Loaded and Rolling: Back-office jobs still in demand; EPA electric truck plan draws concern

June 1, 2023

Fleet back-office jobs still in demand

(Photo: Jim Allen/FreightWaves)

The freight recession has done little to stem ongoing demand for both drivers and the back-office operations staff that supports them, according to a recent article by Hilary Daninhirsch of Transport Topics. Trucking companies and brokerages typically require teams of dispatchers, load planners, logistics coordinators, and sales and administrative staff to manage their operations.

In the article, Ryan Schreiber, chief growth officer at Metafora, noted how trucking companies and brokerages are often behind the hiring curve for back-office and support staff, in part due to market variability. Schreiber added, “Companies are looking to save money. The back office is often seen as a cost center, and largely it is. Additionally, there are typically a number of upstream issues in sales and operations that create issues in the back office. However, it is also mission critical. Without timely and accurate billing, trucking and logistics companies face serious cash flow issues.”

Advances in freight technology platforms are not expected to immediately replace roles but change their nature and scope. Jason Turner, vice president of talent and growth initiatives for ArcBest, said, “I think technology and the use of data will continue to reshape the jobs, which will continue to be more enriched by the availability of real-time data; this will make the job itself different but it will continue to be needed.” For now, the complexity and domain-specific knowledge in truckload transportation and logistics remains in demand as freight technology platforms struggle to fully automate the often chaotic complexity inherent in the supply chain.

EPA electric truck rules proposal draws concern

(Source: EPA Proposed Rules)

Using the California Advanced Clean Trucks (ACT) rule, the Biden administration’s proposed Phase 3 truck rule sees the EPA potentially imposing stricter standards on carbon dioxide emissions for truck makers and buyers. FreightWaves’ John Gallagher writes, “Specifically, EPA is proposing stronger carbon dioxide standards for model year 2027 trucks that go beyond the current standards that apply under EPA’s Phase 2 rule. It is also proposing an additional set of CO2 standards that would begin to apply in model year 2028, with progressively tighter standards each model year through 2032.” By 2045 the rule proposed would require all new trucks to be zero-emission vehicles.

Conservative lawmakers including Rep. Pat Fallon, R-Texas and the chair of the House Oversight Committee’s subcommittee on energy policy and regulatory affairs, noted during a May 17 hearing that Republicans, while not anti-EV, are concerned by the rulemaking’s impact on the auto industry and consumer choice. Motor carriers using these trucks are concerned about costs, mandated buying choices and added complexity. A new all-electric Class 8 truck can cost over $400,000 today compared to a diesel truck in the $150,000 range.

Laurence Cox, vice president of sustainability for PGT Trucking, told FreightWaves, “We operate in a market economy, so if we were to buy 200 new electric trucks it would not only cost us a lot of money, chances are we also would not be able to pass that on to our customers because most of the rest of the industry is still running older equipment.” Smaller fleets, owner-operators and their lobbying groups also voiced concern, with Lewie Pugh, Owner-Operator Independent Drivers Association executive vice president, telling lawmakers on Capitol Hill on May 10, “The Phase 3 rule is … a blatant attempt to force consumers into purchasing electric vehicles while a national charging infrastructure network remains absent for heavy-duty commercial trucks.”

Market update: ACT Research data shows volumes, rates and capacity fell in April

(Source: ACT Research Co.)

ACT Research recently released April data for its For-Hire Trucking Index, noting that the freight market continues to weaken as volumes, rates and truckload capacity continue to decline. Part of the ongoing freight market deterioration is related to consumer demand. The report noted, “Destocking contributed to the softness, although the 24% y/y decline in container imports in Q1 likely represents the worst of the destocking. A slowing in destocking would be a positive for volumes. Inflation, while showing tentative improvement, continues to gnaw at consumer spending power, with retail sales in real terms down 3.6% y/y in April. The slow start produce season may also be a headwind.”

Regarding freight rates and pricing power, the ongoing declines appear Darwinian in nature. The report added, “Astute respondent feedback said this is among the most challenging markets of a multi-decade career, and ‘only the strong survive!’ We believe the cure for low prices is low prices, and since October 2022 the Department of Transportation (DOT) has revoked a net 11k operating authorities.”

Truckload capacity is expected to grow but at a slower rate for medium and larger truckload carriers, according to the survey results. For owner-operators, who can be harder to track in survey data and mainstream data sources, spot market rates may continue to be a barometer for small carrier and owner-operator health, as enough of them leaving the market can result in spot rates rising.

FreightWaves SONAR spotlight: Slight spot linehaul rate gains won’t stem contract rate declines

(Chart: FreightWaves SONAR)

Summary: Memorial Day weekend brought slight relief for spot market linehaul rates, but the gulf between those rates and the average contracted base rate per mile remains high. The National Truckload Index (Linehaul) (NTIL) is a seven-day moving average of daily spot rates minus the estimated cost of the average retail diesel price for fuel divided by a fuel efficiency of 6.5 mph. Week over week, the NTIL rose 3 cents per mile or 1.89% from $1.58 to $1.62 as customers’ front-loaded shipments and truckload capacity left the market for the holiday weekend. Van contracted rates, limited by a two-week delay, posted a 6-cents-per-mile week-over-week decline of 2.46% from $2.44 on May 9 to $2.38 as of the most recent reading.

In spite of the delay, spot market rate movements typically lead contract rate declines by 60 to 90 days. Expect further deterioration in contract rates for truckload carriers and brokers as shippers negotiate RFPs and seek lower overall transportation costs. While the spot market may have bottomed out, the current spot linehaul to contract spread remains around 87 cents per mile in favor of contracted rates. Typically contract-to-spot premiums hover around 25 to 30 cents per mile, suggesting further downward pressure on rates. One question that remains is what the new normalized spot-to-contract spread will look like, as carriers face higher costs across the board compared to pre-pandemic numbers.