The growth in the number of short-haul, local truck drivers outpaced that of long-haul truck drivers as the initial COVID-19 lockdowns eased and increased e-commerce shipping reshaped transportation networks, according to an analysis of US employment data by IHS Markit Pricing and Purchasing Service, a sister product of JOC.com within IHS Markit.
US Bureau of Labor Statistics (BLS) data shows employment at local trucking companies rose 7.4 percent from a low point in April through July, while long-distance trucking employment rose 1.3 percent from its nadir in May through July, the last month for which data are available.
In unadjusted raw numbers, local trucking employment climbed by 15,700 jobs to 229,100, while long-distance trucking employment, covering truckload and less-than-truckload (LTL), climbed by 8,700 jobs, the BLS data indicate. The seasonally adjusted numbers were slightly lower.
Compared with July 2019, unadjusted long-distance trucking employment was down 6.4 percent, while local trucking was only 1.6 percent below its year-ago level. Overall, truck transportation jobs were down 6.1 percent year over year in July, according to the BLS data.
The divergence, if it continues, has implications for US shippers and beneficial cargo owners. Although the surge in local or short-haul drivers will benefit those engaged in e-commerce, slower growth in long-haul employment could tighten capacity and boost truck pricing.
It could mean fewer drivers available for long-haul runs from ports inland or from manufacturing sites to distribution centers and retail stores. It could lead more long-haul carriers to raise or change pay as they battle with short-haul jobs some drivers may find more attractive.
Schneider National raised its pay for experienced drivers by 4 cents a mile in August, and other carriers are expected to follow suit as competition for truck drivers heats up. Much smaller Baylor Trucking this month raised pay to 75 cents per mile, with a 3,000-mile weekly guarantee.
Long-distance truckload employment actually hit its low point for the year to date in July, falling by 2,900 to 443,300, a payroll number 6.5 percent below peak employment for the year in February and 5.5 percent lower than July 2019, according to the BLS data.
Long-distance LTL employment hit its low point this year in May, falling 9.8 percent from January to 203,900 jobs. From May to July, LTL employment rose 5.2 percent, the BLS data shows
Production employee data differs slightly from the data BLS uses in the monthly employment situation report, which includes managers and administrative workers. Production workers in truck transportation are more likely to be truck drivers and dockworkers.
As jobs leap, pricing follows
The strong growth in local trucking employment immediately preceded a 20.4 percent jump in the producer price index (PPI) for local truckload service in August, propelled by demand for short-haul distribution of goods from warehouses to e-commerce fulfillment centers and stores.
The BLS PPI data showed a strong increase in the cost of local trucking overall in August, with the PPI for local general freight hauling services rising 14 percent month to month, although only 1.8 percent year over year. In July, the BLS local trucking PPI rose only 0.5 percent.
Increased e-commerce-related freight demand — not just for last-mile delivery but for regional distribution to fulfillment centers and stores — is likely behind the surge in local trucking employment and local trucking costs.
The US Census Bureau estimates e-commerce retail sales, not seasonally adjusted, increased 44.4 percent year over year in the second quarter, while total retail sales dropped 3.4 percent in the same period. Second-quarter online sales were up 37 percent from the first quarter.
Increased demand for local or regional drivers may also be diverting potential truck drivers from long-haul companies. Trucking executives at the recent Council of Supply Chain Management Professionals (CSCMP) 2020 Edge Conference said truck drivers are in short supply.
“The driver situation is probably getting worse than anything we’ve seen in 10 or 15 years, worse than in 2018,” Eric Fuller, president and CEO of truckload carrier US Xpress Enterprises, said at the conference. US Xpress expects truck driver turnover rates to rise.
“I’m not sure those people are coming back, because when they do come back there will be plenty of other opportunities,” Greg Ritter, CCO of XPO Logistics, said of unemployed truck drivers. Those opportunities include jobs at local and regional trucking firms.