The possibility of a smooth running supply chain experienced more adversity as the Omicron variant sidelines for-hire truckers. A December release of the ACT For-Hire Index indicates Driver Availability shows a decline from an otherwise promising November posting.
“The Driver Availability Index decreased 2.4 points in December, to 35.5 from November’s 37.9, reflecting the impact of the Omicron variant on both absenteeism and recruiting,” Tim Denoyer, vice president and senior analyst at ACT Research, reportedly said. “Positively, Omicron’s case pattern appears more needle-shaped, and U.S. cases have already begun to fall, so this wave is likely to be short-lived.”
The ACT For-Hire Trucking Index surveys monthly service providers and converts the responses into “diffusion indexes.” An index is considered flat when it generates a level of 50.
The November For-Hire Availability Index continued a string of month-over-month improvements that began in March 2021 after the driver availability index hit its lowest point in more than four years. With an increased number of for-hire truckers unexpectedly sidelined in December, the law of supply and demand appears to be organically pushing up freight rates.
“Freight markets remain tight with elevated demand and Omicron impacting driver availability, and ACT’s For-Hire Pricing Index rose 1.7 points, to 72.0 (Seasonally Adjusted) in December from November’s 70.3,” Denoyer reportedly said.
This is not necessarily good news for consumers, at least in the short term. With inflation at a 40-year high in the U.S. and tipping the scales at 30-year highs in Canada, fewer truckers will only exacerbate pricing conditions. The loss of availability comes at perhaps the worst time for both economies. The U.S. suffers a persistent annual driver shortage the American Trucking Associations now pegs at more than 80,000. In Canada, freight hauling operations reportedly need to add upwards of 23,000 CDL holders. Add a massive Freedom Convoy that has thousands of truckers protesting vaccine mandates instead of hauling loads, and the supply chain appears to have entered a Bermuda Triangle of logistics.
“Omicron’s negative impact on driver availability is affecting fleet capacity in the short-term, but, with extraordinary stimulus in the rearview, drivers have started to respond to significant bonuses and wage increases in greater numbers. That said, equipment production is still challenged, and the sustainability of the improvement will be interesting to watch in the coming months. Given the major supply challenges, we still anticipate capacity growth to be slow for a while,” Denoyer reportedly said.
Until December’s driver availability setback, optimism was high that a rebalancing of the supply chain was at hand. However, the Omicron variant and other factors sidelining truckers during the run-up to the busy holiday season highlight the fragility of the current system.
Source: thetrucker.com, trucknews.com
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