Trucking stocks are leading the conversation after U.S. lawmakers voiced concerns in a letter sent Wednesday related to driver shortages. Citing “alarming turnover rates,” more than 60 members of Congress signed on, requesting federal funding for truck driver training. These signatures come in addition to endorsements from many of the biggest trucking associations in the country. In spite of the letter’s support, however, trucking stocks are down across the board on Friday.
Headed by Rep. David Scott, chairman of the House Agriculture Committee, the letter requested assistance from the Labor Department to fill unmet demand for truckers. The letter proposed expediting a grant application that would pay unemployed Americans to receive trucking training.
The plea is not without need, either. The trucking industry lost 6% of its pre-pandemic labor force at the height of the Covid-19 pandemic. Turnover rates are over 90% for large, long-haul truckers. As the letter says:
“The world economy has been able to flourish because of hard-working truck drivers. From medical supplies to the transport of food and agricultural commodities, the trucking industry has played a vital role in elevating our standard of living. … Putting forward data-driven policies to improve the quality of life and flexibility for drivers, the trucking industry’s most vital asset, is important for lowering turnover rates among those workers and attracting a new generation to the workforce.”
What Does News From the Hill Mean for Trucking Stocks?
Trucking stocks came up big in the past year. J.B. Hunt Transport (NASDAQ:JBHT), Old Dominion Freight Line (NASDAQ:ODFL) and Knight-Swift Transportation (NYSE:KNX) each reported at least 35% increases gains in the year to date. Still, the industry continues to suffer from labor shortages that have taken a toll on the U.S. economy. All of the aforementioned trucking companies are down slightly on the day.
Where does that place the future of the trucking giants? And where will the plea from those lawmakers and trucking associations go?
Despite receiving great support, some big names are less sympathetic to the cause.
Leading the naysayers, Todd Spencer, who heads up the Owner-Operator Independent Drivers Association, thinks the proposal is outlandish. In a MarketWatch interview he said this funding would be nothing more than “corporate welfare.”
“When they say there’s a shortage, you have to ignore basic math. Every year, states license over 400,000 people to drive big trucks. Where do they all go? Most clearly don’t stick in this occupation that they just got licensed for. The reality is, if the job that you’re offering sucks, is the solution really go find more suckers, or should you improve the job so people will come and stay?”
Spencer instead proposes paying truckers by the hour rather than by miles, to compensate for long loading and unloading time.
The Bottom Line
Trucking remains a vital industry in the United States. But with drivers hitting record lows and facing sky-high turnover rates, it’s unclear if its current trajectory will keep pace with demand. Some estimate that roughly 40% of America’s trucking capacity is untapped.
Right now it’s unclear just where this proposal will go, or when the driver shortage will ease up. Keep an eye on the highways to see how trucking plays out in the long haul.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.