Supply Lines: Headwinds for truckers

Supply Lines
Bloomberg

The North American trucking industry has had its own year of firsts, with record demand to haul goods, capacity constraints and the pandemic all making the roadways much tougher to navigate.

The surging need for road freight has exacerbated yet another issue: not enough qualified drivers in an era of stricter drug tests.

"Demographics, a new alcohol-and-drug clearinghouse and increased hair-follicle testing, as well as Covid-19 forcing many drivers off the road and limiting new ones, will be industry headwinds in 2021," said Lee Klaskow, Bloomberg Intelligence's senior logistics analyst.

The average age of a driver is 46, according to the American Trucking Association, and more than 55% are 45 or older. Many also face health challenges including hypertension and obesity, reflecting a job associated with long hours, little physical activity and limited access to healthy foods.

The pandemic has constricted the number of new drivers coming to the industry through driving schools, some of which are closed, while others have curbed enrollment because of social-distancing measures.

Nationwide database

Strict rules on substance use are also thinning the pool. Carriers can now use the Federal Motor Carrier Safety Administration's Drug & Alcohol Clearinghouse — an online database — to identify prospective drivers prohibited from operating a commercial motor vehicle due to a violations of drug and alcohol programs.

Reported transgressions exceeded 40,000 in September, with 52% related to marijuana. Despite being recreationally or medically legal in a growing number of states, cannabis remains an illegal substance for federally regulated truck drivers.

Companies are using more sophisticated drug checks such as hair-follicle testing, which can pick up usage from as many as six months before. A recent study by the University of Central Arkansas concluded that about 300,000 drivers would fail a hair-follicle test.

This would eliminate about 9% of drivers from the workforce, Klaskow said. The American Trucking Associations is lobbying for carriers to report positive hair-test results through a clearinghouse proposed by the FMCSA, which could further reduce the pool of qualified drivers.

To ease constraints, companies could:

  • Cast a wider net to attract and retain staff. "The industry needs to do more to make trucking a safe and appealing vocation for women," who account for about 9% of drivers, Klaskow said. The FMCSA also has a new pilot program to allow drivers aged 18 to 20 into the industry.
  • Companies could also ease the shortage with autonomous trucks, but the technology is best-suited for closed networks, and it will be decades before it's widely adopted, Klaskow said.

Charted Territory

After eight years of negotiations, talks among countries over the Regional Comprehensive Economic Partnership have concluded and the world's biggest trade pact will be signed on Sunday, Malaysia's trade minister said. Read more about the Asia-Pacific deal known as RCEP on Bloomberg.com here or on the terminal here.

Today's Must Reads

  • Tariff reminder | Barely 48 hours after President-elect Joe Biden pledged to "make America respected around the world again," the European Union was among the first in line to remind him that trans-Atlantic trade relations might be a good place to start.
  • Space invaders | British businesses are racing to secure extra storage space as the risk that the country leaves the single EU market at the end of the year without a trade deal threatens supply chains. Brexit talks are set to be extended beyond this weekend's informal deadline and continue in Brussels next week.
  • Reverse tendencies | Germany's auto-industry lobby urged Europe and the U.S. to reconcile on trade after enduring four years of hounding by President Donald Trump.
  • Mending fences | China indicated that it wants Australia to act to improve strained relations, saying Canberra should know what needs to be done to get ties back on track.
  • Baht signal | Thailand's government wants the central bank to temper a rally in the nation's currency, which is threatening efforts to boost exports to balance a slump in tourism revenue.
  • Cold reality | The roadmap sketched out by the Chinese company that has licensed Pfizer's Covid-19 vaccine offers a glimpse into the daunting logistical challenges faced by those looking to deliver the medicine when it's ready. Meanwhile, the cost of distributing vaccines to all 50 U.S. states and who will pay for that operation remains a huge stumbling block.

Save the Date

Next week, the Bloomberg New Economy will convene business and world leaders to address the world's most significant changes and challenges from green energy solutions to a post-pandemic recovery.

Register now to join our global town hall, Nov. 16-19: neweconomyforum.com

On the Bloomberg Terminal

  • A $31 trillion question | Bloomberg Economics explores the future of U.S. trade policy and the critical question of whether a Biden administration will continue an "America First" strategy or re-engage with the global economy.
  • U.S.-China clash | Confrontations in trade, technology and geopolitics are threatening to spill over into the financial system, says Bloomberg Economics, with the U.S. pondering sanctions against Chinese banks and China weighing the possibility of selling down its U.S. Treasury holdings.
  • Use the AHOY function to track global commodities trade flows.
  • Click HERE for automated stories about supply chains.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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