Food trucks crushed by coronavirus pandemic
‘Yankee Doodle Dandy’ food truck founder Josh Gatewood discusses why his two food trucks had to shut down in the midst of the coronavirus outbreak.
While many sectors across the broader economy prepare for negative fallout related to the spreading coronavirus, the trucking industry is one where some companies may weather the storm well.
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“I think trucking has a long road ahead of it – along with the US economy – but there are bright spots,” Brian Fielkow, president of multimillion-dollar trucking and logistics company Jetco Delivery, told FOX Business.
The industry is coming off a challenging year when overcapacity and weak pricing forced at least 795 companies to close.
TRUCKING INDUSTRY OFF TO ROUGH, 'SLUGGISH' START IN 2020
Experts had predicted similar headwinds would weigh on the industry in the early months of 2020 – demand, for example, remained sluggish. But then the effects of the coronavirus began to settle in.
The virus, which first took hold in China, started to affect supply chains earlier this year. Now it’s widespread in the U.S., taking a steep toll on industries ranging from airlines to restaurants, hotels and many more.
However, the trucking industry as a whole may not see as many adverse effects as those other industries, John Kearney, president and CEO of Advanced Training Systems, told FOX Business.
“The movement of freight is such a basic part of our economy, try to imagine a day without freight moving,” Kearney said. “As businesses shut down … or [business is reduced], that reduces the freight requirement. But people are still eating, they’re just eating at home.”
IS THE TRUCK DRIVER SHORTAGE REALLY AS BAD AS IT SEEMS?
Fielkow told FOX Business he doesn’t see the “tremendous demand for truckers to restock the shelves” at grocery stores and pharmacies letting up any time soon.
However, in a very large and fragmented industry – not all companies will share the same experience.
“In trucking, if you’re in the right niche, if you’re nimble, if you’re financially strong, I think you could do just fine,” Fielkow said. “The trucking industry is going to be the ‘haves’ and the ‘have nots’ … I think coronavirus is going to exaggerate and separate the haves and have nots even more.”
That means additional trouble for companies who narrowly escaped the difficulties of last year. Amid a massive number of firm closures, a lot of businesses barely made it through – suggesting the current situation will weigh even heavier on their prognoses.
“Can they run at half speed or 75 percent speed and stay alive for 60 days? I doubt it,” Fielkow said.
More company failures could lead to broader challenges when the economy eventually rebounds. Capacity in the industry could be contracting at a time when demand begins to rebound and surge – a situation Fielkow dubbed the “perfect storm.”
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But there are other concerns, too.
Kearney, for example, pointed to companies’ potential inability to hire drivers. Since many states have shuttered their motor vehicle departments, prospective drivers are unable to take tests or obtain the necessary licenses.
“If we’re shutting down the DMVs, we’re going to find that as the [driver] shortfall increases, changes in demand will be offset by the fact that there will be less drivers,” Kearney said.
As previously reported by FOX Business, the industry was short about 60,800 drivers in 2018 – a roughly 20 percent increase from the year prior, according to the American Trucking Associations. The shortage is expected to balloon to more than 160,000 by 2028, and over the next decade, the industry will need to hire 1.1 million new drivers – many to replace older and retiring workers.
If the overall economy does seriously slow, Kearney noted it would be extremely important for the Trump administration to consider aiding the trucking sector to keep things moving.
“Every single thing in every single store in Amazon and Walmart at some time travels by truck and if you slow that down you’re going to kill the economy very quickly,” Kearney said.
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