The bigger picture: Getting back to normal

by Laurie Turnbull
Dan Goodwill

The latest U.S. economic data “most closely resembles a horror movie with Q1 GDP posting the worst numbers since the global financial crisis, nearly a quarter of workers now unemployed, and durable goods showing the worst two-month streak since data collection began,” according Brett F. Ewing, chief market strategist, First Franklin Financial Services.

The job market halted its pandemic-induced collapse in May as employers brought back millions of workers. Tens of millions of American workers are still out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains worse than in any previous postwar recession.

All the same, economists warn that it will take far longer for the economy to climb out of the hole than it did to fall into it. Many expect an initial resurgence in at least some kinds of business. But it is not clear how strong that upturn will be, since a number of southern U.S. states are experiencing an uptick in new Covid-19 cases.

Volumes will remain soft 

How is Covid-19 impacting freight transportation? As the pandemic took hold in North America, business initially picked up as manufacturers and truckers struggled to restock stores with toilet paper, hand sanitizer, and groceries. Companies like Amazon hired thousands of new employees to keep up with demand.

For other businesses, volumes dried up almost overnight. Most categories of sales plunged at unprecedented rates. Even sales at “essential” health and personal care stores were down 10 percent.

The Canadian Trucking Alliance (CTA) collected responses from 100 carrier members, and performs a monthly survey of Today’s Trucking readers, representing responses from 246 trucking industry representatives.

The surveyed CTA fleets reported an average 27 percent drop in revenue, and a 300 percent increase in empty miles – with a drop in backhauls sacrificing margins and the ability to cover full costs. Sixty-three percent of respondents say customers have asked for payment deferrals or simply not paid for trucking services. More than half (52.4 percent) of those surveyed say their trucking businesses have laid off staff and/or downsized in the wake of Covid-19.

Since they cannot go out, today’s consumers are going online. In April, retail sales at non-store (mostly online) retailers jumped 8.4 percent, even as total retail spending fell. Sales via this channel were up 22 percent over the last 12 months.

Freight rates will rebound

Spot market rates dropped so much that some loads would cost more in operating costs to haul than truckers would be paid. Many contract carriers saw the number of loads tendered from their committed shippers drop significantly, forcing some into the spot market, especially to fill empty backhauls. A willingness to accept low rates to get the truck back to where they could pick up a committed contract load put more downward pressure on spot rates. Rates will edge upward to pre-Covid levels as demand increases.

Employee protection initiatives

In an HDT survey conducted March 27 through April 11, the most common steps companies had taken to protect the health of their employees were:

  • Communication and training about best practices, 67 percent;
  • Sanitized surfaces throughout facilities, 65 percent;
  • Provided drivers tools to reduce chances of exposure, such as gloves, masks, and hand sanitizer, 57 percent;
  • Added hand sanitizer stations in facilities, 56 percent.

Trucking Capacity

Since a significant amount of truck capacity has been removed from the market, there is a concern that as freight volumes recover, shippers will again find a shortage of trucks. While this is a distinct possibility, it is equally likely that with a slow and jagged recovery, capacity will be able to keep pace with demand.

Gulf Intermodal Services president Will Connell believes there is a possibility that once the pandemic and slowdown pass, the trucking industry will see more consolidation. “Not everyone is going to be able to weather this economic downturn as successfully as we’d hope they can,” he said. “I think you’ll see people determine that they need to consolidate to strengthen their resources.”

A vaccine is critical

With over 120 companies working on a vaccine, experts are optimistic that more than one will be found. This is the key to reigniting the North American economies and moving the trucking industry back to full employment.


Dan Goodwill, president of Dan Goodwill and Associates, has more than 30 years of experience in the logistics and transportation industries in both Canada and the U.S. Goodwill is a consultant to manufacturers and distributors, helping them improve transportation processes and save millions of dollars in freight spend. He has held several executive level positions in the industry. He can be reached at