Despite the massive wrench the pandemic's thrown into the economy, the trucking industry has remarkably had one of its most successful quarters in late 2020. This is thanks, in part, to the holiday season bringing with it its usual rush for merchandise while stay-at-home orders created an even more aggressive wave of online shoppers.
The lucrative end to 2020 in logistics surprised many, especially considering how bleak the job market looks out there as businesses shuttered and downsized throughout the year.
So if not a global pandemic to bring about a bad year, then what? Moreover, if the logistics industry can still have a fantastic quarter under such volatile circumstances, then what prevents them from having that same great quarter under more typical conditions?
Here are several factors that weigh in on the success of the logistics industry.
Fuel Prices Can Gas the Market Up (Or...Back Down.)
When thinking about what makes the trucking industry 'go', people will often think about it from an economic standpoint—in short, does the country have enough loads to keep our truckers on the road? This is a really important thing to consider when looking at how lucrative the logistics field currently is. However, it's only one factor.
Another, more obvious one and yet, perhaps, an easily overlooked one, is the price of diesel fuel. While it's great to know the number of sales is climbing and that there's a big demand for our carriers, the truth is no one will be going very far without fuel in the tank.
In 2010, despite how many sales were being made, the price of diesel to the gallon was going on to a two-year high, all the while, the country was still trying to get back on its feet from the 2008 recession, which really hampered the trucking industry.
Someone's Gotta Take the Wheel
Driver shortages have consistently shown up in polls when asking truckers about prevalent issues in the industry. As of 2020, complaints of a driver shortage have been the biggest concern—for the fourth year in a row.
As the market begins to recover from 'pandemic numbers', the driver shortage is predicted to reach the height it did in 2018, at around 60,800 drivers short.
With not enough drivers to take on the influx of jobs, the market is limited to the number of drivers when there's still more of a profit to be made. The matter of a driver shortage complicates further with how many other variables are tied to this such as driver pay, turnover rates, freight volumes, and regulations—all of which could vary and contribute to how many drivers are flocking to fill seats.
Mo' Money, Mo' Drivers
Going off of driver retention, driver pay not only can affect how many people are revving up to start their career in the logistics field but is also impacted by how well the field is doing. The prospects of truck driving can appear especially enticing during high-demand times like the holiday shopping season with the market saturated by both jobs.
However, the logistics industry gets caught in an economic catch-22 when the market isn't doing so well. That's to say, without many jobs, there isn't much pay and without much pay, there's no incentive for more drivers to come. With fewer drivers to take on the jobs, existing drivers are overworked but compensated the same, which can contribute to a high turnover rate. This in turn exacerbates the driver shortage issue as the number of jobs piles up.
Drivers are generally paid either by the load, by the mile, or by the hour, which has varying levels of appeal. Getting paid by the load on a trip that takes one driver coast-to-coast could absolutely have someone reconsidering their work-life balance. Meanwhile, getting paid by the hour for a series of 150-mile routes might not be cutting it for others.
It'd be nearly impossible to ensure a perfect year that has all the 'ideal' conditions in trucking because truthfully, there are just too many factors that come into play. Trucking plays such an integral role in the economy and in return, almost every little variable in the market feeds back to impact the logistics industry.
The good news though? Perfection isn't necessary for a great year in trucking as 2020 has proven and if history has told us anything, it's to never underestimate our drivers or carriers propensity to 'keep on truckin'!'
Are you interested in an alternative to the conventional trucking business model? If so, take a look at how Relaymile is reimagining trucking to provide drivers with a healthier, more consistent standard of work.
Comments