The freight rate is a price at which a certain cargo can be delivered from one point to another. This price depends on a variety of factors such as the form of cargo, the weight of the cargo, the delivery distance, and the mode of transport. However, there is one additional factor that has been impacting the trucking community recently: COVID-19. In fact, some truckers say that the extremely low freight rates caused by the global pandemic are driving them out of business altogether. Let’s take a look at how this has come about.
How COVID-19 Has Impacted Freight Rates
It’s no secret in the trucking industry that COVID-19 has driven rates down drastically. Moreover, a lot of loads are offering only $1 per mile. Others are paying as little as 75 to 80 cents a mile. That’s less than half of what’s common in the industry and so bad that truckers have started protesting in the nation’s capital of Washington, D.C. At these rates, it’s not worth it for truckers to pull out of their driveways because they can’t turn a profit.
The entire economy has been driven into a recession by the pandemic, and a number of industries are hurting. Yet, the fact is that it still costs money to be out on the road. Between maintenance on the truck, fuel, and other expenses, trucking companies aren’t surviving the current economic conditions. And it all started when stay-at-home orders went into place in mid-March.
Initially, U.S. freight rates surged over fears about the coronavirus as well as the closure of highway truck stops. Many believed that this would discourage drivers from making long trips. However, as the pandemic persisted, factories shut down and port traffic ceased. Rates then plummeted as truckers battled over jobs to keep their families stable.
What Truckers Are Saying
Like most citizens impacted financially by the COVID-19 pandemic, truckers aren’t feeling optimistic right now. Pay is mostly determined by the distances driven, and this has also dropped. Rates are lower right now than they were 15 years ago, but all the costs that come with trucking have increased. Small carriers are the most vulnerable in this crisis. Some have had to lay off employees; other truckers have quit because it just isn’t worth it.
Some truckers feel that a further relaxation on restrictions on driver hours and more transparency on shippers’ margins could help small operators compete. Either way, now is a challenging time for truckers, and it’s forcing many to reevaluate their long-held career path.
Right now, truckers are risking their health and well-being to continue to move must-have items across the country. But, at the end of the day, they are being gouged with up to 50 percent of their workload and pay dropping since the start of the pandemic. Low freight rates are drastically impacting the industry and disproportionally hurting small, independent truckers.