June 10, 2020

Trucking industry doesn’t escape COVID-19 disruption

The trucking and supermarket sectors have been dramatically altered by the effects of COVID-19. Almost everything that truckers and supermarket workers knew about doing their jobs has been turned on its head since the outbreak began.

Two executives from Avant, an insurance group that works closely with the trucking and grocery retail industries, offered thoughts on the situation. They are:

  • Scott Hendricks, CEO, Avant — Hendricks has led national transportation insurance organizations for an insurance company, managed a general agency and a retail insurance agency since 1982. He has experience in underwriting, claims, product management and policy services.
  • Bill Morrison, president, Avant Supermarket Group — Morrison has been involved in the insurance industry for virtually his entire 45-year professional career. As a CPA, Morrison led the Insurance Industry Practice Group for a “Big 8” firm in the Kansas City area. He was formerly the president of a specialty insurance carrier insuring supermarkets, contractors, agricultural coops and medical equipment providers. He also has retail and general agency experience.

You’ve actually called the truckers and supermarket workers two of the heroes of the coronavirus outbreak. Why do you say that?

Hendricks: I firmly believe that these groups of workers are two of the most essential employees in one of the most important sectors of our economy. They keep the cargo moving and America fed.

Morrison: Truckers and grocery store workers go to the work every day, putting their lives at risk. They have been largely ignored and lost in the shuffle. They are truly unsung heroes. Supermarket workers are putting in extraordinary hours to restock the shelves to keep our nation fed. What would you do if you went to the stores and the doors were locked because they had no stock? We take these workers for granted every day. Everyone in our country depends on them.  That’s especially true today, when it’s getting more difficult to get into our grocery stores and home delivery services are so overbooked that many customers simply can’t get their food from them.

In addition, people aren’t spending money in restaurants. They are eating every meal at home. Grocery and convenience stores have become a lifeline for them.  

Hendricks: When the rest of the country was hunkering down and protecting themselves, truckers not only kept going, they delivered freight volumes at staggering levels to a country in need.

Talk about the impact of this crisis on the volume of freight.

Hendricks: The amount of freight that had to be moved spiked by 39% in one month. It’s being transported in refrigerated units, flat beds and dry vans. The country needs them to move food to supermarkets and medical supplies to where they are needed. The truckers are working their tails off. If it weren’t for them you wouldn’t see anything on the shelves. On average, if they stopped doing their jobs those grocery shelves would be bare in three days. Let’s remember that trucking moves 70% of the freight in this country under normal circumstance.

Morrison: Traditional shopping habits have been destroyed and the need to keep supermarkets shelves fully stocked has created a real dilemma for many store owners. An industry that has customarily had a difficult time maintaining a largely minimum wage workforce is finding itself having to increase wages to find people to meet the increased demand and adequately operate their businesses. While most Americans are still shopping in-store, retailers have had to dedicate additional resources to keeping their store’s customers and employee safe and clean, keeping essential items stocked and providing options for health precautions.

What about the increase in long-haul tonnage that needs to be moved during this crisis? 

Hendricks: Tonnage was already increasing before the full force of the virus hit.  It went up 1.8% in January and 2.6% in February. … By March 24, posted truck loads had risen 41% from the same period a year ago.

Where do you think this will lead for the trucking industry? 

Hendricks: The trucking industry is benefiting now from high consumer demand for household goods, but if the economy slows down, that picture could change. It’s a tricky question because the answer is quite different depending on the type of freight. I believe we will have an overall decrease in freight volume that will not bounce back suddenly but will march steadily back in months, not years.

Morrison: COVID-19 has caused consumers to make fewer trips to the store, while spending 62% more per visit as people stock their pantry’s with food and cleaning supplies. Additionally, on-line and delivery options are growing with that reaching as much as 40% of grocery expenditures. How much of this will continue post-pandemic is hard to say, but it will have and lasting affect and will likely fundamentally change the way retailers do business going forward. 

Are we seeing some relaxing of government rules and regulations to meet the nation’s needs during the COVID-19 crisis?

Hendricks: Thankfully, yes. They have temporarily softened the compliance burdens such as hours-of-service (HOS) and drug testing.

Morrison: While there is currently no evidence that the coronavirus can be transmitted through food, it has provoked a heightened level of awareness and oversight by the FDA and the Department of Agriculture’s Food Safety and Inspection Service. They are making sure certain procedures are in place to assure food is not contaminated by ill workers. With that said, these federal rules long-predated the COVID-19 pandemic.

Ultimately, what do each of you expect to be the outcome of this crisis for the trucking and grocery industries? Do you think these entities will thrive, decline or maybe not even survive? 

Hendricks: Freight must move, during and after this crisis. The types of freight ebbs and flow according to macro-economic factors, but trucking will remain the dominant mover of freight. 

Morrison: Grocery retailers have existed for over 700 years and have proven to be the ultimate entrepreneurs by demonstrating a tremendous willingness and ability to change. COVID-19, which completely took the world by surprise, was no match for the independent grocer. They quietly went about their business addressing rapidly changing customer needs. They made desired products available. They offered safe in-store shopping. And they stepped up their ability for customers to do on-line purchases that would include pick-up and delivery services. They are truly the epitome of resilience.

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