The pandemic has been a tale of adapting for the trucking and transportation industry — defined by remarkably high demand and catastrophically low rates.
Before Denton County even confirmed its first coronavirus infection, an onset of what was to come was seen at area grocery stores, where essential items like toilet paper, eggs and milk were out of stock.
Then, when the outbreak flourished, disruptions began to hit the trucking and transportation industry, said Brent Hagenbuch, CEO of Titus Transport, based in Ponder.
“It’s really been a tale of two cities,” Hagenbuch said about the initial effects of the pandemic. “Grocery-type food distribution into the chain has been huge, but the rest of the industry has been hurt by the economy basically shutting down.”
Traditionally, the Thanksgiving holiday is the busiest time of the year, Hagenbuch said — that is, until the first few weeks of the novel coronavirus pandemic. His company, Titus Transport, a national freight hauler primarily serving major grocery retailers, experienced the largest surge in overall volume in company history more than two months ago.
As consumers’ panic-buying influenced product shortages, the number of spot loads posted for transport increased 39.1% and the number of drivers looking for loads increased by 6.3% in March, compared to last year, according to DAT Freight and Analytics.
Terry Leonard, a company driver for Titus Transport, has been hauling freight to North Texas and Oklahoma supermarkets for 13 years. During the first few weeks of the pandemic, he said times were often hectic as drivers could only adapt along with industry demands. The challenge was mainly a twofold balance, he said about the first weeks.
“It was tough — I wanted to get people what they needed so everyone could calm down,” said Leonard, who lives in Dallas County. “A lot of these stores would ask, ‘Do you guys have [toilet paper, eggs]?’ and unfortunately, you have to tell them no, but the stores understood why.”
As stores began limiting the number of purchases on some items and others like Walmart rolled back their operating hours to restock shelves, the supply chain has stabilized somewhat, he said, nothing that there are still fluctuations.
Wesley Randall, a logistics professor and dean of the University of North Texas New College at Frisco, said the supply chain is healthy, but that significant events, of late, have disrupted the status quo. Retail sectors of the economy have plummeted; the hotel and travel industries have been virtually decimated; and manufacturing output has come to an abrupt halt since mid-March.
Other sectors, though, have weathered the onset of the pandemic better than most, he said, such as grocery transport.
“Since the pandemic hit, fuel consumption for grocery trucks has stayed relatively consistent, while retail non-grocery dropped considerably; then industrial dropped considerably and warehouses have picked back up,” Randall said. “What you can infer is that there is much less transportation to grocery-like areas to support the consumer grocery supply chain [overall].”
Recently, challenges have been presented on the path to recovery as coronavirus outbreaks spread into meat processing plants in Texas and elsewhere in the U.S., leading supermarkets such as Kroger to limit purchases of chicken, pork and beef.
Part of the issue comes from an operations management standpoint, Randall said, noting that socioeconomic elements have also allowed coronavirus to spread. Inside these factories, many of them in rural parts of Texas, droplets containing the virus can spread more easily in close quarters, where workers are often required to yell — spreading traces in the air.
“That’s really the straw that broke the camel’s back,” Randall said of the conditions that led to outbreaks at processing plants.
In some cases, grocery retailers such as Aldi have sought new suppliers, Leonard said, lending a greater emphasis to local sources.
“The way [Aldi] is doing it now is that they are reaching out to smaller farms that have not been hit by like the mass production plants have been hit,” he said. “But we are doing what we need to, so we don’t see like what we saw with [bottled] water.”
With the rapid depletion and gradual stabilization of store supplies, the number of loads posted cratered by more than 67% in April, according to DAT. Titus Transport saw the largest drop-offs in volume in its history, Hagenbuch noted.
Also, the trucking industry is facing dismal returns on transport of loads as rates plummeted 12% in April, according DAT.
But with businesses gradually reopening in Texas this month, the forecast turned upward for the first time since late March with rates increasing by 3.3% on most high-traffic lanes during May 4-10. Although the trucking industry is on the mend in what could be described as a “fragile recovery,” there are many unknowns and uncertainties about its future.
Even while the pandemic has led to catastrophic setbacks to the economy, Randall said the U.S. does not necessarily turn on a dime when change arrives; however, he believes the pandemic could be a catalyst that ushers in a stronger economy.
“This time next year, we might see a new kind of economy that has come back even stronger,” Randall said. “I think there are a lot of things that everybody has known it’s time to make some changes about and we just have not, but now we are.”
On a ground level, Hagenbuch was hopeful but noted the industry outlook is too premature to speak definitively about possible recovery.
“We don’t know, and I think no one knows; to be honest, this is a situation that I’ve never gone through before, and there are some people who think it will last a long time and some who think it will bounce back in a hurry,” he said. “But, if the economy picks up in a hurry, there would [likely] be huge demand that would probably outstrip the capacity of the industry.”