Although many in big media — CNN, MSNBC, FOX News and others — have been pushing the narrative that a trucker shortage is to blame for the supply-chain problem, at least one major national news source is now reporting what trucking industry publications, such as The Trucker, have been writing about all along: Truckers, or a lack of them, are not the primary cause of the clogged supply chain. People are just buying more. And more. And more. The Associated Press is reporting that the supply chain, as it is currently configured, simply cannot keep up with the soaring demand. As previously reported in The Trucker, the Owner-Operator Independent Drivers Association (OOIDA) has continued to shout that a trucker shortage is mostly untrue. Yes, many major carriers are experiencing high turnover rates and are seeking more drivers, OOIDA President Todd Spencer wrote emphatically in an e-mailed statement on the issue, “but let’s be clear, the current supply chain crisis is not due to a shortage of truck drivers!” “Because the real bottlenecks in the supply chain occur at pickup and delivery points, adding more trucks and drivers will simply makes the lines longer, NOT faster.” On the counter argument, Chris Spear, president and CEO of the American Trucking Associations, has said that the trucking industry is short 80,000 drivers. That debate aside, truck shipments were up 1.7% in September, according to the latest statistics available. And as with ports, rail lines are moving more goods. Through early November, freight shipped by America’s railroads was up 7.5% from a year ago. And the number of for-hire trucking applications received by the federal government is up, too. Avery Vise, vice president of trucking for Freight Transportation Research Associates, Inc., said that during the period of 2017 through 2019, the Federal Motor Carrier Association (FMCSA) on average authorized around 3,400 new for-hire trucking operations per month. This was stronger than the long-run average, he said. For example, from 2010 through 2019, the average was fewer than 2,800 per month. Since July 2020, the number of newly authorized for-hire trucking firms has exceeded 5,000 every single month, according to Vise. Since April, that number has not gone below 9,500, and the average in May through October has been nearly 10,100 new for-hire carriers a month. The number in October was just barely below the record level in August, Vise said. “This is happening principally because of spot rates that are extraordinarily high and that are staying high for months on end,” Vise said. “That makes it very attractive for leased owner-operators (and quite a few company drivers, no doubt) to get their own authority. Again, perspective: Mid-2018 saw the highest spot rates ever to that point. Total rates in the spot market have been running above those rates since April and are still more than 50 cents a mile above that prior record. Now, one reason for that is that diesel prices are so high, but even if we exclude fuel surcharges, rates are still about 40 cents a mile higher.” Further contributing to this surge are the enormous levels of financial support extended to consumers through three rounds of stimulus in 2020 and early 2021, Vise added. “Plus, digital freight platforms have developed, and some carriers are moving away from the leased owner-operator concept altogether because of situations like California’s AB 5 law,” he said. A number of factors have come together to create an unprecedented situation.” Through October, FMCSA has already authorized more than 92,000 new for-hire trucking firms in 2021. On the strength of the second half of the year, that figure in 2020 was about 59,000. Before that, the most new carriers authorized in a single year had been just under 44,000 in 2018, according to Vise. Over the past 16 months, more than 113,000 for-hire trucking operations have received federal motor carrier operating authority. Of those, more than 100,000 still held authority as of Nov. 1 and represent about 195,000 drivers, according FTP’s analysis of data filed with the FMCSA. “We estimate that since March 2020, this surge in new entry has resulted in a shift of about three points in market share of trucks and drivers from carriers with more than 100 trucks to those with 100 or fewer trucks,” Vise said. “That would be a notable shift over several years, but in just 18 months it is extraordinary.” U.S. households are flush with cash from stimulus checks, booming stock markets and enlarged home equity have felt like spending freely again — a lot. And since consumer demand drives much of the U.S. and global economies, high demand has brought goods shortages to the U.S. and much of the world. Add the fact that companies are ordering — and hoarding — more goods and parts than they need so they don’t run out, and you end up with an almost unquenchable demand that is magnifying the supply shortages. The Associated Press report notes “that’s where a big problem comes in: Suppliers were caught so flat-footed by how fast pent-up spending surged out of the recession that they won’t likely be able to catch up as long as demand remains so robust.” That’s especially so because Americans, still hunkered down at home more than they did before the pandemic, continue to spend more on goods — electronics, furniture, appliances, sporting goods — than on services like hotels, meals out and movie tickets. All that demand for goods, in turn, is helping to accelerate U.S. inflation. Unless spending snaps sharply back to services — or something else leads people to stop buying so much — it could take deep into 2022 or even 2023 before global supply chains regain some semblance of normalcy. “Demand is completely skewed,” Bindiya Vakil, CEO of Resilinc, a consulting firm that helps companies manage supply chains,” told the AP. “This has now become more and more painful by the day.” One reason people may eventually stop spending so much is that everything simply costs more now. Consumer prices in the U.S. skyrocketed 6.2% over the past year as food, gasoline, autos and housing catapulted inflation to its highest pace since 1990. The laws of gravity suggest that the cumulative effect of so much inflation will eventually exert a brake on spending. Since April 2020, consumer spending on goods has jumped 32%. It’s now 15% above where it was in February 2020, just before the pandemic paralyzed the economy. Goods account for roughly 40% of consumer spending now, up from 36% before the pandemic. Production at U.S. factories rose nearly 5% over the past year, according to the Federal Reserve, despite periodic ups and downs, including disruptions to auto production caused by chip shortages. Imports have narrowed the gap between what America’s consumers want and what its factories can produce. From January through September this year, the U.S. imported 23% more than in the same period in 2020. In September, thanks to surging imports, the U.S. posted a record deficit in goods trade: Imports topped exports by $98.2 billion. Voracious demand for goods has accelerated as more people have become vaccinated in wealthier countries. Yet in poorer countries, especially in Southeast Asia, the spread of the delta variant forced new factory shutdowns in recent months and crimped supply chains again. Only recently did it start to recover. At the same time, many U.S. workers have decided to quit jobs that had required frequent public contact. This created shortages of workers to unload ships, transport goods or staff retail shops. Last month, 65 ships waited off the California coast to be unloaded at the Ports of Los Angeles and Long Beach — two weeks’ worth of work. The average wait: 12 days. That has since worsened to 78 ships, with an average wait of nearly 17 days, despite around-the-clock port operations beginning in October. Before the pandemic, ships had set arrival times and went straight to a berth for unloading, said Gene Seroka, the L.A. port’s executive director. Now, with Asian factory output at record highs, the port is moving record levels of goods. Yet it’s not enough to meet the demand. Seroka doesn’t foresee the shipments easing even next year. Retailers have told him they plan to use the slower months of January and February — if they actually are slower — to replenish inventory. In China, too, manufacturers are struggling with shipping delays, container shortages and cost increases. Shantou Limei International Ltd., which makes children’s toys in the city of Shantou, expects sales to fall 30% this year because of delays and costlier shipping. “The most serious problem for us is being unable to deliver goods on time because of the difficulties in securing freight containers,” said Frank Xie, the company’s general manager. “A lot of things have gone beyond our controls and expectation.” The Associated Press contributed to this report.
