Trucking forecasts optimistic for 2021, but risks remain
The pandemic still poses the biggest risk as the industry moves ahead in 2021. Trucking is also staying laser-focused on regulatory initiatives from the incoming Biden administration.
As the industry kicks off in 2021, there is a lot of reason for optimism, according to Avery Vise, vice president of trucking at FTR Transportation Intelligence. A strong rebound in the consumer economy is expected to continue, with more than 5% growth expected among all truck freight segments, Vise projects.
Although FTR’s outlook for 2021 is bullish, Vise told FleetOwner there are still looming risks of concern.
“The biggest one being the pandemic itself and whether the elevated levels we have been seeing the last couple of months will hold or even get larger in the coming months to the point where we need some type of retraction in commerce,” Visa explained. “We have the vaccine rolling out, but we don’t know yet whether the vaccine will be able to be rolled out fast enough to make much of a difference in the next few months.”
Another concern carrying over from 2020 is the constraint that driver supply is putting on the supply chain. FTR had projected this would be a big deal in 2020, especially considering the Drug & Alcohol Clearinghouse has culled more than 40,000 commercial drivers thus far and could be causing people to rethink whether they want to be truck drivers.
Dave Osiecki, President of Scopelitis Transportation Consulting, projected that the Drug & Alcohol Clearinghouse will continue to impact the driver supply, with some tens of thousands of drivers every year that will be disqualified because of the violations.
“Right now, we are seeing only 11% of the drivers going through the return-to-duty process and then getting back in the seat,” Osiecki pointed out. “We will continue to lose a significant percentage of drivers who violate.”
“Now, 45,000 sounds like a big number, but when you look at 3.5 million CDL holders, you have to put it into context,” he added.
The pandemic has also compounded driver supply and played a significant role in reducing the number of new drivers entering the industry. After an assessment reviewing all CDLs issued, the Commercial Vehicle Training Association projects that the industry will likely see roughly 40% fewer commercial driver’s licenses (CDLs) issued by the end of 2020 than it would have had absent the pandemic.
“We are heading into 2021 where we have a reduced number of incoming drivers and an increase in the number of drivers who have exited,” Vise explained. “Then, layered on top of that, we have the Drug & Alcohol Clearinghouse, which is something we would have had anyway, but we never had it before. So, it’s a stress to the market.”
Looking further into 2021, Vise surmised that even as fleets increase driver pay, it’s going to be impossible to restore the driving force to the level it would have been without the pandemic. Vise added that the driving force will likely be restored, but not until the pandemic is under control.
“At the end of the day, the industry has to find drivers,” Osiecki said. “That’s the biggest strain on capacity, and I don’t see that fundamentally changing in 2021.”
Regulatory initiatives to watch
Aside from tight capacity and a demand for drivers, the industry will be laser-focused on what regulatory initiatives come out of the incoming Biden administration.
On Inauguration Day, Jan. 20, President-elect Joe Biden will sign an executive order (for all industries) to freeze all regulatory activity. That means any measure that has been developed but hasn’t been pushed over to or published on the Federal Register will be stalled.
As it relates to trucking, that executive order will stop or slow down any of Trump’s remaining “midnight regulations.” That executive order would likely impact the State of Washington’s meal and rest break preemption determination for commercial truck drivers and the U.S. Department of Labor’s Jan. 6 final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act.
Osiecki projected that Biden will likely delay the effective date for that independent contractor ruling to allow for more time to review the policy aspects. Then, the administration can choose whether or not it will begin to unravel the rule, he explained.
“That rule is dead on arrival and would be undone by the Biden administration because it is one of the so-called ‘midnight regulations’ that is announced too close to the inauguration,” Vise said. “That’s one of the big areas that I think there will be some immediate change.”
The industry will also be keeping its eyes on two pilot programs initiated by the Trump Department of Transportation (DOT): the hours of service (HOS) pilot program to pause the 14-hour clock as well as an under-21 driver program.
In addition, Osiecki explained that the Trump administration had wanted to put its stamp on the Compliance, Safety, Accountability (CSA) scoring system. FMCSA engaged the National Academy of Sciences to look at some statistical challenges within that system. The academy recommended the Item Response Theory (IRT) in 2017 as an alternative to the CSA Safety Measurement System scoring method. In order to put something in motion before leaving the office on Jan. 20, the Trump-led DOT would have to issue a Federal Register notice to explain what the changes are going to be.
“If it doesn’t happen, I don’t think it happens within the first couple of months of the Biden administration,” Osiecki said. “That is going to be an issue that is of some importance for those who come into the DOT—to take a look at the CSA program and the Item Response Theory idea to see if they want to make some changes as well.”
Osiecki listed additional trucking initiatives, which were included in the House-passed INVEST Act, that Scopelitis believes will get serious consideration under the Biden administration:
Speed limiter mandate: This would give the DOT the authority to impose speed limiters and the use of speed limiters on new trucks and possibly existing trucks. The rule was initially proposed by the Obama administration and then shelved by Trump.
Upgraded rear trailer underride guards and side guards. Rear impact guards have been required on most commercial vehicles for nearly 70 years, but they are not included on the list of components to be checked in the required annual vehicle inspection. On Dec. 29, FMCSA published a Notice of Proposed Rulemaking to address the matter. The major concern is whether the Biden-led agency would issue regulations to upgrade the standard for the rear underride guard, as well as put in a new rule to put side underride guards on trailers. “That’s not a rule today, and that would be a big deal for the industry,” Osiecki advised. “It has been a big deal for a lot of years, and the industry has pushed back because of the weight and cost-benefit analysis.”
CSA safety fitness ratings. The idea of basing safety ratings on CSA scores were supposed to be part of the CSA program 10 years ago, and then it kept getting pushed back, before ultimately being stalled by Trump, Osiecki said. “That idea is likely to get traction again,” he added. “Whether or not they change the underlying CSA methodology and the way they develop the scores, it is likely that the Biden administration will take a hard look at using those scores to assign safety ratings.”
Sleep apnea criteria for drivers. “The Trump administration said, ‘We’re not doing that,’” Osiecki said, noting the Biden administration will likely review the idea and determine whether there needs to be a standard.
Driver detention time and whether it should be regulated. The Biden administration would likely consider whether it should be mandated that drivers be paid for detention time after a certain period or shippers be penalized in some way for detaining drivers.
HOS rule changes. Based on the previous administrations—Clinton, Bush, Obama, and Trump—all four took a shot at changing hours of service rules. The Trump administration succeeded in changing HOS in September. “I believe the Biden administration will follow suit,” Osiecki said. “I believe they will probably start a rulemaking to begin to roll back some of those September 2020 changes.”
If the Biden administration does try to roll back some of the Trump-led HOS changes, Osiecki believes there would be an industry-wide fight against the move.
FTR’s Vise added that in order for the Biden administration to undo Trump’s HOS rules, Biden’s DOT would have to launch a new rulemaking to reverse it. “That would take the time to get that going assuming they would even want to do it,” Vise explained. “Realistically, we would be well into 2022 before it would even take effect.”
One of the most controversial elements of the Democratic-led House infrastructure bill was an amendment that would raise the minimum insurance requirements on commercial vehicles from $750,000 to $2 million. Vise added that Biden’s FMCSA might also consider raising trucking insurance limits, which would have significant effects and would put more stress on the smaller carriers.
“I think, by and large, the regulatory side is probably not going to have a huge effect on the coming year,” Vise said.
Stay tuned for part two of this 2021 outlook series, which will cover green truck initiatives and forward-looking projections.