America’s truckers and the wider logistics sector are facing multiple strains going into the holiday season, with rising costs and labor shortfalls threatening to derail certain firms over the crucial period.
According to a new report from Bank of America, the country's trucking firms are “contending with a limited supply of qualified drivers," an issue about which the industry has long expressed concern.
“Growing transportation bottlenecks are reemerging ahead of the holiday season,” wrote Bank of America economist Taylor Bowley. “Trucking capacity has tightened as driver availability remains constrained.”
This comes as firms continue to wrestle with elevated diesel prices, which have peaked amid a wave of bankruptcies experts say could soon impact consumer prices.
Trucker Shortage Spells Trouble
The U.S. is on the cusp of the holiday season, with spending increasing on shipping and other transportation services ahead of the year’s busiest shopping period. And a scarcity of available drivers, according to Bank of America payments data, has “pushed freight rates higher and driven strong transportation sector payroll growth, particularly among midsized businesses.”
Researchers said that the trucker shortage “reflects several factors,” including more stringent training and license requirements “and other regulatory changes that have reduced the pool of qualified drivers.”
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Stephen Burks, Professor Emeritus of Economics and Management at the University of Minnesota Morris, has pushed back against the idea of a chronic or significant lack of truckers in the U.S., while noting that temporary shortages or surpluses have historically self-corrected.
However, in early October, Burks told Newsweek that strong evidence of a meaningful shortage would be rising wages, something Bank of America has now observed.
“Rising payroll costs suggest labor shortages remain a challenge across the sector,” Bank of America wrote in a note on Wednesday. “As carriers compete for workers, higher wages and tighter trucking capacity could continue to put upward pressure on freight rates, especially in the spot market where smaller businesses are often most exposed.”
Burks also said that, beyond capacity and labor, “the new challenge is fuel prices rising faster than freight rates can adjust upward.”
Trucking Bankruptcies Mount Amid Rising Diesel
The price of diesel stood at $6.31 a gallon on Thursday, according to fuel price monitoring website AAA, up more than 70 percent from $3.63 at the same point last year. It has stayed above $6 since early September and hit an all-time high of $6.53 on September 21.
In late September, the economist Willy C. Shih, a professor of management practice at Harvard Business School, told Newsweek it could now cost around $3,000 for a truck to haul goods cross-country, based on $6.50-per-gallon diesel and assuming it gets seven miles per gallon.
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And amid these pressures, the supply chain-focused publication FreightWaves reported that a number of nationwide trucking firms had filed for bankruptcy protection, including major players like Xoco Transport and Globemaster.
This has coincided with a spike in logistics layoffs, the outlet found, though neither the companies filing for bankruptcy nor those reducing headcounts directly blamed rising fuel costs for their decisions.
However, Jacquelyn Omotalade, a supply-chain resilience and climate risk consultant, previously told Newsweek that such difficulties were a predictable result of near-record diesel prices.
Earlier this month, she said that these effects would be unevenly spread, impacting smaller carriers rather than the larger firms, which “usually have fuel-surcharge clauses, hedges or the balance sheet to wait out a spike.”
And if the trend continues, she warned that consumers could soon notice the effects in the price of their transported goods.
“When small carriers drop out, capacity tightens on the routes that depend on them: rural and regional lanes, perishables, and small retailers who can't negotiate freight terms,” she said. “Costs then arrive in food, construction and manufactured goods with a lag.”
This week, FreightWaves reported that at least 16 trucking companies had sought bankruptcy protection from September 18 to October 21.
Newsweek's reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Daniel Orton and Oliver Pritchard.