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Trucking has already returned to pre-pandemic norms in many ways but there are still issues — including capacity — that are lagging behind, according to panelists at the SMC³ Jump Start 2021 conference on Jan. 27.
A lot of the industry has trended back to where it was before the pandemic, such as freight activity, while much hasn’t, such as capacity.
“November we had returned to a ton mileage basis to where we were at in 2019,” said Jason Miller, associate professor of logistics at Michigan State University. “November tends to be a lower ton mileage month in general because we’re entering the winter period. Plus we have the holiday season.”
Miller based his observations on an index his department produces to estimate trucking ton mileage. It looks at various government data and examines sectors that generate freight.
“We can see what happened is essentially activity fell almost 15% when the COVID-19 pandemic hit,” Miller said. “It picked up a little bit in May, but then we have this tremendous increase in June. We’ve been moving up slowly but surely in a roughly linear manner since that point up to October.”
Miller added activity is essentially back to where it was last year but with the caveat that November, December, January and February tend to be lower volume months for ton mileage. So overall activity may have not returned to normal, and the real question is where trucking will be in the spring.
“The natural response is then why have spot prices gone so high? Why has it felt like capacity is tight?” Miller said. “And the answer is, because employment has rebounded far less aggressively.”
Miller said the index showed activity was well above employment in the few years before the pandemic, indicating capacity is tight. But once the pandemic hit, employment plunged by about 7% and then demand sank even further at 15%. But that started to reverse as freight activity more quickly recovered.
“Many of you probably felt the market changed very quickly toward the end part of June,” Miller said. “June values were about the same so the indices are indicating neutrality. Then we have a major spike of demand as we’ve got the reopening occurring. But capacity is not coming back online on a proportionate basis.”
FTR freight forecast data has shown a similar trend when it comes to volumes recovering, but capacity remaining an issue.
Avery Vise, vice president of trucking research at FTR, told the conference that impending monthly data from his organization will be even stronger in general.
“The title of the session is that we’re forecasting a return to pre-pandemic levels, and basically we’re there,” Vise said. “We think total volume will be there this quarter. When we look at capacity utilization and rates we’re more than back to pre-pandemic levels.”
Vise also said that if the pandemic is under control faster, that’s going to probably have a positive impact on capacity, meaning the trajectory of the pandemic itself is going to play a huge role in how the freight transportation sector continues to recover.
“We had an extraordinary rebound [third quarter] that pretty much put us back to pre-pandemic levels overall,” Vise said. “We’re basically back and in fact, if you look at the van markets, dry van and refrigerated, we were back last year in [fourth quarter].”
Vise added the more heavy-haul and industrial sectors aren’t quite there yet and will likely take months more to fully recover.
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