The COVID-19 pandemic has affected trucking and the economy in unprecedented ways. 
 -  Photo: Jim Park

The COVID-19 pandemic has affected trucking and the economy in unprecedented ways.

Photo: Jim Park

The looming business and economic impact on the trucking industry from COVID-19 pandemic is “kind of like there’s a big hurricane coming in, and it’s one of the nastier storms in history. But so far you’re just seeing some waves on the shore.”

That’s the assessment from Jeff Kauffman, managing director for Loop Capital Markets and head of Tahoe Ventures, a transportation consulting company. “You know what’s coming, and it’s just starting to hit land. I think a lot of businesses haven’t really seen the brunt of it, even though they’re preparing for it…. we really haven't seen the brunt of what's about to happen in the next seven to 10 days.”

Tough Times for Some Trucking Operations

The early economic impact from the COVID-19 pandemic was mainly seen at the ports, because containers coming in from China were affected by the novel coronavirus there.

In recent weeks, as events have been canceled, trucking companies that specialize in transporting concerts and exhibits for trade shows have been affected. One fleet that specializes in hauling elements necessary for live events, which did not wish to be identified, told HDT that its world changed when Live Nation, one of the country’s largest concert promoters, announced it was suspending all live shows for the foreseeable future. “It was like a thousand parking brakes being snapped on all at once.”

Restaurants and bars have been ordered closed except for takeout in many places, and that’s affecting the foodservice industry. The International Foodservice Distributors Association projects the industry will lose $24 billion over the next three months as the COVID-19 pandemic shuts down restaurants, schools and hotels.

Fleets with customers in the automotive business are being negatively affected as car and truck makers enact temporary shutdowns. “You're going to see a lot of other manufacturing facilities related to that are going to cut back their hours or lay off their lines,” Kauffman says.

Next to be hit will be fleets serving retail that’s not staples like groceries and paper products. “You’ve only started in the last week or two to get these massive closures of malls and stores,” he says. Many shelter-in-place orders have been spreading rapidly since late last week. “You're going to start to see a lot of retail that would be going to stores that isn't anymore. And yes, there's curbside pickup and online delivery and online shopping, but it's not going to be able to offset all of that. So you're really going to see a very sudden sharp drop in freight volumes. Probably starting now over the next three to four weeks.”

‘Like Christmas’ for Some Fleets

Meanwhile, fleets hauling groceries, toilet paper, hand sanitizer, and all the other supplies people are stocking up on right now are all-hands-on-deck busy. That’s where some fleets, like the events fleet we spoke to, are picking up additional freight to keep trucks running.

Illinois-based Meiborg Bros. Trucking is one of those fleets. President Zack Meiborg told HDT in an interview, “Probably three quarters of what we ship is freight that, that falls under the exemption classifications” for the federal hours-of-service exemption for hauling COVID-19 relief loads.

“With all these places shutting down [under many state lockdown orders], you sure would think that because the supply of freight is less, that the quantity demanded would be less. Well, what we're not seeing right now is that, and I don't understand why. We're actually seeing that the spot boards are extremely busy, and some of our customers are extremely busy as well. Now we're heavy in the food sector, probably 75%. So we're positioned well from that standpoint. But I think a lot of people are trying to clear their inventories now because they're worried about the impending shutdown.

“So we're going to do our part and we're going to keep trucking until we run out of fuel, food, drivers or parts to fix the trucks.”

DAT Solutions, which tracks the spot market through its extensive system of load-matching services, reported that urgent orders of retail goods continued to drive spot rates up for van and reefer equipment last week. “Anxious shoppers buy as much as they can on each trip. Retailers, including e-commerce outlets, rely increasingly on spot market providers to re-stock shelves at a moment's notice, while truckers report long wait times at pickup and delivery points,” it said in an email.

“With all the upheaval, it's no surprise that rates are rising sharply, all over the country,” said DAT analyst Peggy Dorf in a DAT blog post March 23. “We track 100 high-traffic van lanes every week, and last week the rates rose on 88 out of 100, with only four lanes declining compared to the previous week. Those price drops were small as well as few in number, and in every case, the rates rose on the return trip.”

‘New normal’?

Kauffman points out that now that a quarter of the population is under stay-at-home orders and many others are practicing social distancing, suddenly families are cooking three meals a day from home. “And I bet you half the families out there don't [normally] cook a single meal. You know, we're one meal a day at most.” That means household budgets will shift from spending on concerts, eating out, and shopping sprees at the mall and spend a lot more of their budget on groceries… and yes, toilet paper. “You know, we joke about the families that are hoarding toilet paper, but if you've got a full house all day long for the next eight to 12 weeks, you're going to go through it.”

“The demand is spiking, there's no doubt about that,” says Kyle Kottke, general manager of Minnesota-based refrigerated fleet Kottke Trucking. “We’re receiving multiple recovery type orders... The inventory is just moving from a grocery store to your pantry. So the likelihood is we're setting up one heck of a roller coaster for the next month.”

At the same time, as retail has closed, more people are turning to online shopping and curbside pickup at big-box stores. Kauffman notes that Amazon has been so busy it announced it was hiring another 100,000 people. Walmart said it’s adding 150,000 new employees through the end of May.

“I think this is the new normal for a while,” Kauffman says, “and I think a lot of supply chains have to rejigger themselves to understand that the grocery and consumer products and pharmacy sector and the health sector are going to be the bigger part of our economic fortunes for the next couple of months.”

As DAT's Dorf wrote, "Supply chains are strained to the breaking point, and consumer habits have undergone a seismic shift. It would be tough to overstate the amount of change and the speed of transformation in freight flows. It could be a while before life returns to normal, and it may be a ‘new normal’ at that.”


“And now we're in a recession,” Kauffman says. “It doesn't feel like it yet, but we're in one, and it's going to feel like it in the next three to four weeks. We've heard some people saying you could get 15 or 20% unemployment for a short period of time. This is different than an economically led recession.” And of course, people without jobs aren’t going to spend a lot of money on goods that get transported by truck.

Goldman Sachs on Friday said it expects GDP to plunge by a record-setting 24% in the second quarter of 2020 because of the pandemic.

In addition, Kauffman says, if the country goes on a full lockdown as we’ve seen in China or Italy, which many health experts say is needed to keep our healthcare system from being overwhelmed with severe cases of COVID-19, “freight's not going to flow. Now it may only be for a short period of four weeks or six weeks or eight weeks. Then people start to move and heal and we start to see a recovery. But the question is, how long does it take for the virus to peak?” And how long will the recession last? That’s something neither health experts nor economists really know at this point.

“I don't think there's a really good model for forecasting this that we can use, because this is different than the last couple of recessions.”

What Fleets Can Do

Kauffman predicts that for much of the industry, the environment will become increasingly difficult over the next few weeks. “A lot of businesses are going to struggle to keep the trucks busy.”

It will depend a lot on sector; “It may be like Christmas if you're in the grocery sector or refrigerated goods sector. But if you're in the general freight space, you're going to have fewer route miles, fewer tons, fewer loads, and they are probably going to be some carriers that don't survive.”

“Keep your drivers busy to the extent you can. Be fiscally prudent. Coming out the other end, there’s going to be a large number of companies that are going to need to restock their supply chains, and they're going to need freight capacity and they're going to need partners. It's probably not a bad idea to get out there and actively talk to your customers and figure out what their needs are going to be on the other side of this, even if there's not a lot of business right now. But you're going to have to figure out a way in the short term to keep drivers so you don't emerge from this on the other side with a bunch of underutilized equipment and a lack of drivers. You've got to keep the business alive. It's going to be a very, very sudden decline. And we're right on the precipice.”


About the author
Deborah Lockridge

Deborah Lockridge

Editor and Associate Publisher

Reporting on trucking since 1990, Deborah is known for her award-winning magazine editorials and in-depth features on diverse issues, from the driver shortage to maintenance to rapidly changing technology.

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