Many independent truck drivers are starting to see lower rates and increased fuel costs, says Lewie Pugh, Executive Vice President of the Owner-Operator Independent Driver Association. Joe Raedle/Getty Images
The American trucking industry moves a huge part of the nation’s freight each year. Trucks moved over 10 billion tons of freight in 2020 accounting for 72.5% of domestic tonnage that year, according to the American Trucking Associations. Some drivers during the pandemic saw lucrative pay rises from companies trying to combat supply chain difficulties — Walmart in April raised its starting salaries for long-haul drivers to up to $110,000, among the highest rates in the nation.
However, the industry’s recent boom may soon come to an end. Lewie Pugh is a former truck driver of over 20 years and executive vice president of the Owner-Operator Independent Driver Association. He said, “With inflation starting to rise and the economy slowing some, the worm is turning now with the price of fuel and stuff.” In addition, Pugh says that drivers being paid through the spot market, which uses market prices to determine compensation instead of pre-determined contracts, are seeing lower pay.
“Marketplace Morning Report” host David Brancaccio checked in with Pugh about the latest in the trucking industry, including how drivers are dealing with high gas prices and why turnover is so high among truckers. The following is an edited transcript of their conversation:
David Brancaccio: So the economy surged coming out of the depths of COVID. And there was a surge in hiring for truck drivers. I’ve seen these offers of pay for people who drive for the bigger companies, they were seen to be getting sweeter by the day. How’s it going now, from your perspective, as we get into high summer?
Lewie Pugh: Well, you are correct, it did surge, and truckers probably over the last year and a half since the first glut of COVID, when it first hit, have probably in most reports made more than they’ve ever made. Of course, with inflation starting to rise and the economy slowing some, the worm is turning now with the price of fuel and stuff. And yeah, as far as drivers, some carriers have upped their game, upped their ante, per se. We still think they need to put a lot more. Driver salaries, especially, have not kept up with inflation since the 1970s. If they had, truck drivers will be making six figures easily by now and most are not. The vast majority are not and a lot of the pay, it seems really good until you dig down into it and realize how many hours a trucker really works per week: about a 70 to an 80-hour work week.
Brancaccio: Yeah, 70 to 80 hours. And so the salary, you have to kind of prorate that in your head when you’re hearing about the salaries. Let’s talk about what I see at the pump here. When I stop at one of the diesel truck places and I look at what people are paying for diesel, I don’t know how they can make it. But I want to understand how it works. Why can’t the independent truck driver just pass along those fuel costs to the customer and say, “Here’s the fuel surcharge, you eat it not me?”
Pugh: Well, some can. A lot of it depends on kind of how your business is operating, how you’re set up. In trucking, we have what they call brokers, which work as an intermediary between shippers and truckers. Usually, the broker has the contract with the shipper or receiver. They look for a truck and they bid that out to usually whoever they can get to haul it for at least amount. When you deal with brokers and stuff, it’s a lot of times it’s harder to get that fuel surcharge, especially if they’re an area where they know there’s a low volume of freight, the broker may get a fuel surcharge, they may have a surcharge in that contract, but they don’t have to pass it along. There’s no regulation or law saying they do. Now if you’re an owner-operator, which is what we try to get guys to do, and push for guys to do, who have your own contracts with your own shippers and receivers. A lot of times you, they, have that fuel surcharge worked into their agreement. And then also there’s a third case here where owner-operators are leased to a bigger trucking company. And a lot of those companies pass the fuel surcharge along as they get it but a lot don’t as well. So it just sort of depends on the nature of your business and how your business is set up.
Brancaccio: Let’s get back to this point that you made about maybe the worm is turning now. There’s a lot of people trying to figure out if what the central bankers are doing the Fed with higher interest rates is beginning to slow growth in the economy because that is the plan. That’s what they’re trying to do to wipe out inflation. Do you think the truckers are beginning to see that we’ve come down the other side from the boom? Or is it still running pretty hot?
Pugh: Yeah, especially the guys we were talking about before. You call it the spot market—the people use the brokers—the spot market. Those guys are already starting to see it. We’re hearing lots of guys calling in here with a lot lower rates on the spot market. And my experience is almost 25 years of owning my own truck and being in the business. It seems like truckers are a good barometer of the economy because usually you feel the economy getting worse before anybody else really does, and then you feel the economy start to get better before anyone else does. Just gotta think because they’re kind of out there on the front line and in the shipping chain and in [the] supply chain. But yes. Now, contract rates to guys who have their own contracts with shippers and receivers directly. Their rates are staying steady, and they seem to be doing just fine right now. But what we usually see is when the spot market starts to drop, as they drop, people start looking for other things to do, which will then entail that this drop in the market will spin over into the contract phrase because guys will try to go in and undercut the rates and get a contract for less than what the guy that has the contract now has.
Brancaccio: So in the spot market for this, you’re seeing a little bit of slowing here?
Pugh: Yeah, we’re seeing quite a bit of slowing in the spot market. Other places that we watch organizations who really keep an eye on this stuff, they’re all showing downing trends in the spot market rate as well. I think probably it’s kind of a twofold thing. One, with the economy slowing that’s going to make the spot market go down just naturally, but also I think with trucking being so high, sometimes [for] brokers their contracts are for less than what they can get stuff moved for. I think that’s kind of what we saw after COVID, the first glut and COVID. And so brokers were taking out of their own pocket to get help get their freight moved. And so they’re probably trying to gain some of their losses back.
Brancaccio: And here’s something separate I want to ask you about, it’s something people may not fully appreciate about your industry: turnover among drivers. Very high in that industry, right?
Pugh: Last I looked, I think, is 94%, 95% turnover in the long-haul sector. Guys who run regional, your guys who work for LTL [Less Than Truckload] carriers, they don’t have a big turnover, but they have a better lifestyle, they’re usually paid better. So there’s not the turnover there. But in the long-haul sector, yes, we’ve heard for years and years of driver shortage and how there’s a huge driver shortage. We don’t agree with that. I don’t agree with that. There’s a huge turnover problem in the industry. There’s over 400,000 new CDLs [Commercial Drivers License] issued every single solitary year. But guys come into this industry, and like we talked about in the beginning, the pay and everything sounds really good until you come into the industry and see how long you have to work. You have a lot of time that you don’t get paid for. Detention time sitting at shippers or receivers that you never get repaid for. So you’re going away from home for 200-plus days a year. And it costs a lot of money to live on the road as well. So guys find out that this job really isn’t all that it’s cracked up to be so they leave and go somewhere else.
Stories You Might Like
Truckers block Oakland port to protest a California labor law
How can trucking companies get more drivers on the road?
The drivers of this economy: Long-haul trucking in the pandemic
Truckers are in short supply. Drug testing doesn’t help.
A freight time to be in shipping
Does trucking have to become a better job to end the driver shortage?
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
- Poor traffic predictions.
- Cost of fuel.
- Poor weather predictions.
- The cost of fleet maintenance.
- A lack of skilled drivers.
- Poor routing strategies.
Truck driving in America remains in crisis. There are 80,000 fewer drivers on the road than needed, according to the American Trucker's Association. This dearth is having a ripple effect on the supply chain crisis. Approximately 71 percent of all freight moved across the United States was carried by trucks last year.Has freight slowed down? ›
The freight industry is slowing in general, but it's not so much falling off a cliff as returning to earth from the soaring heights of a hot cargo market that peaked in the fourth quarter last year.What will happen to the trucking industry in 2022? ›
In 2022, a year that promises a hold-over in heightened demand, lower-than-usual supply levels and increased costs across the board, freight rates will rise. Spot prices, which indicate the going rate for transportation services, increased substantially over the past 12 months.What is the biggest problem in the trucking industry? ›
Truck drivers consistently rank parking availability as a top concern in most surveys. When drivers cannot find parking, they must park illegally or continue searching, often violating federal hours-of-service (HOS) rules.What is causing the trucking crisis? ›
The cost of living has greatly increased but wages have not kept up with the cost of living. In fact, wages are so low with some trucking companies, that it's simply no longer worth the sacrifices the drivers make for the job. Interesting to note this started with Deregulation.
As a result, the trucking industry hauled 72.2% of all freight transported in the United States in 2021, equating to 10.93 billion tons. The trucking industry was a $875.5 billion industry in that same year, representing 80.8% of the nation's freight bill. Learn more here.What are the biggest challenges facing the trucking industry in 2022? ›
After spending five years as the number one concern, the Driver Shortage dropped one position in 2022 to rank second overall. The lack of available Truck Parking rose one spot this year to the third-ranked issue, followed by Driver Compensation.Will the trucking industry get better? ›
Despite the challenges, many experts predict that the trucking business will grow through the rest of 2022.Is trucking business good right now? ›
Higher Freight Volume
In 2022, a 24 percent increase in freight tonnage is likely, according to the American Trucking Association. As a result, revenue is predicted to increase by 67 percent in the trucking industry.
All in, we believe trucking spot rates could fall 25% to 35% from their peak in early 2022 to their trough, potentially by the end of 2023.”What is the future of the trucking industry? ›
Trucking industry trends and the future of trucking
A shift from same-day to same-hour delivery. 50% of fleets with some level of autonomy and trucks connecting to human-driven agile 'last mile' delivery in cities and regions.
Last year, trucking companies in the United States suffered a record deficit of 80,000 drivers, according to the American Trucking Associations, a trade association. Given that trucks move 72 percent of American freight, a lack of drivers spells substantial disruption.Is the trucking industry struggling? ›
The American Trucking Association estimates that the 2021 driver shortage capped at 80,000 drivers. According to experts, if this current trend continues, the trucking industry could need more than 160,000 drivers by 2030.What would happen if the trucking industry shut down? ›
U.S. mail and other package delivery will cease. prices and long lines at the gas pumps. Without manufacturing components and trucks for product delivery, assembly lines will shut down, putting thousands out of work.Is the trucking industry in decline? ›
The industry was around 51,000 drivers short in 2017, up from 36,000 in 2016. Late last year, the ATA estimated that the industry is short more than 80,000 drivers, a number that could rise to 160,000 by 2030 as drivers continue to retire.What would happen if the trucking industry stopped? ›
According to the article, if trucks were stopped for twenty- four hours: hospitals would run out of basic supplies, U.S. mail and other package delivery would cease within one day, food shortages would begin to develop, and automobile fuel would dwindle, leading to high prices and long lines at gas pumps.Is there still a truck driver shortage 2022? ›
SAN DIEGO — The truck driver shortage eased slightly in 2022, after more than 90% of TL carriers raised pay last year, but the industry still faces its second-largest number of vacancies on record, American Trucking Associations Chief Economist Bob Costello said Tuesday.Why are so many truckers quitting? ›
Many truckers are quitting because of low pay combined with difficult working conditions. Truck drivers can spend days at a time behind the wheel of their truck, spending nights in gas station parking lots, or even on the side of the road.Why are people leaving trucking? ›
Trucking companies are struggling to retain drivers, wreaking havoc across the supply chain. Joe Kattermann trains truckers at a mega carrier, taking them through their first weeks in the industry. Kattermann says the high turnover is down to low pay, time away from family, and living in a truck.
The supply chain is improving and past the worst, according to Derek Leathers, CEO of Werner Enterprise, which moves freight for Walmart and Target. But, he warned, headwinds for truckers will keep rates well above prepandemic levels for the rest of 2022. “You'll see rates hold up for the remainder of the year.Will the trucking industry grow? ›
Increase in the Freight Transportation
The American Trucking Association's US Freight Transportation Forecast has stated that in 2022, freight trucking will undergo a 24% increase. This consequently means an increase in revenue by 67%, which is beneficial for the trucking industry.
The semiconductor shortage and supply chain disruptions have caused heavy-duty truck factories to fall short in terms of meeting consumer demands.How long will truck drivers be around? ›
According to the BBC analysis, there is a 50% chance that machines can take over all human jobs in 120 years. But some fields are at greater risk than others. Let's focus on one big one: trucking. Truck drivers may be replaced by automated technology as early as 2027.Is trucking still worth? ›
Truck drivers can earn a good income. How much does a truck driver make? On average drivers earn $50,909, while Over The Road (OTR) drivers who haul freight over long distances earn on average nearly $64,000 per year. Private fleets- those that deliver freight only for one company- often have much higher levels of pay.Is it worth starting a trucking company 2022? ›
Following a significant hike in rates during 2021, early predictions point to truckload rates being up again in 2022. These trends are likely to establish new highs for the industry — it's a great time to start a trucking company!What states move the most freight? ›
Top 10 Freight Shipping States.
- 1) New York. New York City is one of the most vibrant transportation hubs in the nation, consistently ranking first among U.S. cities in truck freight volume.
- 2) Houston. ...
- 3) Minneapolis. ...
- 4) Dallas. ...
- 5) Kansas City. ...
- 6) St. ...
- 7) Chicago. ...
- 8) Cleveland.
It is estimated that freight rates will be corrected and will drop by 30-40% in 2022. The fact that freight rates drop is good news, especially for importers. However, it is highly unlikely that they will drop back to the 2019 level.What trends are affecting the trucking industry? ›
- Transportation of goods is less complicated as a result of advances in technology. ...
- Tackling the shortage problem of freight truck drivers. ...
- Rising inflation and continual supply constraints. ...
- Congestion at ports and bottlenecks in the supply chain.
With 70% of all goods in the US are moved by the trucking industry – which is an USD$800m+ economic value – we're going to need more trucks and truckers on the road. The struggle is that in 2022 there is an estimated 80,500+ shortfall in drivers needed in 2022 and this figure is forecast to reach 162,000 by 2030.Is the trucking industry going to get better? ›
While the trucking industry might not be in the best market situation currently, some experts are enthusiastic and optimistic about 2023 and all it is likely to bring.What are the three major problems faced by road transport? ›
Five problems faced by road transport in India are given below: i The volume of traffic and passengers is very large. ii Road network is inadequate. iii Half the roads are unmetalled which limits their usage in rainy seasons.How can we solve the problem of poor transport? ›
- 1. Development of Additional Road Capacity: ...
- Traffic Management Measures: ...
- Effective Use of Bus Service: ...
- Parking Restrictions: ...
- Promoting the Bicycle: ...
- Encouraging Walking: ...
- Promoting Public Transport: ...
- Other Measures:
New data from the federal government reveals that transportation demand and investment in 2020 plummeted, contributing to the largest decline in national gross domestic product on record. In 2020, transportation demand dropped by more than 15% compared to 2019, according to the Bureau of Transportation Statistics.How does the issue in transportation affect people's lives? ›
Transportation costs can be a significant financial burden, particularly to lower-income households. Transportation activities impose significant indirect and external costs, including traffic congestion, road and parking facility costs, accident risk, plus air and noise pollution.Why transportation problem is important? ›
The transportation problem represents a particular type of linear programming problem used for allocating resources in an optimal way; it is a highly useful tool for managers and supply chain engineers for optimizing costs.Is trucking business going down? ›
The ATA's U.S. Freight Transportation Forecast to 2022 reports that freight tonnage this year will rise by 24%, with a predicted 66% increase in revenue. And most of that will go to the trucking industry, with freight rail demand expected to fall.