Trucking stocks lead the conversation after U.S. lawmakers raised concerns in a letter sent Wednesday regarding driver shortages. Citing “alarming turnover rates,” more than 60 members of Congress have signed on, asking for federal funding for truck driver training. These signatures are in addition to the approvals of many of the country’s largest trucking associations. Despite the letter’s backing, however, trucking stocks were down across the board on Friday.
Led by Rep. David Scott, Chairman of the House Agriculture Committee, the letter called for help from the Department of Labor in meeting the unmet demand for truckers. The letter proposed to expedite an application for a grant that would pay unemployed Americans to receive trucking training.
Advocacy is also not pointless. The trucking industry lost 6% of its workforce before the pandemic at the height of the Covid-19 pandemic. Turnover rates are over 90% for large, long-haul truckers. As the letter says:
“The global economy has been able to thrive because of hard-working truck drivers. From medical supplies to transporting food and agricultural products, the trucking industry has played a vital role in raising our standard of living. … It is important to come up with data-driven policies to improve the quality of life and flexibility of drivers, the most vital asset of the trucking industry, to reduce the turnover rates of these workers and attract new ones. generation in the labor market.
What does the Hill news mean for trucking stocks?
Trucking stocks have skyrocketed over the past year. JB Hunt Transport (NASDAQ:JBHT), Old Dominion Freight Line (NASDAQ:ODFL) and Knight-Swift Transport (NYSE:KNX) each has reported at least 35% increases in earnings during the year to date. Yet the industry continues to suffer from labor shortages that have wreaked havoc on the US economy. All of the aforementioned trucking companies are down slightly on the day.
Where does that place the future of the trucking giants? And where will the advocacy of these legislators and trucking associations go?
Despite great support, some big names are less sympathetic to the cause.
At the head of the opponents, Todd Spencer, who heads the Association of independent owner-operator drivers, thinks the proposal is far-fetched. In a Market surveillance interview, he said that this funding would be nothing more than “the welfare of businesses”.
“When they say there is a shortage, you have to ignore the basic math. Each year, states allow more than 400,000 people to drive large trucks. Where are they all going? Most of the time, don’t stay in that profession they just got licensed for. The reality is, if the job you offer sucks, is the solution really to go for more suckers, or should you improve the job so people come and stay? “
Instead, Spencer suggests paying truckers by the hour rather than the kilometer, to compensate for long loading and unloading times.
The bottom line
Trucking remains a vital industry in the United States. But with drivers hitting record highs and facing extremely high turnover rates, it’s unclear whether its current trajectory will keep pace with demand. Some estimate that about 40% of the US trucking capacity is untapped.
At this time, it is unclear exactly where this proposal will go, or when the driver shortage will ease. Keep an eye on the freeways to see how trucking is going over the long haul.
As of the publication date, Shrey Dua does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.