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Rebecca Brewster is President and Chief Operating Officer of the American Transportation Research Institute (ATRI). ATRI is the trucking industry's not-for-profit research organization, whose mission is research to improve the trucking industry's safety and productivity.
Rebecca is the recipient of several awards including Fleet Owner magazine's 2016 Dozen Outstanding Women in Trucking, the 2013 Influential Woman in Trucking award from the Women in Trucking Association, and the 2010 J.R. Bob Halladay award given by the 50 state trucking associations.
Rebecca has been with ATRI for over 27 years. Prior to that, she was the Public and Governmental Affairs Director for the Cary, North Carolina Chamber of Commerce and a Fleet Analyst with Moen, Inc. Rebecca has a B.A. in English from Wofford College and she is a Fellow of the North Carolina Institute of Political Leadership.
David Maloney, Editorial Director, DC Velocity 00:00
What concerns are driving the trucking industry? California voters approved a measure to support gig deliveries. And new figures show a surging rebound in logistics.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by DCV-TV. Five channels of streaming videos are yours for the viewing on DCV-TV. Major improvements have recently been made to the DCV-TV platform to enhance the viewing experience, provide greater search capabilities, and to expand the capacity of the video library well beyond the 3,000-plus videos already in the archive. Be sure to check it all out at DCVTV.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin: What worries the trucking industry the most? To answer that, I'd like to welcome our special guest today. Rebecca Brewster is president and chief operating officer of the American Transportation Research Institute, also known as ATRI. ATRI is the trucking industry's not-for-profit research organization. And Rebecca has been with the organization for 27 years.
Welcome, Rebecca, thanks for joining us.
Rebecca Brewster, president and COO, American Transportation Research Institute 01:29
Thank you so much for having me on today, Dave.
David Maloney, Editorial Director, DC Velocity 01:32
To begin, can you tell us a little bit more about the work of ATRI?
Rebecca Brewster, president and COO, American Transportation Research Institute 01:36
Certainly. As you mentioned, we are the trucking industry's not-for-profit research organization. And the work that we do on behalf of the industry is focused in many of the areas that you would think have a nexus to trucking: the environment, workforce issues, regulatory issues, economic analyses, as well as safety.
David Maloney, Editorial Director, DC Velocity 01:59
And last week, ATRI released its 16th "Top Industry Issues" report. Before we get into the details of those top issues, can you tell us a little bit about how this report is generated?
Rebecca Brewster, president and COO, American Transportation Research Institute 02:10
Absolutely. We started this annual survey of the trucking industry in 2005. And it was intended to identify what are the emerging issues in the industry, so that collectively as an industry, we could get ahead of those issues. But what we've found over time is that the survey is really representative of whatever the pain, if you will, that the industry is feeling at that time, whether it's fuel costs—in the very first survey we did fuel was priced very high, and we had a series of hurricanes, including Katrina and Rita, that really impacted the fuel supply, and so therefore, fuel prices. So that was the Number One issue in that very first survey. But it shows what the industry is concerned about, and it really is an indicator of where we are handling each of these issues, because not only do respondents rank the issues, but they also rank strategies that they believe the industry should collectively pursue to address each of these issues.
David Maloney, Editorial Director, DC Velocity 03:12
Obviously, 2020 has been a very unusual year for trucking and for most other industries. How did the pandemic and economic fallout affect your report and the results that you saw this year?
Rebecca Brewster, president and COO, American Transportation Research Institute 03:23
Well, it's interesting because, again, timing is everything. We had, as one of the issues that respondents could select from on this year's survey, Covid-19, because in early research that we did in March and April, we were seeing some fairly significant impacts on the industry from the pandemic. But in the results of this year survey, because of when it was conducted, there are 10 issues that outranked the pandemic as one of the top concerns for the industry. But certainly, if we look down the list of Top 10, we know that the pandemic had an impact on a number of those.
David Maloney, Editorial Director, DC Velocity 03:59
Can you share what some of those top concerns the trucking companies face?
Rebecca Brewster, president and COO, American Transportation Research Institute 04:05
For the fourth year in a row, the Number One concern on our annual survey is the driver shortage. And certainly, the lack of drivers and new entrants to the industry continues to plague us, but we're seeing it really come back now like it did even in 2018. Early on in the pandemic, fleets were just reacting to and figuring out "How do we deal with the situation?" And in certain sectors of the industry—for instance, those who haul fuel—business really took a dive. But now that freight demand is on the way back up, and really increasing as we go into the holiday season later this year, there is tremendous capacity constraints in terms of the available drivers.
We've also seen a number of external issues impact our driver supply, including the Federal Motor Carrier Safety Administration Drug & Alcohol Clearinghouse, which has taken out a number of drivers who tested positive and who have not initiated the return-to-work process. And so, regulatory impacts, Covid impacts. We have an older workforce, and so we had a certain number of drivers who just decided that the risk associated with working during the pandemic was not something they were willing to take on, and they retired from the industry.
David Maloney, Editorial Director, DC Velocity 05:26
Sure. With so many people out of work, though, I could imagine people not familiar with the industry would wonder why there's a difficulty in finding drivers when there are so many people unemployed. How would you answer that?
Rebecca Brewster, president and COO, American Transportation Research Institute 05:39
Certainly, I view the unemployment—high numbers of unemployment—as a great opportunity for the trucking industry because of our shortage, but this is—particularly in the over-road sector, over-the-road sector—not a lifestyle for everyone. Certainly, you have to go through a training program, driver training program. And if you operate in the over-the-road sector, you are often away from home for long periods of time. And when we think about, even now, people who have perhaps two, husband and wife, who are out of work, and you have children who are schooling from home, you can't have—you have to have a parent at home. And so there are just issues associated with the pandemic, that are making it challenging for us as well.
David Maloney, Editorial Director, DC Velocity 06:27
And, of course, the requirement to have a CDL license and all enter into that. Beyond just finding drivers, there's also difficulty retaining drivers you have, whether it's people not wanting to drive during the pandemic, or as you mentioned, an older workforce who may be retiring. So what are companies doing to try to retain those drivers, and how big of a factor is that within the listings that you had this year from the survey?
Rebecca Brewster, president and COO, American Transportation Research Institute 06:50
Well, we see both driver compensation, which certainly is part of the driver shortage and driver retention issue, came in at Number Two on this year's survey, and driver retention as an issue came in at Number Six. And it's really hard, Dave, to separate any of these issues and look at it in a silo, because they really, there's so much interplay between them. But certainly fleets are reacting, and have been reacting for the past several years, to the shortage by increasing driver pay, and so we have seen, in our research, driver pay go up significantly. And we have also seen driver benefit packages go up as fleets are offering additional benefits, including things like paid tuition for a college degree, as some of the offerings that fleets are providing in an attempt to recruit and retain the best drivers.
David Maloney, Editorial Director, DC Velocity 07:45
What are some of the other issues that are high on your list from this year's survey?
Rebecca Brewster, president and COO, American Transportation Research Institute 07:50
Number Three on the annual survey is truck parking, or the lack of available truck parking. And that's the highest that truck parking has ranked on our survey. And it's really indicative of a situation that our professional drivers face every single day. And I don't care where you live in the country, if you have been on the road early in the morning on the interstate, you have seen trucks parked on interstate ramps. And that is not something professional drivers choose to do. They're doing that because they have nowhere else to safely park to get their federally required, mandated rest period. And so, providing that additional capacity is critical. And that's a situation that, again, has been impacted by the pandemic. Because early on in the pandemic, a number of states shuttered their public rest areas, essentially taking capacity out of an already constrained system. And so, I think that drove truck parking up higher in the ranking.
Coming in at Number Four was our regulatory framework that is called Compliance, Safety, and Accountability [and] comes out of the Federal Motor Carrier Safety Administration, and carriers have a number of concerns with how their safety performance is ranked and rated under that program.
And then Number Five, Dave is an issue that has not been on our survey since the inaugural year in 2005, and that's the cost of insurance. And we have seen the cost of liability insurance continue to increase for fleets. In some other research that we do annually, what we call our operational costs. We've seen, over the past five years, the cost per mile for insurance premiums go up over 18%. We know that a number of fleets have had to close their doors because they cannot afford their liability insurance. And so, not only did it now appear for the first time since 2005, but it came in at the Number Five issue overall.
David Maloney, Editorial Director, DC Velocity 09:47
Is there a need for some tort reform and some of the nuclear verdicts that we've seen, and settlement judgments that have been laid? Is there some kind of legislation needed to to reverse some of that, to be able to control insurance rates?
Rebecca Brewster, president and COO, American Transportation Research Institute 10:02
Certainly, tort reform has a big role in that. And again, we saw it show up on the survey again this year. It hadn't been on the survey since 2011. It's on in this year's survey number, as the Number Seven issue overall. And tort reform and insurance costs are so closely linked because we have seen this growth in very large verdicts against the industry. We recently released a study looking at the increase in what we called "nuclear verdicts"—verdicts of $10 million and more—and the impact that's having on fleets, but not just for the fleets who are involved in those crashes, but it is driving the cost of insurance up across the board for all fleets as those motor carrier insurers are having to absorb all that risk and costs from those fleet—from those crashes.
David Maloney, Editorial Director, DC Velocity 10:53
Were there other issues that stood out to you this year in this year's findings?
Rebecca Brewster, president and COO, American Transportation Research Institute 10:57
The economy, it's amazing to me with a pandemic-fueled recession that we experienced earlier this year, only ranked Number Eight, the state of the economy on the overall top industry issues, which I think points to how challenging these other issues—driver shortage, driver compensation, the lack of truck parking—how impactful those issues are on the trucking industry. But we do have concerns about the economy. As I said, certain segments of the industry are doing quite well, but other segments of the industry, like fuel haulers, have had a tougher time this year.
David Maloney, Editorial Director, DC Velocity 11:38
How can our listeners get a copy of this year's report?
Rebecca Brewster, president and COO, American Transportation Research Institute 11:42
All of ATRI's research is available free of charge from our website at truckingresearch.org. So fairly easy to remember. It's what we do: truckingresearch.org.
David Maloney, Editorial Director, DC Velocity 11:53
And we'll put that link up on for those podcast platforms that are able to reveal links. We'll put that up there for everybody to be able to see. We've been talking to Rebecca Brewster, the president and chief operating officer of the American Transportation Research Institute.
Thank you, Rebecca, for being with us today.
Rebecca Brewster, president and COO, American Transportation Research Institute 12:12
Thank you so much for having me.
David Maloney, Editorial Director, DC Velocity 12:14
Our pleasure.
Now let's take a look at some of the other supply chain news from the week. Ben, you reported this week on Prop 22, the California initiative that redefines gig-economy drivers. Can you tell us what happened with Tuesday's vote?
Ben Ames, Senior News Editor, DC Velocity 12:29
Thanks, Dave. Yes, it's been a fascinating week to be watching current events unfold. And this point actually ties into some of the talking points that you were just finding out about from Rebecca at ATRI, to do with driver compensation, to do with pay and benefit packages. Specifically, the impact of this week's presidential election will take some time to figure out, but in California, people in the logistics field did get some immediate feedback. That's because voters approved an initiative called Proposition 22—Prop 22 for short—and that allows employers to compensate their gig-economy drivers as independent contractors, instead of full-time employees.
It's important to note that the measure does not apply to truck drivers in the freight sector, but rather to those who drive their passenger cars for gig-economy jobs for companies like Uber and Lyft. However, the measure covered many of the same issues that we've been covering in the magazine about a similar legislative issue known as AB5, which refers to Assembly Bill 5, from California's state house. That law passed in 2019, and it would make it harder, likewise for employers to qualify employees like truck drivers as independent contractors, because those are less expensive to employ than full-time employees. So, supporters of AB5, like the Teamsters union, say that the law would block companies from dodging the cost of providing benefits and minimum-wage guarantees. But industry groups, like the California Trucking Association, oppose AB5, because they say that it would raise their operating costs, and maybe even lead to tighter capacity in the freight sector. Both groups might be right, but at any rate, the whole issue of AB5 is now caught up in the courts, because earlier this year, a federal judge issued a temporary stay on the new law.
David Maloney, Editorial Director, DC Velocity 14:19
Now, Prop 22 primarily affected Uber and Lyft and those other people who are doing that kind of thing, delivering people places, but will also affect those who were doing package deliveries through Uber and Lyft and DoorDash and some of these other types of platforms?
Ben Ames, Senior News Editor, DC Velocity 14:35
Yep, great question. And the answer is "maybe."
So, Prop 22 would require employers to provide their drivers with benefits like paid sick leave and unemployment insurance. And that policy would reach beyond, it seems, just the ride-hailing companies, like Uber and Lyft, because Uber and Lyft teamed up on this Prop 22 issue with, as you mentioned, DoorDash and Postmates and Instacart, which are three other companies that build smartphone apps where part-time drivers can deliver parcels as well as passengers. So, drivers for those firms often deliver meals, for example. You do often see DoorDash, as an example, for restaurants. So, to get around that debate, supporters say that Prop 22 is actually a compromise, those smartphone-app builders say, because while the drivers wouldn't get all the treatment of full-time employees, they would still get a lot of support. That's according to a transportation law firm in Indianapolis called Scopelitis that analyzed the proposition. So, the law firm said that Prop 22 guarantees drivers things like minimum earnings. They can keep the tips from passengers. They get compensated per mile for the use of their vehicle. They get the health care subsidy, and accident insurance. Of course, all those benefits relate to how many hours per week they do the job, so a part-time worker wouldn't get full insurance. But still, the law firm said that Prop 22's win shows that voters see AB5, as well as the gig-economy sector in general, see AB5 as an overreach into that area. So voters think the drivers should be able to choose to work, if they wish, either as an independent contractor, as opposed to employee if they're willing to accept those terms.
David Maloney, Editorial Director, DC Velocity 16:23
Thanks, Ben. It'll be interesting to see if there are any legal challenges, and if other states follow these same guidelines in enacting their own legislations for the gig economy.
Ben Ames, Senior News Editor, DC Velocity 16:32
It really will. We'll be on it for the magazine.
David Maloney, Editorial Director, DC Velocity 16:34
Thanks, Ben. And Victoria, you reported on new logistics numbers that show a rapid recovery continuing, can you share more?
Victoria Kickham, Senior Editor, DC Velocity 16:43
Absolutely, yes. So, there was more positive news about the health of the logistics industry this month. Activity's picking up across the board as e-commerce continues to ramp up, as we've talked about quite a bit, and peak shipping season gets underway. So, we covered the Logistics Managers' Index, or the LMI, each month, as you know. And this week, the LMI researchers released their October data, and it showed that the index reached its highest level in more than two years. And just as a little background, the LMI measures activity across logistics, transportation, and warehousing by surveying industry professionals each month. So, in October, it reached, the LMI reached 71.6, which is 20 points ahead of where it was in April, and April was an all-time low. So, this essentially means the industry is rebounding from pandemic-related low activity earlier this year.
In particular, the researchers pointed to the fact that inventory levels are very high and keep rising, and that warehouse capacity in particular is tight, and that continues the trend we've been tracking as well. So, essentially, what we've been seeing is that warehouse space is hard to come by these days, and it's also very expensive as companies seek space in more populated areas to meet e-commerce and last-mile delivery demands.
David Maloney, Editorial Director, DC Velocity 17:54
Have you seen other data also to support the rebound?
Victoria Kickham, Senior Editor, DC Velocity 17:58
Yes, and we've been tracking sort of a steady rise in activity across a range of [sectors]. But this week, we also saw that demand for air freight improved a little bit in September. That's compared to August. I should note that demand for air freight remains depressed compared to year-ago levels, and that's mainly due to pandemic-related issues, of course. But what we saw—or what I saw—is that members of the International Air Transport Association said this week that demand for air freight rose about 3.7% in September compared to August. And again, year-over-year demand was down 8%. The group also said it expects demand to improve as peak shipping activity heats up, like we saw with the LMI. And they also said regional pockets of strength are emerging. In particular, they said, carriers here in the Americas, as well as in Africa, saw year-over-year gains in demand last month.
The big problem going forward is capacity. So, capacity fell by more than a quarter in September compared to a year ago, and that's three times larger than the decline in demand, so the International Air Transport Association says that that indicates a severe lack of capacity in the market that's likely to be exacerbated by a Covid-19 resurgence. Essentially, you know, you're going to look at, demand on the passenger side of the market is going to fall even further than it has this year. And that makes for less available belly space for cargo at a time when it's really going to be needed, these next couple months.
David Maloney, Editorial Director, DC Velocity 19:18
Well, it's good to see the overall recovery, and we'll continue to track those numbers, too, to see how the air freight sector does. Thank you, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 19:26
You're welcome.
David Maloney, Editorial Director, DC Velocity 19:27
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. Go there to check it all out.
So, thanks, Ben and Victoria, for sharing highlights of the news this week.
Ben Ames, Senior News Editor, DC Velocity 19:37
Thank you, Dave.
Victoria Kickham, Senior Editor, DC Velocity 19:38
Yeah, thanks.
David Maloney, Editorial Director, DC Velocity 19:39
And again, our thanks to Rebecca Brewster of the American Transportation Research Institute for being with us today. We encourage your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
And we also encourage you to rate this podcast, if your podcast platform allows for that. We appreciate your feedback.
DC Velocity also has a special free offer for our listeners: You can get a complimentary copy of this year's State of the Retail Supply Chain report. This annual review of retail supply chains is a result of research collaboration between Auburn University's Center for Supply Chain Innovation, the Retail Industry Leaders Association, also known as RILA, and DC Velocity. This ninth installment of the study covers highly relevant topics that impact success or failure in the hyperspeed omnichannel retail environment and its pandemic-fed acceleration. So, you can download your free copy of the report by going to DCVelocity.com/retail. Again, that's DCVelocity.com/retail.
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