Covid-19 gives freight demand a bump – but will it last?

TORONTO, Ont. — Canadian trucking firms are still unsure of how the Covid-19 pandemic will affect their businesses long-term, but for now it’s been a boon for freight volumes.

“We actually saw an increase last week on a week-over-week comparison,” said Derek Koza, president and CEO of Wellington Group of Companies. “We are seeing the health care, home essentials, food goods, and cleaning supplies sectors all pick up, while automotive, electronics and want-vs.-need items were flat.”

Wellington delivered 28 loads of toilet paper to one region in the U.S. last week alone. But Koza is unsure of how freight volumes will react as panic buying subsides.

“Due to the fact this is a first for us, dealing with a viral pandemic, we had naturally thought our volumes would be down,” he told Today’s Trucking. “We are actually seeing the opposite and have read that last week was a record week for most in regards to volumes, and we are seeing additional reports that spot markets are climbing. During this time of pandemic, the trucking industry is stepping up in a large way to support demand.”

“Overall, our volume levels have been sustained, but we’re anticipating a large dip in the retail segment this week.” – Jared Martin, Speedy

Koza acknowledged the current spike in volumes may not be sustainable. “It makes logical sense to understand if consumers are purchasing multiple weeks or months of supplies today, the need will not be there in a month’s time for the same supplies, as households have been building up inventory.”







Jared Martin, managing director of Speedy Transport, has seen a similar trend.

“The obvious high-consumption commodities have spiked, which has been offsetting non-essential items,” he said. “Overall, our volume levels have been sustained, but we’re anticipating a large dip in the retail segment this week.”

Avery Vise, vice-president of trucking for industry forecaster FTR, said fleets in the U.S. are seeing a similar bump in demand, with the U.S. spot market capacity tightening to 2018 levels.

“Specifically for trucking, frankly, last week has been a little bit of a windfall,” Vise said in an interview. “We have seen additional pressure in the spot market.”

Vise said the spot market was already tightening prior to the outbreak, but its demand has grown further in the past week to 10 days. The imbalance between load availability compared to truck postings on load board Truckstop.com set a new record for the tenth week of the year, according to the latest data released Sunday night by the load board. Spot market rates, as a result, have been creeping up, benefiting carriers. And low diesel prices have also provided a boost to carrier profitability.

‘Bank every dime’

Vise urged carriers to manage their finances carefully while they can.

“The big takeaway people should have is, they need to bank every dime they can over the next several weeks,” he warned, noting falling diesel prices provide a short-term benefit as carriers continue to receive fuel surcharge payments based on earlier diesel prices for about 30-45 days. “The near-term advantage is you are getting fuel surcharge receipts coming in that are based on considerably higher diesel prices, so you get a little bump there, but that comes to an end eventually and will reverse at some point.”

The good news, Vise said, is that diesel prices are likely to remain low due to decreased consumption from travelers and the airline industry.

Looking ahead, Vise said FTR anticipates a couple negative quarters before seeing a rebound. “The recovery may not start until well into the third quarter,” he warned, hinting FTR will be revising its forecast downward.

Karen Campbell-Jones, director of marketing with TransCore Link Logistics, said a spike in load volumes seen in Loadlink’s Canadian spot market is more likely attributable to the end of rail blockades and winter storms in some regions of Ontario, Quebec, and Atlantic Canada, than to virus-related demand.

“To date, we are not seeing a trend directly as a result of the virus on Loadlink,” she told Today’s Trucking.

Fleets respond to threat

Fleets are responding to the pandemic in a variety of ways, including making office workers work from home and equipping drivers with information and supplies.

“Most companies are canceling all in-person meetings, having those who can work from home do so, and asking people who have traveled to self-isolate for 14 days when returning,” said Mike Millian, president of the Private Motor Truck Council of Canada, when asked what measures private fleets are taking.

“For drivers, they are providing hand sanitizer and disinfectant wipes and providing information on hygiene, as well as limiting contact with other people as much as possible. They are also providing information on symptoms and what to do if they have any of them. Some of my members are slowing down because of this and are putting people on rotating shifts. Others in the food and medical supply industry are suffering from a shortage of drivers as a result of demand and wait times to load and unload.”

Wellington Group has developed an awareness campaign for all staff and is currently not welcoming visitors to its facilities. Employees have been urged to avoid external meetings, and the company is resorting to conference calls only with vendors, suppliers and customers for 30 days.

“We have also asked our staff to refrain from going to any non-essential gatherings such as malls, retail, entertainment, etc., to further enhance their safety and the safety of all employees and family members,” Koza said. One employee was asked to work from home for 14 days after returning from an international trip, while nine other employees are working from home.

“No one has been showing symptoms, however we’re taking this seriously to protect the health of all of our Wellington Group of Companies employees and community,” said Koza. “We will continue to monitor the situation and will provide further updates to our staff along with additional sanctions if needed.”

James Menzies

James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 18 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

Have your say

We won't publish or share your data

*