November 24, 2017

When the Trucks Stops

During the skyrocketing fuel prices of 2008, I remember listening to talk radio and the host commenting on how diesel prices were affecting truckers and trucking companies.  He said something to the effect of “At what point do they just decide they’re not making enough profit to be away from their families and stop driving?”  At the time, diesel was over $5.00 a gallon, which was $1.00 more than unleaded.  That didn’t make sense, as diesel requires less refining than unleaded.

That got me thinking.  I soon realized that nearly everything we purchase is, at some point, transported by semi-trucks.  If they stopped delivering goods, our economy would soon follow and eventually grind to a halt.  I began to do a little digging and found a report that was prepared in 2006 called “When Trucks Stop, America Stops”.

The report details how a stoppage of trucking could greatly impact American life.  It talks about how different industries, such as Healthcare, the Food Industry, Waste Removal and others rely heavily on trucking.

The author mentions how trucking stoppages after 9-11 impacted the economy and how hindering trucking after Hurricane Katrina added lengthy delays.

They also list the timeline below.  I don’t agree with 100% with it, but it’s not far off.

 

“A Timeline Showing the Deterioration of Major Industries Following a Truck Stoppage

 

The first 24 hours

  • Delivery of medical supplies to the affected area will cease
  • Hospitals will run out of basic supplies such as syringes and catheters within hours. Radiopharmaceuticals will deteriorate and become unusable.
  • Service stations will begin to run out of fuel.
  • Manufacturers using just-in-time manufacturing will develop component shortages.
  • U.S. mail and other package delivery will cease.

 

Within one day

  • Food shortages will begin to develop.
  • Automobile fuel availability and delivery will dwindle, leading to skyrocketing prices and long lines at the gas pumps.
  • Without manufacturing components and trucks for product delivery, assembly lines will shut down, putting thousands out of work.

 

Within two to three days

  • Food shortages will escalate, especially in the face of hoarding and consumer panic.
  • Supplies of essentials—such as bottled water, powdered milk, and canned meat—at major retailers will disappear.
  • ATMs will run out of cash and banks will be unable to process transactions.
  • Service stations will completely run out of fuel for autos and trucks.
  • Garbage will start piling up in urban and suburban areas.
  • Container ships will sit idle in ports and rail transport will be disrupted, eventually coming to a standstill.

 

Within a week

  • Automobile travel will cease due to the lack of fuel. Without autos and busses, many people will not be able to get to work, shop for groceries, or access medical care.
  • Hospitals will begin to exhaust oxygen supplies.

 

Within two weeks

  • The nation’s clean water supply will begin to run dry.

 

Within four weeks

  • The nation will exhaust its clean water supply and water will be safe for drinking only after boiling. As a result gastrointestinal illnesses will increase, further taxing an already weakened health care system.”

 

Fast forward to the week of 9-23-2012; I had a conversation with my brother, who is a freight broker for a large grocery distributor in the Midwest.  He told me that things are the worst he has seen them in the last six years that he has been in this position, and that he cannot see it getting better.  Now keep in mind that goes back to before the diesel hike of 2008.

I asked if that was due to diesel prices.  He said “only partly”.  He said the biggest problem right now is finding truckers.  Many truckers are either getting out of the business or retiring and that not many young people are considering it as a profession.  He said it’s a tough job, that you can sometimes be away from home for up to two weeks.  He said when he first started in the position, they posted a want ad looking for truckers in Madison, Wisconsin and they had 50-60 applicants.  He said they posted another want add this year in Madison and had maybe 3-5 applicants.

Another comment he made was about the US Department of Transportation enacting CSA2010, which added more penalties for truckers and trucking companies that don’t follow the regulations.  He said that not all of them were bad, but that they add more restrictions.  They also enacted a points system that might deduct points for not wearing a seat-belt or a light out on the top of the cab.  With enough points, you get audited and possibly fined on top of the cost of the ticket.  There was even one trucking company that, granted had some problems that needing fixing, but the US Department of Transportation went in and shut down for good.  Like my brother said, not all of the changes were bad, but they added more difficulty to an already complex problem.

He also mentioned that companies like the grocery distributer use a philosophy that might sound familiar to you; “just in time inventory”. To keep cost low, they don’t have a lot of inventory sitting around and depend on the trucks bringing them beef to butcher and package as well as all of the other groceries they distribute. If a truck is a day late, it starts to cause problems. If it is two days late, they send people home because they have nothing for them to do. This also goes for deliveries to grocery stores, which use a term similar to the one above that I have used a few times, called “just-in-time” delivery. For those of you unfamiliar, most grocery stores and many other retail stores only keep enough stock on hand for three days.

As an incentive to get drivers to pick up their loads, they have to pay a premium of 20% more per load.  That is going to trickle down folks!  We’re going to end up paying more for everything that is delivered by semi, which, as I mentioned, is MOST things.

I have mentioned in other articles that in many countries where food riots have occurred, it is because they pay between 30-50% of their income for food alone.  When food prices are raised, families have no money to spend on it.   In the USA, we spend roughly 12%-20% on food.  With the added cost of inflation, the increased price of corn, which is used as feed for livestock and many other things, and now the added cost of transportation of the goods, this is a problem that will only get worse.  Do you have room in your budget to pay 30-50% of your income for food?