With COVID-19, truck freight demand increases and changes.
Due to the coronavirus (COVID-19) pandemic, there has been an increase in demand for specific food staples and medical aid supplies, which has resulted in a jump in freight rates for trucks. Travel restrictions have both aided and impeded such efforts, and logistics are crucial in keeping the pandemonium brought on by COVID-19 to a minimum.
Jim Ritchie, president and CEO of Redstone Logistics, a Kansas City-based supply chain consultancy, logistics management, and freight brokerage company operating throughout North America, stated, “We’ve traded speed for price.” “Trucks are the way to go when you need to move stuff quickly.”
He claimed that while truck freight orders have increased net due to a shift in demand, rail freight demand has decreased.
According to Mr. Ritchie, trucking rates have risen by roughly 7% to 8% during the pandemic, though variations have been frequent. In certain instances, much larger increases for “immediate freight” have been observed. Regardless of whether COVID-19 cases have peaked and panic buying has subsided, he anticipates that freight demand and pricing will moderate in the upcoming weeks.
According to Mr. Ritchie, “continuous replenishment will ease the fear” that has caused people to panic buy necessities like food and even things like toilet paper.
He predicted that “people will stop buying more than they need once they see things are getting replenished.”
Mr. Ritchie emphasized that during the early phases of the pandemic, truck freight capacity was sufficient as consumer packaged goods (CPGs) were replaced with staple foods and medical supplies. He saw a roughly 50% drop in the demand for non-essential CPG freight. According to him, empty store shelves of essential groceries and other commodities weren’t caused by a shortage of vehicles or a truck’s inability to meet demand. When goods were unavailable for delivery, delays usually happened at the wholesale or distributor levels. However, producers of food and necessities (such wheat mills and toilet paper makers) promptly increased output in response.
Stay-at-home orders have reduced traffic in big cities, which has facilitated trucks’ ability to move more swiftly through the streets and complete deliveries, he said.
According to Mr. Ritchie, the trucking sector will have a “bullwhip effect” on demand for trucks when the current rise in demand eventually gives way to lower demand in a few weeks or months.
After declining 0.3% in January, the American Trucking Associations’ February for-hire truck tonnage index increased 2.6% from February 2019.
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According to Bob Costello, chief economist at the ATA, “the trucking industry was in a fairly good place before economic impacts hit from the health crisis.” “Prior to a slowdown as the economy contracts in the COVID-19 emergency, trucking volumes will be favorable for consumer staples and other commodities.”
The average on-highway price paid for diesel gasoline in the week ending March 30 was $2.59 per gallon, according to the US Energy Information Administration. This is a 7½ decrease from the previous week and a 49¢ decrease from a year ago.
According to Mr. Ritchie, “lower fuel prices have been a big plus.”
Truckers and the trucking sector have benefited from the US Department of Transportation’s temporary regulatory easing, according to Mr. Ritchie.
Similar to trucks, railroads were granted some temporary regulatory relief as a result of COVID-19; however, this relief was typically contingent upon the existence of workforce shortages and other COVID-19-related restrictions that could impede railroads from meeting deadlines for required safety tests and inspections or other requirements.