Canada adds back 43K truck drivers after cuts in first half of 2020

Dive Brief:

As the Canadian economy continues to reopen and Canadians get back to work, truck drivers are returning to payrolls, driving their jobless rate far lower than the national population, according to Trucking HR Canada's September report.
After cutting 49,000 drivers in the first half of 2020, Canada added back 43,500 by the end of August, the report stated. "The upward trend we are seeing is even higher than predicted, [signaling] that our return to acute [labor] shortages could be here sooner than we think," Trucking HR said in a statement.
Unemployment was high among drivers in June, coming in at a recent record high of 12%, according to the report. In August, the jobless rate fell to 6.3%, far below the national Canadian unemployment rate of 11.4%.

Dive Insight:

The Canadian economy and trucking industry had a brief break from the driver shortage and turnover while COVID-19 slowed things down. But the respite fleets had in Canada and the U.S. is ending. Inventories are down, freight demand is up, and the holiday season is right around the corner. Such demands will likely revive the body aches of driver shortages in the two nations.

Before the pandemic struck Canada, the shortage in drivers was expected to grow to 25,000 by 2023, according to Trucking HR. In a previous survey this year, Trucking HR found more than one quarter (27.8%) of Canadian firms had put off growing or expanding their business because of the inability to attract new drivers.

After COVID-19 arrived, the pandemic-driven drop in trucker employment was pegged at $2.4 billion in sales in 2020, according to research by think tank Conference Board of Canada, commissioned by Trucking HR. In March, Canada responded with a C$27 billion stimulus for people and businesses.

Canada is letting its provinces reopen businesses on their own schedules. And the Canadian economy has slowly been rebounding. Cross-border freight is up, with the U.S. Bureau of Transportation Statistics reporting on Wednesday that U.S.-Canada freight exchange was up 7.3% in July from June. That translated to $26.2 billion in truck freight.

While Canada adds back drivers, the U.S. trucking market is managing to hold onto the drivers it has.

Annualized turnover rate at truckload carriers with revenues of $30 million or more dropped by 12% in Q2, to 82%, the lowest level since the end of 2018, said Bob Costello, ATA chief economist, in a news release. The rate at smaller truckload carriers fell 10 points to 60%, the lowest level since the final quarter of 2011, Costello said.

"By the end of the [second] quarter, we had begun to see the market tighten again as various restrictions began to be lifted," Costello wrote. "After steep drops early, the driver market began to normalize toward the end of the quarter. As the economy continues to recover, we should see the market for drivers continue to tighten going forward."

Annualized turnover at LTL carriers was unchanged at 12% during Q2, according to Costello.

The bigger challenge will be for U.S. and Canadian trucking firms to keep adding drivers as the economy improves. Because COVID-19 slowed CDL training and licensing, and because of retirements, U.S. Xpress Chief Financial Officer Eric Peterson told analysts on his company's Q2 earnings call, on July 28, that the U.S. industry could be down another 150,000 to 200,000 drivers by the end of 2020.

That's on top of the U.S. structural deficit of about 60,000 drivers that the ATA estimated existed at the end of 2018, the last time the ATA updated the number of the gap.