WASHINGTON — In the midst of the covid pandemic, with consumers buying products for their lockdown lifestyles and tangled supply chains, Arnesha Barron saw the moment to make her dream of starting her own trucking company come true.
The 39-year-old single mother of three teenage children had worked for six years driving a truck across the country as an employee for a trucking company. But in 2021, as shipping rates increased, she decided to hit the road on her own. She took out a $175,000 new truck loan and was soon taking home up to $20,000 a month in profit.
“It was amazing. I was a teenage father. I had my first child at 15 and all the odds were stacked against me,” Barron said. “All three of my children graduated high school while I was on a truck and still managed to to happen.”
But like thousands of other truckers across the country, Barron’s fortune did not last long. Over her last year, her shipping rates have plummeted, leaving her and other drivers who bet big on the trucking boom struggling to make ends meet.
The number of trucking companies, many consisting of a single truck and driver, increased by 50% between the start of the pandemic and the end of last year, with workers drawn to the industry for record wages from companies desperate to move your goods and services. social media influencers promoting trucking as a get-rich-quick way, said Todd Spencer, president of the Owner-Operator Independent Drivers Association. But as consumer spending has slowed over the past year and the volume of goods that must be shipped has returned to pre-pandemic levels, there is less demand for all of those drivers, creating competition that has driven down rates. shipping.
“Basically, the good times have come and gone,” Spencer said. “There is a reorganization in the works right now, and it will more than likely continue through this year.”
As shipping rates fell, a growing number of drivers found themselves unable to continue operating, with 15,000 trucking companies closing operations as of October 2022, the majority being owner-operators with just one truck, said Dean Croke, an analyst. DAT main. , a trucking analysis and logistics company. He estimates that another 2,000 carriers will have to leave the market before the supply of drivers meets the demand.
Barron said he went from making $20,000 a month in profit in March 2022 to just over $3,300 a few months later in July after fuel prices rose and demand slowed. That money was not enough to keep up with his family’s expenses at his home, which included $2,600 in rent, along with a $1,400-a-month loan for his truck. In August, he turned his truck over to the lender, lost his $4,000 down payment, and had to pay a $7,000 penalty for returning the vehicle.
“Everything was fine, but once the pandemic slowed down, there wasn’t a huge demand anymore. So I couldn’t make the money I needed to live on and then gas prices went up as well,” Barron said.
Demand for drivers increased in late 2020 and throughout 2021 as Americans, strapped on stimulus checks and unable to spend as much on rides and dining, began ordering more goods online, from everyday necessities to large items, such as sofas and garden furniture. A booming real estate market meant an even higher demand for building materials and appliances. At the same time, logistics bottlenecks at ports and warehouses were slowing down the efficiency with which drivers on the road could move.
With the prospect of quickly earning six-figure wages, a wave of workers switched to truck racing during the pandemic, either as employees of a trucking company or by buying a truck and starting their own operation, said Rico Muhammad, who has been in the trucking industry for 20 years and houses a podcast in the industry
They were spurred on by videos on TikTok and YouTube touting the ease of starting a trucking company and the huge profits it could generate. One Youtube video Posted in August 2022 with over 3 million views, it features a 19-year-old who started his own trucking company and says he made $159,000 in the first three months.
“A lot of people got on board because of all the hype and all the hype on social media, which made people think they could make a quick buck,” Muhammad said. “You had a bunch of people jumping into the industry, and now you have a mass exodus out of the industry of people going out of business. It’s kind of like a pack sacrifice.”
Even President Joe Biden urged Americans to consider trucking careers, and the White House unveiled a “trucking action plan” in December 2021 to strengthen the trucking workforce and help alleviate bottlenecks in the supply chain. of supply. Last April, Biden invited a group of truckers to the White House, with big trucks parked on the White House lawn, where he touted the more than 35,000 trucking jobs added since the start of the pandemic.
But as the number of drivers increased, the demand for them soon slowed. Consumer spending cooled as inflation squeezed household budgets and people shifted spending to travel, entertainment and dining instead of buying goods. At the same time, demand for building materials has slowed as higher interest rates have stifled construction of new homes and bottlenecks at ports that have left drivers stuck waiting hours for shipments have eased.
“There are definitely more trucks than loads. It’s a simple supply and demand equation,” Croke said. “They are holding there right now. But for many carriers they are a major breakdown away from bankruptcy. This is a dangerous time for many carriers.”
‘Praying and hoping’
Gitonna Smith, 32, was one of those who made the leap to trucking during the pandemic. Smith had been working Atlanta nightclubs for more than four years when the pandemic hit and the club where she worked closed. Feeling exhausted by the nightclub industry and in need of a job, she spent $4,000 on a three-week commercial driving course.
He immediately got a job with a trucking company and began earning $2,500 a week. She said that she enjoyed traveling and the independence of work and started a Facebook account. page and Youtube channel with videos of his truck in which he talked about the new places he had visited and recounted his difficulties, such as trying to back his truck into a loading dock.
But over the past year, he’s seen his weekly wage drop to $1,200 as the rate his employer pays him per mile has dropped and the number of jobs he’s given has dropped to the point where he can spend days or weeks without work
“When I started, I was getting hired by the back-to-back piles. I would always be running,” Smith said from his Atlanta home, where he was waiting for his truck to be repaired, unpaid time off the road. “But now it’s to the point where they can reserve a load, and then I have to sit for hours until they find something else for me. It’s really bad.”
Smith said she plans to stay at the job at least until the end of the year because she can cover her monthly expenses, but she isn’t sure what the future holds.
“I pray and hope it gets better because I love trucking, it’s easy for me, I love to travel. So I’m going to hang in there,” Smith said. “I’ll give it to maybe until the end of the year, and we’ll go from there.”
Monica Garcia said she left the industry entirely after she closed her trucking business last year and sold her trucks. She started the business in 2016 with the $30,000 pension she received when she retired as a teacher. Over time, her business grew to three trucks with a turnover of seven to ten drivers.
But the pressures on his company began to mount with port delays, rising fuel prices and increased competition from a flood of new drivers entering the market, along with Amazon building its own fleet.
“When gas got to $5.50 a gallon, that was the nail in the coffin for me. I had to close my doors,” said Garcia, who now works in real estate. “Between that and the truck repairs, I didn’t have enough mattress. My profitability fell with the drop in rates. Then when the fuel went up and I had to put my truck in the shop, that was it.”
‘Trials and Tribulations’
Many drivers source their shipments from the spot market, which is dominated by independent drivers or small businesses bidding for individual jobs. But rates have plummeted, from about $1 a mile in profit in 2021 to about 3 cents a mile today, Croke said. Typically, a driver needs at least 40 cents a mile in earnings to build up a cash reserve for vehicle maintenance and repairs that can be in the tens of thousands of dollars, he said.
Larger trucking companies that contract with retailers and carriers have also seen their rates drop, though not as dramatically, and some have had to reduce the size of their fleets as demand has slowed, said Bob Costello, an economist. head of American Trucking. Associations, representing the main road carriers. Those companies still have trouble finding and retaining workers, though it has diminished, especially as truckers who started their own companies have been forced to shut down and seek work as company drivers, Costello said.
For those who bought equipment in the last two years and now need to sell it, they could lose tens of thousands of dollars. Truck and trailer prices nearly doubled in 2021 as everyone from major shippers like Amazon and FedEx to individual drivers began buying more vehicles to keep up with demand, Croke said. Prices have started to return to their pre-pandemic levels, leaving drivers under water with their loans.
