Tucker Worldwide CEO takes a deep dive into takeaways related to FMCSA driver analytics

While the subject of a truck driver shortage ostensibly never runs out of roadway, data from the Federal Motor Carrier Safety Administration (FMCSA) highlighted what a “tumultuous year for trucking” 2020 was.

That was a key theme of a recent blog post written by Jeff Tucker, CEO of Haddonfield, N.J.-based Tucker Worldwide, the nation’s oldest freight brokerage.

In his blog, Tucker explained that even though the trucking sector felt pain everywhere in 2020, it was felt most sharply by smaller fleets, with 1-100 trucks, whom added drivers at almost a 2:1 ratio compared to fleets of 500 or more trucks, until the onset of the pandemic, that is.

And since that time, as noted in the blog, FMCSA data observed that the pandemic has led to the removal of 163,697 drivers from the total U.S. fleet—and have not returned. What’s more, by the end of 2020, the data showed that there were 7,096 fewer drivers than compared to the end of 2020, a 5.3% decline compared to early 2020.

But here is where it really gets interesting. Tucker observed that 2020 marked the first year the U.S. driver count represented a net negative, with the shift in drivers from small fleets to large fleets accounting for a 4.4% reduction from the beginning of 2020, while fleets in the 101-to-more than 500 trucks showing a “more significant relative gain,” as larger fleets took on 7.1% more net drivers, which ramped up available capacity for customers. There is more to that, too, with Tucker observing that, in 2020, “the U.S. minted both new carrier growth and overall net growth in for-hire trucking companies, to the tune of 16,168 overall new net carriers ending 2020 compared to 2019, a 6.3% annual increase.

Logistics Management Group News Editor Jeff Berman spoke with Jeff Tucker to get a deeper read on the data and what it means for both carriers and shippers. Their conversation follows below.

LM: How would you view the best way for industry stakeholders to view this data from the FMCSA?

Tucker: There is a lot of data and a little bit of interpretation. It is not from a trade association or Wall Street analysts, because either they don’t have it or it does not bolster their narrative. As a third party, I need to understand the marketplace, what is in the carriers’ mind, and what are the factors driving the motor carriers. And I also need to switch that quickly and think about what the shipper is going through, how are they reacting, so that I can position my business to be a service to both parties.  

LM: Speaking of narrative, where does the current state of a driver shortage fit into this?

Tucker: I was on a recent panel discussion, and a motor carrier said “we need to keep the driver shortage going, because it helps in those contract times.” This past summer, there clearly was a driver shortage, and we went from, according to the numbers, to 163,00 drivers lost from the peak. The data shows that peak at around July 2020. Driver data is lagging that data, so it is very likely that the peak hit at the end of 2019.

As for carrier data, that data is about as live as live can be, there is very little delay to that, in just the way it is reported. Even though there was a pre-market decrease in the number of drivers in the first half of this year into the mid-part of the year, you had a steady increase of carriers. One of the things that is most remarkable is that is the first time that every year over the last decade had a net increase in the number of drivers

Back to that narrative of a driver shortage, how does one say we had a driver shortage nationally or holistically, if we added drivers every year. You can fill a load any given day if you have enough money and want to pay the market rate.

LM: FMCSA’s data shows that more than 163,000 drivers were removed from the nation’s fleet, due to the pandemic and by the end of 2020, there were only slightly more than 7,000 fewer drivers compared to the end of 2019. How would you characterize what that data is telling us?

Tucker: To me, that is extraordinary in that: 1-in that we lost that from the Peak and 2-annually, it is only 7,000 out of roughly 3 million drivers. It is almost as if the end of 2019 and early 2020 never happened with regard to driver events. That is oversimplifying it, but it was the first time there was a decrease and—this is really important—the drivers scurried in a meaningful way and migrated to the larger carriers. Every year of the last decade you saw more drivers go to the top 1-100 fleets than the 501-plus fleets 

When you hear the large fleets and their reps talk about driver shortage, they have always had a driver shortage. It is a shortage to them, because they want the drivers but nationally the shortage is not existing because they are driving but just not for the big guys. We went from 1,944,771 drivers in February 2012 to almost 3 million [2,944,091] drivers. It is absolutely ridiculous and extraordinary that we have added nearly 1 million drivers. That is not even a full decade. That is the for-hire carrier fleet, or any carrier that is open to hauling not only its own product but is also out in the market selling its own capacity and services. That carrier data is very close to live or real time and the number of drivers is a lagging figure because it is reliant on a periodic census of the carriers.

LM: In a recent LinkedIn post, you noted that, from 2019 to 2020, there was “an annual gain of 658,974 net new tractors, which has eased (re)entry for owner operators with low price, recent model equipment with low interest.” How should that be interpreted, in terms of what it means, relative to the driver situation?

Tucker: It tells me that the large carriers continue to upgrade their fleets using the capital they have earned over the last 10 years of rate gains economic activity and continuing to buy to keep that fleet new and the technology new and invest that capital, but the large carriers also complained vocally and publicly about the fact that they cannot seat all of their tractors; they have trucks parked. That net increase is making it easier for drivers or owner operators to get into the business. And we have low interest rates, the lowest in history probably, that kind of keep payments down. If you were one of those drivers in 2020 that realized that the spot market disappeared and you did not have any freight to find and did not want to go into carpentry work or something else and wanted to stay with driving, tens of thousands of them joined larger fleets.      

LM: With things being what they are now, what does this current situation mean for shippers and end consumers? Will they need to pay up to get what they want? Or will it be a leveling off or not back to full recovery, with things maybe staying this way for a while?

Tucker: It is really hard to play this guessing game for me…what I think it means is that, based on my understanding of the capacity crises we have been through since deregulation, from 1980, we did not have one until 2005, and it took 18 months to shake that one out and normalize. The next one was the Polar Vortex in 2014, and many people thought that was a bunch of bunk. And now ports have ground to a halt in Los Angeles and Long Beach. There is a big backlog there. We have a customer that ships a bunch of plywood and ships are being turned away from different ports and are going to [alternative] ports to bring freight in and that is messing up the traffic flows.  

LM: With that as a backdrop, how does it compared to what we are seeing today?

Tucker: We went from the most dire freight situation in May, in my 30 years in this business, to the most constrained environment inside of the same 7-to-8 months. It might very well take another 12-15 months to find normal again, or some sort of understanding of what normal is, and that is based on what happened in the past. Nobody can predict the future. For consumers, I would expect there might be some higher prices in lesser expensive products that are more prone to higher freight transportation costs. One of the shoes to fall in the last capacity crisis in 2017-2018 was General Mills whose stock price was harmed due to increased transportation costs, as well as others too. Everyone started owning up to it as being a real issue.

LM: So, does it mean different things for different types of supply chain stakeholders?

Tucker: One of the problems foundationally in our supply chain is that we brokers are prolific users of technology and our entire understanding is based on ebbs and flows and where we need to be, as are carriers, too. Shippers have a different way of going about it, especially if they have high volume. They have a relatively stoic bid and business award process and when that first tender acceptance is rejected, and the second one happens, by that time, the market is empty and devoid of trucks, and they go to the spot market and create this spot market that does not need to be as big as it is. To me it is a pattern that repeats itself over and over and this is self-serving, to some degree, but it is an absolutely valid point: if you are a shipper and you only want to deal with those big-name motor carriers you are fighting a decade of contraction. They are not contracting, they are growing, but they are not growing as quickly as the smaller fleets. And you want to be able to scale up and down and to roll in a market place that has had has had three or four capacity crises in last six years, whereas there was one in the first 32 years of deregulation.

LM: Does that mean this is the new normal, at least for now?

Tucker: This is what it is going to be like for a while, at least over the next couple of budget cycles, and if you want to fight the fact that this is the way that this is going to be then you just stack your core providers with a bunch of big carriers and repeat the same mistakes of your brothers and sisters for you or you say you need two or three real quality 3PLs in your mix and treat them like a core carrier. And then all of the sudden you don’t have to go to the marketplace and pay extraordinary prices to the spot market as frequently as you do today, and you won’t find yourself left at the altar by a large motor carrier who decides that this spot market is so lucrative—and there are only so many days in the year and the carrier decides it can move only so many boxes on wheels— that it opens its fleet from 5% spot to 10% spot. Where does that leave you? It leaves you out. The carriers will never tell you they are doing that, though. To the shipper it will sound like this: ”we don’t have any trucks in the area, we are really backed up and we are trying”—that is what the shipper hears— but the reality is that the truck is not being picked up when they expect it to be picked up. The reason I say this is not going away in the immediate future, or the next couple of budget cycles, is because I think the world has changed so rapidly

LM: In what specific ways from your perspective?

Tucker: As a basic example, the gym I go to is attached to a very popular mall and it is like a ghost town. But you have a revolution going on in technology and in how we get our products and also in terms of what is the goal in inventory. The goal of inventory is not to carry it, and it is not to build excess inventory unless in real specific cases–but you don’t want inventory, you want turn back and you want to turn it real fast.

Amazon and Walmart are great examples of that. They have huge footprints and huge warehouses. But they are turning that stuff like there is no tomorrow. They want all of their product to be within an arms’ reach of every single human being in the country.

In order to do that, transportation takes on a higher importance in the grand scheme of things, and I think that going forward transportation, until we find the eventuality of where our buying and selling goes, until we get there, I think that we can and should expect transportation to always be at, or right on, equilibrium so any one little thing messes that equilibrium up dramatically.

LM: What are some of the types of things that can mess up that equilibrium?  

Tucker: It could be lots of little things. We are going to have more storms, who knows what is going to happen next? We are always going to have something and when you are teetering on the brink of equilibrium like we have for the last 10 years any little thing that comes knocks you off of your game. That is why it is so important for shippers to build durability using flexibility and with a foundation of flexibility. And that is why, depending on your size, you need 1-to-3 good quality 3PLs  to be able to provide that. The conversation with a carrier goes like this: “do you have a certain number of trucks?” And with the broker: “I need two trucks tomorrow. Great, no problem, we can get that.”

It provides that a durable supply chain can occur by having just a little bit of extra flexibility in that system. Every single capacity crisis has expanded the footprint, and market share of brokerage. It needs to be better understood that there is extraordinary growth at the smaller fleets, and there is no shipper on the planet that can manage those smaller fleets and the technology and the interface and that kind of stuff at smaller fleets. So, if you realize where the market is going and if you realize the big macro- environment, you can see that is what is driving this very delicately balanced supply chain.