The Trucking Bubble Has Burst

7 minute read

It was hard to escape the narrative, during the pandemic, that there was a severe shortage of truck drivers who could move goods from one place to another. In reality, the trucking industry has a retention problem, and has often struggled to find enough people to work a grueling job for low pay.

But there are big downsides to the narrative that America doesn’t have enough truckers, and they are becoming evident today. Demand for truck drivers has plummeted in the last year, and tens of thousands of drivers who entered the profession thinking it was a surefire way to earn a living are ending up deep in debt with no work. 

“The shortage is just something the big companies make up,” says Jacqueline Jolly, who entered trucking alongside her husband as their work in the construction industry slowed to a stop in early 2020. By late 2022, they were homeless and scrambling to pay off bills. 

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Booms and busts in the trucking industry have been around since 1980, when the industry was deregulated and rates between set markets were no longer guaranteed. But this bust has been especially painful because it comes after a high in which rates were skyrocketing and people flooded into the industry.

“What happened in the middle of 2020 was unprecedented and is still playing out in the market today, in terms of the number of trucks that entered the market,” says Dean Croke, principal freight analyst at DAT Freight and Analytics.

In June 2020, there were 241,835 registered for-hire carriers with a gross vehicle rate of 10,000 pounds and over, according to DAT’s data. By July 2023, there were 475,371, a jump of 96%.  

A few things happened to create the rush of drivers. As global demand for goods cratered in early 2020 at the onset of the pandemic, the price of diesel plummeted, making it more affordable to run a trucking business. Government loans helped trucking companies survive the slowdown, and then, by mid-2020, as Americans started buying goods again, freight rates started climbing. Companies paying $1.85 a mile in early 2020 were paying $3.10 a mile by late 2021, Croke says. 

This motivated people who had never been in trucking before to jump into the field. It also inspired drivers who were working for larger trucking companies to get their own trucks so they could become independent owner-operators and work for themselves, he says.

But some of this boom was a mirage. Companies worried about shortages ordered more goods than they needed, creating temporary jobs for truckers to bring those goods to them. Sometimes, companies would fill trucks up halfway and send them to warehouses rather than delivering an order late, creating an inflated sense of demand for trucks. 

During the boom times, “you would have had to be very bad [at the job] to lose money,” Croke says. 

Rates started plummeting in 2022, soon after Russia invaded Ukraine. At the same time, the price of diesel skyrocketed. 

Today, almost everyone in the “spot market”—drivers who aren’t contracted with a particular company, and thus can’t add a fuel surcharge—is struggling. (The spot market makes up about 15% of truckers.) The flood of drivers into the market has now created a surfeit of drivers who brokers and trucking companies can play off one another, driving rates lower and lower. 

Jacqueline Jolly lived this boom and bust cycle. At first, when she and her husband entered the business in 2020, she says they got loads that paid as much as $4 or $5 a mile. Diesel prices were so low and rates were so high that the couple decided to take out a loan and buy a second truck, for $80,000, and hire another driver. 

Things were good for a while. Then, their situation quickly changed. Diesel prices jumped from $2.50 a gallon to $5.99 and rates started falling. A load from New York to Texas that would have netted them $4,500 in early 2021 was making only about $1,900 by 2023. 

The couple got so behind on their truck payments that they had to give the second truck back, but even with just one vehicle, they struggled to earn enough money to pay rent and feed their four kids. 

“When the rates went down, that really killed us,” she says. “We were like, what the heck, we can’t survive on this.” 

The couple gave up their apartment in Poughkeepsie, N.Y., and lived out of a motel as they tried to keep up with insurance, repairs, and personal expenses. But the costs proved too high, and they ultimately sold their last truck in the spring of 2023 and returned to the construction industry. The same truck that they bought for $80,000 now goes for around $30,000, in part because interest rates are so much higher today. Jolly says the family “still [has] bills out of our eyeballs,” including $15,000 in unpaid tolls. 

Thousands of truckers are experiencing the same boom and bust. 

“We certainly hear from many that are feeling the impact of the current overcapacity that exists in trucking—there’s lots of competition among lots of truckers for not enough freight,” says Todd Spencer, president of the Owner-Operator Independent Drivers Association. 

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This could create a problem for anyone who drives on highways. It’s the big companies who are most able to weather the slowdown, because they can negotiate fuel surcharges and because they have the cushion to pay for unexpected repairs. But it’s also the big companies that often employ the newest drivers and the ones with the least experience on the road. This makes driving more dangerous for everyone; in 2021, for example, 4,714 people died in crashes involving large trucks, a 14% increase from 2019. When a large truck and a passenger vehicle crash, it is almost always the occupants of the passenger vehicle who are killed; in one highly-publicized incident, a truck driven by a new driver caused a 28-car pileup that left eight dead in Colorado—the driver later said he had never been taught to navigate mountain passes.  

The messaging during the pandemic about a truck driver shortage contributed to the over-capacity. The American Trucking Association repeatedly said that the industry was short 80,000 drivers, and the Biden Administration added fuel to the fire, launching a Trucking Action Plan in late 2021 that tried to draw more drivers into the industry. That included a pilot program that allows 18-21 year olds to drive trucks. “The problem that much of trucking has is that they can’t retain drivers,” Spencer says. “That doesn’t indicate the problem is the workers, that indicates the problem is with the job.”  

Now that truckers are competing against one another, driving rates down, the narrative about a truck driver shortage has disappeared—for now. Trucking goes in cycles, though, so Croke says it’s sure to return. The amount of freight being moved is roughly equivalent to what it was in 2019, which was itself a slow year. 

Croke predicts that the U.S. is about three-quarters of the way through the current freight recession. As more independent operators leave the market, though, bringing their debt with them, the cycle will bottom out, he says. There will once again be demand for truckers, rates will start to rise, and the message that there’s a shortage of people willing to drive trucks will rear its head once again.

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