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12 August 2020
COVID-19 affects even the smallest areas of people's lives, so it comes as no surprise that large industries such as the trucking and transport sector have been rattled by the pandemic. Over the past few months, trucking has come face to face with the volatile economic behaviour of businesses, consumers and their suppliers, inevitably trickling down into transport fleets worldwide.
The true impact on commercial transport has been felt from the onset of the pandemic; however, the gravity of that impact has manifested itself across borders and even on a local level. This article provides a general overview of the changes that have occurred in light of the recent health crisis and the continued efforts that the trucking industry is implementing to respond appropriately.
According to Geotab, Inc, a company that specialises in providing web-based analytics to help transport companies better manage their fleets, between 16 March 2020 and 8 May 2020 there was a significant drop in commercial transport activity in the United States compared with baseline data from February 2020.(1) The United States is operating at an average of 83% of normal commercial transport activity. This reduction in activity is felt more severely in federal regions, such as New York and New Jersey, with operating levels at 66% of normal activity.
Although the data reflects significant drops in North America in recent months, commercial activity appears to be gradually rebounding as other industries prepare to resume their business activities and phase into their 'new normal' operations.
A discussion of some of the key areas of concern with regard to freight operations will help to understand why supply chains have suffered such a significant slowdown in recent months. Logistics and industry professionals have provided insight on how truck drivers are affected by this pandemic, explaining that although drivers have been exempt from the non-essential business closures and stay-at-home orders implemented by most states, there are disruptions that could not have been avoided even with preparation. There have been reports of long waiting times at pickup and delivery points due to a lack of on-site personnel, which has upset and clogged up many receiving schedules and caused slower than usual turnaround times for freight.
In addition, there are reports of drivers refusing to book freight pickups in hard-hit areas, which has caused spot market and ad hoc rate increases. Even popular trucking routes have become a challenge for drivers due to restaurant and public bathroom closures. Some states have even gone as far as closing frequently used rest areas vital to the trucking industry. Further, less-than-truckload (LTL) freight carriers have been turned away from destination terminals due to reported limited space, resulting in extra fees tacked onto freight costs. Many of these carriers have been required to return their freight less than one day after a load cannot be delivered due to a facility being closed.
In addition to these driver experiences and unique challenges, the transport landscape continues to shift each day. Tray Anderson, Cushman Wakefield's executive managing director for logistics, stated in an article addressing the effect of COVID-19 that "refrigerated truck rates may continue to increase for urgent orders of essential goods while ecommerce businesses rely on spot market providers to quickly replenish their distribution centers in order to fulfill increased online shopping orders".(2)
When faced with these growing demands, drivers and their companies are feeling the pressure to pivot from regular operations and quickly adapt to new ways of doing business. According to Nick Beck, owner of Beck Trucking, "trucking companies are already doing their best to meet increased demand for products across the country. A few customers have already asked [drivers] to help supply grocery chains," requiring trucking companies and their drivers to tackle new objectives and learn quickly.(3) These new realities may include a relaxation of hours of service (HOS), which is discussed in more detail below.
As with any change, difficulties navigating the evolving landscape remain a concern for most trucking companies. According to Verizon Connect, as of 13 May 2020, the Federal Motor Carrier Safety Administration (FMCSA) has extended its Emergency Declaration providing HOS and other regulatory relief to commercial vehicle drivers transporting emergency supplies in response to the nationwide COVID-19 outbreak until the revocation of the COVID-19 national emergency.(4)
According to the FMCSA, none of the HOS regulations apply "while the driver is engaged with providing direct assistance under the emergency relief exemption". This means that drivers are not required to take 30-minute breaks and the regular 34-hour restart is not required: "To help ensure safety, once a driver has completed his or her delivery, the driver must receive a minimum of 10 hours off duty if transporting property, and 8 hours if transporting passengers". In a recent webinar hosted by Heavy Duty Trucking discussing what fleets need to know about the COVID-19 crisis, participants took a deeper dive into the FMCSA's exemptions, including covered and non-covered items. The exemptions are fairly broad, considering the vast areas addressed in Parts 390 to 399 of the FMCSA rules.(5)
These exemptions include driver medical qualifications and vehicle maintenance; however, no exemptions are made for drug or alcohol testing, commercial driver's licence (CDL) requirements or hazmat regulations. Some of the relief efforts provided by the FMCSA's exemptions are expected to become final rules following the Notice of Proposed Rulemaking that was published by the agency in August 2019, and was published in the Federal Register in early June 2020. A few of the areas covered by the final rule include short haul operations, adverse driving conditions, driver breaks and a sleeper berth exception. Any final rule will take effect in 120 days from the publication in the Federal Register according to Dan Horvath, vice president of safety policy for the American Trucking Association.
The FMCSA has implemented these exemptions in an emergency fashion to promote continuity in the trucking industry. These rules and guidelines provide additional relief to truck operators and their companies to manoeuvre accordingly, notwithstanding common issues that arise during this time (eg, licence renewals or registration requirements). Even with these rules in place, there has been a growing concern that as new drivers become qualified to obtain their CDLs, most state departments are closed or have reduced staff, which prevents drivers from finalising their training and further slows down operations heading into third and fourth quarter financial demands. Ultimately, trucking companies are pinched and feeling the COVID-19 effects intensely.
As trucking companies scramble to maintain operation levels, keeping drivers healthy during this time has been another key focus for many trucking companies, but this has become increasingly challenging considering the continued demand and need for supplies to be distributed in the quickest manner possible. Many drivers have stated concern with emotional stress for their families, their finances and their own well-being. Some drivers have even been advised by their companies to self-quarantine in their vehicles after experiencing COVID-19-like symptoms, which has placed drivers and their managers in unchartered territory.
In addition, companies have begun using resources such as in-house driver hotlines staffed by health and wellness teams that will assist drivers with health concerns, educating them on important safety measures and sharing ways to communicate with customers and truck stops in advance to ensure drivers have safe places to park and carry out their duties. These endeavours have provided drivers with essential resources and information on a day-to-day basis while remaining safe and productive.
While the transport industry continues to feel the downward pressures of the health crisis, there are glimpses of hope that demonstrate a recovery is in sight and the trucking industry will be an essential piece to our economic rebound. As companies create new and innovative ways to keep their business operations flowing and employees healthy, trucking operations will continue to deliver freight and provide small and large businesses with the supplies they require to keep them afloat until normal business operations resume.
For further information on this topic please contact Brian Del Gatto or Dameon Cons at Wilson Elser by telephone (+1 504 702 1710) or email (firstname.lastname@example.org or email@example.com). The Wilson Elser website can be accessed at www.wilsonelser.com.
(1) The impact of COVID-19 on commercial transportation and trade activity.
(2) COVID-19 Effects on Transportation Modes.
(3) Coronavirus Disease 2019 (COVID-19) Update.
(4) COVID-19: Impact on Trucking Companies, Economy and Trade.
(5) What Fleets Need to Know Now About COVID-19.
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