February 2021 The Roemer Report

Current Publication

Transitioning trucking’s transcendent year into something more sustainable

Characterizing last year as “transformational” for the trucking industry, the wonderfully named Sierra Alley of CDL Life noted that last year brought changes to the way we live, work and interact with each other. It was also the year the men and women of the trucking industry were asked to keep the country moving in the face of unprecedented challenges. Could not agree more with Ms. Alley.

New leaders, familiar if bumpy road ahead

Although trucking’s transcendence is having a transformational effect on the industry, Alley quickly pivots from describing the new face of trucking, to what the industry it is going to face in coming months amidst tremendous political and regulatory change.

For starters, she notes If confirmed, newly nominated Peter Buttiegieg will soon be the Secretary of the Department of Transportation. Buttigieg has been hand-picked for his support of the Whitehouse transportation plans, which Alley reports revolve around launching “a national effort aimed at creating jobs we need to build a modern, sustainable infrastructure now and deliver an equitable clean energy future.” We’ll see.

As a reminder, Biden is calling for a 10-year, $1.3 trillion plan which dedicates $50 billion for fixing highways and bridges, and another $5 billion for electric vehicle batteries. The plan reports CDL Life would also dedicate $400 billion for research and innovation of clean energy –whatever that means.

Teaching and testing allowed

Federal rules used to restrict third-party CDL instructors from administering skills tests to their students in the past. Not anymore. The new rule is designed to reduce testing delays, explains Alley, and during times of driver shortage, should help create flexibility for the industry.

In response to the COVID-19 crisis FMSCA also extended its CDL, commercial learning permit (CLP)/Medical Certificates waiver.

Freight rates on the road to full recovery by 2021

“Normal” freight rates and demand were understandably disrupted in 2020, but Alley says industry analysts expect freight demand to return to a more predictable, sustainable pattern in 2021. According to FTR Transportation Intelligence, the trucking freight market could fully recover by the end of 2021 as the industry adjusts to pre-pandemic trends, according to their forecasts.

Fuel costs to go flat as hedge technologies emerge

“With demand still significantly lower than historical averages and continued supply to carry through to 2021, prices will continue to remain relatively flat” said Emily Candib, director – fleet products for Merchants Fleet to CDL Life: “Traditional demand is expected to pick up in May-June and raise prices along with pressure on refineries to keep pace.”

Alley notes that the trucking industry has been on its own path towards regulatory sustainability. She also points out the coming integration of automated vehicles into America’s transportation system, which she reports “takes into account concerns about safety, security, and long term impact on the country’s long-haul trucking workforce.”

Frenetic and bumpy road

It has been a frenetic and bumpy period for the trucking industry lately, according to The Martec Group’s recent quantitative logistics study.

Martec Group explains that in 2019 through early 2020, the trucking industry was stabilizing and, again, there was confidence for growth into the foreseeable future—that is until COVID-19 hit. According to Martec Group the pandemic placed carriers into two distinct groups:

  1. Those carrying essential consumer goods such as groceries, pet food, hand sanitizer, cleaning and paper products; and,

  2. Carriers working in industrial, manufacturing and non-essential retail segments.

Martec Group explained the first group had to ramp up services quickly to meet skyrocketing demands while the second group still are still struggling and remain on the road to recovery.

Another forecast Martec Group offers for 2021 is that shippers will have a stronger hand on pricing given current market conditions. “However, lower rates are not predicted to last long,” they predict, “with demand likely to tighten through the first half of the year.”

Automation ready to meet the challenges ahead

For the trucking industry in 2021 Martec Group notes that third-party logistics looking to survive and thrive in this environment will be those effectively implementing automation technologies including blockchain, robotics and predictive analytics.

“Companies that most likely will fair best in this exceedingly competitive space,” intones Martec Group, “will use these types of technology to develop value-added services to benefit their customers and differentiate the brand.”

Therefore, top-of-mind goals for shippers should include reducing emissions and moving to alternative fuels. Further they explain, emerging commercial automation technologies are also ready to provide logistics suppliers the further insights they need to reduce emissions by optimizing shipping efficiencies.

Regardless Martec Group says to compete in 2021 and through the next decade, logistics companies will need to make sustainable freight practices a top priority.