High spot freight rates, and the availability of apps to easily book freight, have likely fueled...

High spot freight rates, and the availability of apps to easily book freight, have likely fueled the rise in new small fleets.

Source: FTR Analysis of FMCSA MCMIS Data Snapshots from March 2020 and September 2021

For more than a year, strong market conditions and extraordinary financial assistance from Washington, among other factors, have sparked an unprecedented surge in the number of newly authorized trucking companies — especially small ones.

From July 2020 through September 2021, the Federal Motor Carrier Safety Administration approved more than 104,000 new for-hire trucking companies, and that’s excluding private fleets that have added authority. These are huge numbers, but they do not account for the other side of the ledger. Even during periods of robust market conditions like today, many carriers exit the market for a variety of reasons.

To understand how the profile of for-hire trucking has changed during the pandemic, FTR compared a snapshot of data filed with FMCSA as of September 2021 to data filed as of March 2020 for carriers that held operating authority as of those two months. The number of purely for-hire carriers (excluding private fleets with authority) holding authority rose by more than 78,000, or nearly 39%, during the period. The number of one-truck for-hire carriers jumped 52%.

More important than the change in the number of carriers is the change in truck and driver capacity. This analysis is a bit more complicated, because carriers are required to update their profile data only once every two years on a staggered schedule. Therefore, the March 2020 snapshot includes carriers that had not updated their data during the industry’s growth in 2018 and 2019. However, 85% of the carriers in the March 2020 snapshot filed in 2019 or 2020. The staggered reporting also affects the September 2021 snapshot, of course, but two-thirds of carriers have filed this year. So while a comparison is far from precise, it should be a reasonable approximation.

One development that arguably distorts capacity changes is the extraordinary growth in parcel and local delivery during the pandemic. This capacity is an essential part of freight transportation, but these operations — UPS, FedEx, FedEx Ground Package, and Amazon Logistics — are fundamentally different and, arguably, are more competitors for driver capacity than sources of it. Together, those operations added about 11% to their truck fleets and 23% to their driver forces between the two snapshots.

If we exclude the parcel operations, the number of trucks rose 12.5% and the number of drivers increased 12% between the March 2020 and September 2021 snapshots.

For carriers struggling to find enough drivers, these figures might sound preposterous. The comparison probably does overstate the growth somewhat due to the reporting timeframes described above. However, FTR believes that the driver supply issues many truckload carriers face have more to do with supply chain distortions that are keeping spot market volume and rates high than they do with the overall supply of drivers.

Owing to the surge in new entrants, the greatest capacity growth has been among the smallest carriers. But to simplify the discussion, we bundled carriers into two groups: 100 or fewer trucks and more than 100 trucks. Carriers with 100 or fewer trucks saw a 20% increase in truck capacity and a 21.3% increase in driver capacity. Excluding the parcel operations, carriers with more than 100 trucks posted gains of 3.5% in trucks and 1.6% in drivers.

Smaller carriers have increased their market share modestly during the pandemic. Carriers with 100 or fewer trucks now represent about 58% of trucks and 57% of drivers, up from about 55% and 53% previously. This share could grow further if spot rates remain robust, and more fuel could be coming soon owing to the Biden administration’s proposal to require vaccinations or weekly COVID testing for workers at companies with 100 or more trucks.

This column first appeared in the November 2021 issue of Heavy Duty Trucking.