• Safety Lane

Why the $800 billion trucking industry did not get a penny from the $2 trillion stimulus bill.

When president Trump signed the $2 trillion stimulus bill signed into law, America's trucking companies

were not included in any of the relief money. Have you asked yourself why? It is simple. The big trucking

companies did not want one at that time and the small trucking companies are not organized to ask for

one.

When the handout of the $2 trillion stimulus packaged was dispersed to ‘small businesses’ the trucking

industry was left to fend for themselves. Small businesses are trying hard to figure out how to stay afloat

while big firms are managing to stay alive with pre existing contracts that still have their fleets rolling.

A month ago, when the $2 trillion stimulus bill was announced the big players in the game felt that a

federal bailout would help the failing trucking firms, depressing shipping rates for the industry as a

whole. So, the big players in the game kept quiet, as to not rock the boat and try to help themselves and

the also help the small struggling truck fleets.

For the first 3 weeks of the pandemic, the trucking industry saw a stunning surge in demand. The spot

rates soared in the first quarter as consumer goods were in high demand. However, after the boom

came the crash where we are now seeing spot rate at $0.25 a loaded mile and companies are actually

fighting for those loads.

This will undoubtfully lead to more bankruptcies in America's $800 billion trucking industry. Airlines,

restaurants, and even Harvard University received funds from the $2 trillion stimulus bill but that money

did not reach any trucking companies. The trucking industry has been historically left out of stimulus and

bailout money. That's not because the sector is insignificant — it touches nearly everything Americans

buy or use.


The reason behind np Stimulus Money for trucking companies: the biggest voices in trucking didn't ask

for one. Hundreds of thousands of trucking companies mean the industry doesn't have 'any of those

loud voices'.

According to federal data in 2015:

206,000 trucking companies in 2015.

183,340 of these companies have 5 trucks are less.

22,660 of the rest of the companies have 6 or more trucks.

22 of the 22,660 companies have more than 4,000 trucks.

What that means for the small business trucking companies is that they have no representation and no

loud voice in the industry.

Large trucking companies are not chasing the bailout money. The key metric to track in trucking is the

balance of supply and demand — that is, how many trucks are on the road versus how much stuff there

is to move. When demand sinks, rates go down and trucking companies go bankrupt. Fewer trucks are


able to carry cargo, which means that trucking rates then go up. Currently, rates are set to fall because

that demand is falling. That means that a large amount of truck drivers need to leave the market in

order to keep rates reasonable. This explains why, trucking leaders are not demanding bailout funds.

Eric Fuller, the CEO of U.S. Xpress, which employs more than 7,200 truck drivers stated in Business

Insider that while bailout money would prop up small truck companies, but there's no way to increase

load demand — it remains subject to market conditions. Such meddling in the industry, he said, could

lead to "unintended consequences."

Derek Leathers, the CEO of Werner Enterprises, which employs nearly 11,000 truck drivers said major

truckers were likely too busy to concentrate on getting bailout money. With the trucking industry busy

responding to the first wave of consumer demand, Leathers told Business Insider, " [we] maybe didn't

get as mobile as other industries about looking for support or help in our efforts."


A recession can benefit major trucking companies — but it's at the expense of smaller companies.

Following the 2008 recession, truckers were some of the quickest to climb out of the economic toil. The

industry's revenue grew by 6.5% each year from 2009 to 2014, according to the American Trucking

Associations. But, as The Wall Street Journal reported in 2015, only big companies were able to take

advantage. Even years after the recession, hundreds of small trucking companies were still going out of

business and selling out to larger firms. This allowed larger companies to raise their shipping rates to

customers.

It is clear why a big trucking company would not want a bailout, which keeps small or medium-sized

fleets chugging along. More trucking companies in the market only means rates are lower for everyone

else.

The small truck companies are diversified and fragmented and when stimulus help is available their

voices need to be unified and loud to be heard in Washington, even if the big companies want them to

fail.

The Trucking Industries’ s representation in Washington comes through the American Trucking

Associations, a trade association that lobbies on behalf of those small trucking companies. Bill Sullivan,

ATA executive vice president of advocacy, are working on gaining access to the $350 billion of Small

Business Association loans made available from the stimulus bill. Only time will tell what will happen

next.


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