That will depend on the sectors they operate in. Trucking industry professionals have warned some companies may struggle to keep their drivers busy while others will be rushed off their feet in the face of an upswing in demand.
Those in the grocery and refrigerated goods sectors aren’t likely to feel the pinch, even once the recession has arrived. Those in the general freight space may have fewer tons, fewer route miles, and fewer loads to haul. It’s realistic to expect that some carriers will not survive.
In the meantime, trucking companies should work to keep their drivers busy in any way they can. They should remain financially prudent and cut costs where necessary without compromising on safety or service quality. On the other end of the pandemic, there will be many companies that will need to restock their supply chains and they’ll need partners to help them achieve this.
If you’re a trucking company owner or associated professional, get out there, network, talk to your customers, and determine what their needs will be once the outbreak has died down. Even if business is not booming right now, you need to find a way to keep drivers in the short term so that your company does not emerge with under-used equipment and a lack of drivers.
Keep your business alive and kicking and be prepared for a decline in business and revenues. We are sitting on the precipice of some major changes in both the world’s economy and the trucking sector. It will be possible to survive, but only with the right approach and strategic partnerships.
Guest Author: Lori Dodson
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