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The Numbers Behind April's Nearly 90,000 Job Losses In Trucking

With a staggering 88,000-plus jobs lost in the trucking sector in April, the question becomes whether the change is temporary or more structural.

Benzinga · 05/11/2020 17:16

With a staggering 88,000-plus jobs lost in the trucking sector in April, the question becomes whether the change is temporary or more structural.

Since trucking is an industry in which barriers to entry and exit are so low, calling anything a "structural" change is always a bit risky. One need only look back at the wailing of 2018 that a driver shortage had the possibility to seriously cramp the nation's economy for a long time to come. The Outbound Tender Rejection Index in SONAR, the leading indicator of trucking capacity, stood at 25.65% at its spring 2018 peak. More recently, it's been under 3%.

Everybody expected a big decline in the number of jobs; the question was just how big. The answer: very.

In the truck transportation segment in Bureau of Labor Statistics (BLS) data, 1,435,600 jobs were reported in April. That was down 88,300 from the prior month. It had not been that low since November 2014. The number of jobs had not been less than 1.5 million since December 2018. The second-biggest decline in the number of jobs since 2013 was in March 2013, when the sector lost 9,000 jobs.

Tim Hindes, the CEO of Stay Metrics, a company that studies job patterns and retention, said he saw the path to the numbers released Friday all way back in mid-March. Describing his client base as a "diverse cross section of carriers," Hindes referred back to Monday, March 16, which was pretty much the first week when it was clear to the nation that life was about to become very different.

"We heard from 10% of our clients [that morning] needing to pause the [StayMetrics] program," he said in an email to FreightWaves. "These were fuel haulers, food distributors to the restaurant industry, new car haulers, etc. We saw all the sectors whose drivers hit the ranks of the unemployed that week."

The figures from BLS are not all truck drivers. As FreightWaves Market Expert and Market Analyst  Zach Strickland said, "I'm guessing a lot of these jobs are back-office positions, not drivers." 

The fact is that truck drivers don't account for even 30% of the sector. In the truck transportation sector at the end of 2019, the BLS broke down the categories as follows: bus and truck mechanics and diesel specialists, 36.5%; supervisors and managers, 9.5%; laborers and freight movers, 27%; truck drivers, heavy and tractor-trailer, 18.16%; and truck drivers, light or delivery services, 8.2%.

The monthly employment numbers do not break down specific job categories. That comes a month later.

That means that the monthly report issued last week did have figures for March under the Truck Transportation heading, with 1,523,900 jobs. The breakdown: general freight trucking-local, 275,000 jobs; general freight trucking-long distance, 780,600 jobs (further broken down by truckload, 525,200 jobs, and LTL, 255,300); used household and office goods moving, 96,000 jobs; other specialized trucking-local, 233,700 jobs; and other specialized trucking-long-distance, 138,800 jobs.

In March, the number of truckload drivers was down 4,600 jobs and LTL drivers were down 1,300 jobs from the prior month. The total number of truck transportation jobs — 1,523,900 — was down 3,400, with scattered gains in other categories offsetting the TL and LTL job loss.

Though specific data on the number of driver jobs that disappeared in April is still a month away, Strickland said "most companies will not fire drivers since they churn themselves at such a higher rate. A lot of the smaller guys will just park their trucks."

Despite that "higher rate" of churn, US Xpress CEO Eric Fuller said recently that churn in the industry had definitely declined. "The last six weeks… we could probably go back 10-plus years and we probably haven't had a period of four to six weeks where we've seen our turnover where it is right now," Fuller said on the company's first-quarter earnings call with analysts April 30.

Hindes said the big drop in employed drivers likely came out of the nonessential services that he saw in the ranks of his clients who were pulling back. "I'm betting the majority of drivers that hit the [unemployed] ranks were with carriers supporting nonessential or companies directly affected by a shutdown," he said.

He also said he doubted the drop in drivers came from any significant exiting of the market by independent owner-operators, many of whom are blaming their current plight on brokers. "[Owner-operators] can't afford to stay home," Hindes said. "They have to keep running the iron regardless of price so they either went out of business during this or are breathing underwater."

Anthony Smith, FreightWaves chief economist, noted that among the job losses, flatbed drivers were likely to be particularly hard hit.

"Flatbed operators are getting walloped," Smith said. Industrial weakness that was already prevalent in late 2019 did not ease, "and now has been amplified by the current COVID-19 pandemic. Production came to a halt over the last few weeks, and the forward-looking new orders are not showing that there is a strong recovery imminent."