Trucking companies, extra sensitive to shifts in the U.S. economy, have put furloughed drivers back on the road as demand for goods and services returns partway to normal from the shock of the spring coronavirus closures.
But owners aren’t yet confident that the United States will boost production back to last year’s levels any time soon. They expect that shipping, like employment and consumer demand, will stay below pre-virus targets, at least until the contagion is contained.
“It’s two steps forward, one step back,” said Sid Brown, chief executive at Camden-based NFI, which employs 12,500 drivers and other workers, and 1,500 contractors at terminals around the country.
Brown had hoped to avoid layoffs by reassigning drivers who served shuttered retailers and auto factories to haul groceries, paper, medical goods, and other “essentials.” But he ended up furloughing around 650 employees, or 5% of the workforce, as factories and retailer warehouses canceled shipments.
“We offered to relocate them, but nobody is moving from California to Texas at a very uncertain time,” Brown said. Plus, the $600-a-week federal supplement to state unemployment insurance made it easier for some to stay home. “We’re paying people $15 or $18 bucks an hour, but they are making the same with unemployment.”
U.S. Commerce Secretary Wilbur Ross, who before joining the government joined Brown for a financial rescue of South Jersey’s former Sun National Bank in the last recession, said on a visit to Exton last month that President Donald Trump doesn’t want to extend that extra jobless pay past July — and instead hopes to pass a trillion-dollar program to rehab roads, bridges, ports, and airports, a move that Brown, as a trucking company owner, called overdue.
And now that such retailers as T.J. Maxx and Kohl’s are restocking, more trucks are rolling, Brown said. With restaurants in states such as Pennsylvania and New Jersey still closed for indoor dining, grocery, bottled liquor, and paper goods sales are strong, and shipping prices have stopped dropping.
So fewer than 100 NFI people remain furloughed. Indeed, “in certain parts of the country, we are looking to hire truckers and warehouse workers, and we can’t get the people,” Brown added. Plus, the government has limited Latin American immigration, a source of experienced truckers. “With 20 million people unemployed, hopefully, we can retrain some.”
Brown is concerned that U.S. manufacturers are having an extra tough time getting back to speed. Automakers, in particular, “have had a harder time starting up their supply chain,” as imports from China and other countries have slowed.
With American factories lagging, Brown expects that retailers and consumers will buy more imported appliances, apparel, and industrial goods, with extra import cargoes expected in West Coast ports such as Long Beach, Calif., and Southern ports such as Savannah, Ga., and Norfolk, Va., this summer and fall.
At West Chester-based A. Duie Pyle Inc., a Northeast-focused, small freight carrier that employs 3,000, chief executive and co-owner Peter Latta has called back all but 34 of the 410 people furloughed in March.
On Wednesday, the company told employees the company would pay them a total of $2 million to make good on 80% of workers’ losses from a temporary pay cut, and half of a managers’ pay cut. The firm imposed those reductions during the worst of the coronavirus cutbacks, when business fell 40% — “like falling off a cliff,” as Latta put it.
After the March shock, sales have risen every week for the last 11 weeks, and Latta was able to end the pay cuts June 1, two weeks earlier than projected. He’s still behind his pre-coronavirus targets, hotel and restaurant demand remains weak, but packaging materials, construction, and groceries are up. Overall, sales could reach last year’s monthly totals by summer’s end.
Angel Rodriguez, a driver based at Pyle’s terminal in the food distribution center in the Bronx, N.Y., was among those who took the furlough through April and May.
He says he stayed busy organizing grocers and butchers among his professional contacts to sell meat, rice, beans, and other groceries at charity prices so his Brooklyn church, Most Precious Blood, and his Knights of Columbus council could donate them to poorer New Yorkers. (Many immigrants aren’t eligible for government benefits.) The grocers and butchers had lots of food on their hands as restaurants closed.
“We were getting 200 families every Saturday. We’d give 800 pounds of chicken, 400 pounds of ground beef,” Rodriguez said, switching between English and Spanish. With more now back at work, “it’s down to 80 to 100 families the past couple of weeks. I had my son with me, he’s 18; he realized how lucky we are to be on this side of the fence.”
Regional shippers such as Pyle are among the first to recover when the economy improves, said Jeffrey Tucker, head of Tucker Co. Worldwide Inc., a Haddonfield logistics firm that matches producers, consumers, and cargoes.
He said the price for unplanned, ”spot market” hauls has partly recovered, though he’s also getting reports of small operators (most U.S. truckers employing fewer than 100) dismissing drivers, parking trucks, and waiting for better times.
Tucker also says the pressure to quickly ship cleaning agents, protective gear, and grocery staples has artificially boosted trucking demand over slower railroad freight, with loads going straight from factory to store without stops at warehouses.
Indeed, rail shipping has been “worse than many had been expecting,” said Philadelphia railroad economist Jim Blaze. He noted that rail shipments were down about a quarter, and freight value was a fifth in May compared with last year, and that the drop was bigger in May than it was in April. Blaze doesn’t expect U.S. industrial production to exceed last year’s levels until late 2021.