Rates may be going up, but the number of trucking jobs continues to go down,
Four years of turmoil, new federal government policies, and higher operational costs are proving to further tighten capacity. Last month, more than 4,000 trucking jobs were lost, wiping out gains in April.
May’s job loss continues a purge of trucking jobs that began in February 2023. Since then, employment in trucking has gone down in all but five months.
Capacity peaked in October 2022 after a surge in new motor carriers entered the market to take advantage of skyrocketing rates in the aftermath of the pandemic. Consequently, a glut was created once economic activity normalized. Trucking jobs have been on a steady decline since.
Tanking rates and higher operational costs did a lot of the heavy lifting over the last few years. Yellow Corp. going bankrupt in 2023 took tens of thousands of drivers off the road alone. The current White House administration’s efforts to clean up the trucking industry likely contributed to more recent truck job losses.
Some economic indicators look promising. Across all industries, the country added 172,000 jobs, surpassing estimates of 105,000 jobs. Manufacturing jobs contributed to that increase, including more jobs in fabricated metals and electrical goods. That is likely the result of a boom in data center construction, which exceeded $50 billion in April, surpassing public transportation spending. That tracks with a surge in computer-related freight imported from Mexico.
However, Andrew King, director of operations at the OOIDA Foundation, pointed out that other important freight-generating sectors experienced job losses in May. That includes wood products, machinery, and motor vehicles and parts. Although the Institute of Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) is showing overall strength, trucking jobs continue to shrink.
“This might spur the FED to raise interest rates, which could put a damper on the current freight market recovery,” King said. “Manufacturing generates approximately 60% of all for-hire freight, so it’s the canary in the coal mines. As manufacturing goes, so goes trucking.”
David Spencer, vice president of market intelligence at Arrive Logistics, pointed to higher fuel prices and a shifting regulatory landscape. Specifically, the Supreme Court decision on broker liability.
“The decline in trucking employment continues to facilitate the ongoing volatility and market tightness seen over the past several months,” Spencer said. “Despite the significant lift in spot rates this year, many businesses find it unsustainable to add staff after years of minimal rate growth and continuous increases in operating costs, especially with inflation fears casting doubt on the stability of future demand.”
While tightening capacity and rising rates suggest trucking is finally in an upcycle, a variety of factors continue to cause volatility in the market and trucking jobs. LL
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