Jan 23, 2024

The Growing Demand for Truck Transportation Jobs in Comparison to Declining Warehouse Employment

In recent years, the transportation-related industries, logistics and manufacturing industry has seen a significant shift in labor shortages, decline in employment or employment levels in job demand. As the rise of economic activity, the e-commerce and online shopping has led to a growing need of retail sales for truck transportation services. This has created a stark contrast in employment trends, with a decline in the number of warehouse job opportunities and a surge in the demand for truck drivers.

This shift has caught the attention of economists, policymakers, and job seekers alike, as it highlights the impact of technological advancements and changing consumer behavior on the labor fair share and market share.

In this article, we will explore the reasons behind the growing demand for truck transportation jobs and the decline of warehouse employment.

We will also delve into the potential consequences of this trend and how it is shaping the future of the transportation and logistics industry. Through a thorough analysis of the current landscape, we aim to provide a better understanding of the commercial properties, supply chain disruptions and driving factors behind this shift and its implications for both employers and employees.

Slowly Recovering

The truck transportation industry has been slowly recovering from the rail freight recession and the job losses caused by the closure of Yellow Corp. in 2023. According to the recent data released by the Bureau of Labor Statistics, there was a 3,300 increase in seasonally adjusted truck transportation jobs in December, bringing the total number of jobs to 1,586,300.

This economic growth was also influenced by upward adjustments in the previously reported figures for November and October. Consequently, the December figure exceeded the "final" figure for October by 5,700 jobs.

It's worth noting that the October number is considered final, as it undergoes revisions over the next two months before being held until the February report. The Bureau of Labor Statistics mentioned that its model for 2023 may have overestimated the number of truck transportation jobs last year.

However, the revision for 2022 went in the opposite direction, as it increased the number of jobs after realizing earlier underestimations.

Increase in Seasonally

Interestingly, the increase in seasonally adjusted jobs was accompanied by a decrease in not seasonally adjusted jobs, which dropped from 1,592,900 to 1,588,400. While economists primarily rely on seasonally adjusted data, they caution against ignoring the not seasonally adjusted figures when observing broader trends.

Despite the rise in seasonally adjusted number since October, not seasonally adjusted jobs have actually decreased by 3,500.

David Spencer, the vice president of market intelligence at Arrive Logistics, highlighted the difference between the seasonal and not seasonally adjusted numbers by noting that the divergence suggests that jobs were down in December, but to a lesser extent than is typical for that month.

Consistently Reinforces

According to Spencer's email to FreightWaves, the data consistently reinforces the pattern observed in other trucking indicators. It indicates that despite the current reduced rate environment, the reduction in capacity and overall employment is happening at a slower pace compared to previous market cycles.

The forthcoming Q4 numbers will reveal whether this trend is genuinely occurring or if it is just carriers' optimism about an upcoming market turnaround. This will become apparent in Q1 as the demand fades from its peak season.

A Distant Goal

Despite experiencing two consecutive months of job number increases, reaching the high education level of January 2023 still remains a distant goal. The Bureau of Labor Statistics (BLS) reported that in that month, there were 1,611,400 seasonally adjusted jobs in the truck transportation industry, reflecting a largest increase of 28,400 jobs compared to December.

However, it is uncertain whether this all-time high in January will remain unchanged after the upcoming annual revision is published next month.

Since then, a combination of a weak freight market and the closure of Yellow, a prominent trucking company, has led to a decline in job totals. This decline was most evident in August when 30,700 jobs were reported lost, coinciding with Yellow going out of business.

Increases In The Past Four Months

However, there have been three monthly increases in the past four months, with only a small loss in October. Consequently, the total number of jobs in December reached 1,586,300, surpassing the August low by 16,100 jobs.

Mazen Danaf, an economist at Uber Freight, observed that certain major sector-specific data lags one month behind the broader report. In an email to FreightWaves, he highlighted that the BLS report indicated signs of tightening in the freight market.

Reached its Lowest Level

Danaf further explained that the job growth in November came from localized trucking rather than long-distance truckload employment, which he noted had reached its lowest level since September 2022. He suggested that this outcome is closely linked to over-the-road (OTR) rates.

Additionally, the data also revealed no change in less-than-truckload (LTL) employment figures. Danaf interpreted this as an indication that the previously oversupplied LTL sector did not absorb the former employees of Yellow.

The Continuous Reduction

A notable trend observed this year is the continuous reduction in employment opportunities within the warehouse sector. According to seasonally adjusted data, there has been a decline in warehouse sector jobs in 16 out of the last 17 months. The remaining month saw no change in employment figures.

The most recent report indicates a comparatively moderate decrease in warehouse sector jobs, with a decline of 4,900 positions. Although this constitutes the fourth smallest monthly decline throughout 2023, the overall impact is significant: by December 2022, the number of jobs in the warehouse sector had dropped to 1,933,400.

A year later, in December 2023, this figure stood at 1,851,200, reflecting a considerable loss of 82,200 jobs.

Notably, the peak in warehouse sector employment occurred in June 2022, with a total of 1,960,300 jobs. Since then, the sector has experienced a decline of 109,100 positions.

A Notable Increase

Additional findings from the report include a notable increase of 500 jobs in seasonally adjusted rail employment. This surge in rail jobs is particularly significant as it marks a positive shift after a prolonged period of decline or stagnation.

However, this positive momentum did not carry over into 2023, as rail employment showed minimal or no rapid growth. Nevertheless, the current figure of 150,500 jobs signifies the highest level of employment in the rail sector since the onset of the pandemic.

It is important to note, however, that this number remains considerably lower than the peak of 209,800 jobs recorded in April 2015.

Furthermore, the report highlights a decrease of 20 cents per hour in average hourly earnings within the truck transportation industry, resulting in a new figure of $30.51. Specifically, the data reveals that wages in the long-distance truckload sector experienced a decline of 0.5%.

This below-inflation wage percent increase is indicative of carriers' reluctance to hire and retain drivers. Such findings shed light on the current state of the industry and the various factors influencing annual wage trends.

In Conclusion

As the demand for online shopping and delivery services continues to rise, the need for truck transportation jobs is also increasing. This is evident from the recent decline in warehouse employment, which has been overshadowed by the employment growth of the trucking industry.

It is clear that this trend will continue as our society becomes increasingly reliant on e-commerce and fast delivery options. Therefore, those considering a career in the modes of transportation industry can rest assured that there will be a steady demand for truck transportation jobs in the foreseeable future.

If you want to stay updated with a wide range of trends, actionable insights, and innovative solutions in the trucking, freight, and logistics industry, stay connected to us.

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