The US trucking business is becoming more short-haul-oriented than ever, with capacity and freight demand shifting away from longer-haul, one-way truck lanes as the coronavirus disease 2019 (COVID-19) pandemic and recession reshape the transportation landscape.
The length of trips taken by US trucks has diminished considerably during the COVID-19 pandemic, according to a survey by the American Transportation Research Institute (ATRI) and the Owner-Operator Independent Drivers Association (OOIDA). The survey provides evidence of a widely perceived shift toward local trucking as long-haul demand vanished in April.
The nearly 5,100 respondents to the joint ATRI-OOIDA survey indicated their number of local trips under 100 miles more than doubled in March and early April, rising from 7.8 percent of their total trips before the pandemic to 18.2 percent during the pandemic. At the same time, the number of long-haul trips of more than 1,000 miles dropped by 10 percentage points to 22.7 percent once the COVID-19 shuttered businesses nationwide.
The shift evident in the ATRI-OOIDA survey data provides context for the drop in truckload spot rates since March. The DAT Solutions average national dry-van rate per mile dropped from $1.87 in March to $1.64 in April, the lowest average in four years, and has fallen further to $1.51 to date in May, DAT said Tuesday. Reefer and flatbed spot rates are at five-year lows.
Rates in some long-haul lanes have fallen even lower, dropping below $1 per mile on occasion, according to JOC.com analyses. That’s led to sporadic protests across the country by truckers, particularly owner-operators and small carriers, who claim rates are too low to be sustainable, or that freight brokers are taking too big a share of the all-in rate paid by the shipper.
Truckers parked rigs near the White House May 1–3 and protested on highways and at state capitals with signs protesting cheap rates and, in Washington, DC, demanding regulation of brokers and shippers. US law, however, prohibits regulation of trucking rates on the interstate and intrastate level, and has since economic deregulation in the 1980s and 1990s.
“While the pandemic decreased trip lengths overall, the impact was most pronounced among smaller fleets,” ATRI and OOIDA said in their report, released Tuesday. “For fleets of fewer than five trucks, 40 percent of respondents reported decreased average trip length,” with nearly a quarter of the truckers surveyed reporting that their average trip length was “much lower.”
Short lanes, but high volumes
The ATRI-OOIDA data indicates capacity is moving from long-haul lanes to shorter hauls, as motor carriers, small ones in particular, scramble for freight. In fact, four of the top five lanes by volume for 53-foot dry van trailers are less than 100 miles, including Ontario, California, to Los Angeles; LA to Ontario; Dallas to Fort Worth, Texas; and Joliet, Illinois to Chicago.
The 24 highest-volume truckload lanes in the United States are all lanes with fewer than 500 miles, according to JOC.com analyses of data from various partners. That’s a strong indication of the amount of regional freight moving in the US economy even before the pandemic, as the average length of haul for one-way truckload freight shipments continues a long decline.
The shift noted by the survey likely reflects an increase in short-haul trips from local food and consumer packaged goods distribution centers to stores as demand for essential goods from food to toilet paper and medicine increased. The strong growth of e-commerce sales noted by UPS, FedEx, and XPO Logistics also may have increased short-haul truckload volumes.
A little more than one-fifth of the survey respondents described operations as being “somewhat higher” to “much higher” than normal; those were likely the truckers moving essential goods and medical supplies, ATRI and OOIDA said. Nearly 50 percent of those surveyed said freight levels were “somewhat lower” to “much lower” as the US economy contracted during the pandemic.
Specialized carriers, often flatbed operations, were most likely to report a drop in demand, with 68.3 percent claiming freight volumes were “somewhat lower” to “much lower.” About 50 percent of less-than-truckload (LTL) carriers said the same. Large publicly owned LTL carriers and brokers have reported decreases in LTL volumes in March and April, typically in the 20 percent range.
About 25 percent of all truckload respondents said their volumes were somewhat higher to much higher, reflecting an increase in demand for essential consumer goods and medical supplies. More than one in four respondents described freight levels as “about the same,” perhaps indicating they were well-positioned to tap remaining freight demand.
Little hope for quick recovery
The truckers surveyed had little hope for a quick economic turnaround as states begin to loosen restrictions on businesses and social gatherings. A plurality of respondents (45 percent) believed freight volumes would be “somewhat worse” or “much worse” over the next two months, with 41 percent indicating they expect volumes to remain “about the same.”
Only 14 percent of those surveyed said they expected volumes would be somewhat or much improved over the next two months. “Obviously, the pessimistic trend line stands out for the next several months, although there are some positive indicators,” the report said. An ATRI study of truck activity in six states noted a small uptick in activity in mid-April in some states.
An ATRI analysis of satellite-generated truck location data revealed a decline in activity ranging from 8 percent to more than 10 percent in April from February in California, Florida, Illinois, New York, Pennsylvania, and Washington. In March, an ATRI analysis of the same data showed trucks were moving faster through what typically would be congested areas.
The survey makes clear most trucking firms were not prepared for the pandemic. “Nearly 80 percent of owner-operators and small fleets do not have any type of disaster plan in place, whereas 70 percent of large fleets do,” ATRI and OOIDA said. Facilitating small-carrier disaster planning should be a priority for industry associations and government, they said.