Jul 28 | 2021
(Americas) Tucker Worldwide CEO Sees Acquisitions on Horizon
Jeff Tucker, president and CEO of Tucker Company Worldwide, characterized the U.S. trucking industry as “red hot, right now,” in a recent company webcast.
One year after the outbreak of the Covid-19 pandemic, the industry is riding increasing freight, which is straining capacity while boosting motor carrier rates.
“Contract pricing for longer-term contracts – between shippers and carriers and shippers and brokers – are way higher than anything we have previously seen before,” said Tucker, a 30-year industry veteran. “Of course, we never could have foreseen the events of the last year.”
According to Truckstop.com, rates for key U.S. truckload lanes have been in the US$3-per mile range since September. 2020. Spot and less-than-truckload demand are likewise unprecedented in scale, Tucker explained.
Noting Morgan Stanley data, he said the recent capacity environment has been “well in excess of the worst capacity crisis in history” in 2018.
Driver Shortage
Tucker noted that trucking’s chronic driver storage has seen improvement for larger fleets in recent months, with driver applications up 13 percent in June.
While the American Trucking Associations claims that the industry needs 60,800 drivers now and more than 160,000 by 2028, Tucker cited Federal Motor Carrier Safety Administration data shows 385,000 drivers have been added in 2021, 1.3 million over the last eight years, to 3.42 million today. “They just happen to not want to work with the largest fleets,” which are seeing “huge churn.”
With the only other option adding drivers, tractors and trailers on their own, the only alternative is “for these larger carriers to grow is by acquisition,” he maintained.
Recent examples of acquisitions are Knight-Swift Transport Holdings acquiring AAA Cooper Transportation and Werner Enterprises buying ECM Transport Group.
Capacity Prognosis
Tucker said he has gone through three capacity crises in his career, in 2003-2005, 2014, due to the Polar Vortex during the longest U.S. economic recovery and took about six weeks, and 2017-2018, which took “about 16 months to work itself through.”
2020-2021 is different, Tucker said. “All supply chains were upended, completely upended. Carriers and shippers, manufacturers, importers, and exporters, and just about everyone, had to reimagine their supply chains. … New contracts, new relationships, and new industries were met with contracts through suppliers. Then over the course of the next 15 months, the churn, the turnover, and the pivoting in our economy and the supply chain evolutions each of our companies have gone through are still working themselves out.”
At the same time, the U.S. is experiencing an economic boom as supply chains are being restrung. “We are in a huge economic boom right now, and supply chains are changing. That is unprecedented as well. We are one year into this capacity crisis, and I don’t think anyone is anticipating an end before the end of this year,” Tucker concluded.
Watch the entire Tucker Worldwide webcast.
