Truckers hit by coronavirus pandemic face rocky road to recovery

By Karl Plume

CHICAGO (Reuters) – Bryan Hutchens in Oklahoma estimates he’s only used his two flat-bed trucks to shift oilfield equipment for a week out of the past month as the coronavirus crisis shutters businesses.

In New York, trucking firm ERL Intermodal says its cargo volumes have halved as lockdowns sideline its business of moving everything from olive oil to garden hoses to truck parts.

At the world’s busiest border, trucks hauling food and consumer products north to the United States are returning empty to Mexico where mass job losses have hit demand, leaving cash-strapped truckers to log hundreds of costly, empty miles.

The pandemic has turned the global trucking industry on its head. As swathes of the world economy shut down and curbs on movement and gatherings disrupt supply chains, freight companies are hemorrhaging cash and sidelining thousands of truckers.

“Once the economy gets going again, my fear is that there will be so many truckers out of the business by then,” said Steve Sperbeck, general manager for ERL, which has a fleet of 52 trucks based in Utica, New York.

According to the International Road Transport Union (IRU) in Geneva, which represents operators in 80 countries, new freight contracts have declined by 60% to 90% since COVID-19 struck while empty runs have climbed by up to 40%.

For truckers shipping products such as car parts, clothes, flowers and construction materials, operations have ground to an almost complete halt, the IRU said.

Lockdown restrictions in India, the world’s second-most populous country, have sidelined 80% of the 10 million trucks behind a $130 billion industry that hauls 60% of the country’s freight.

In Brazil, which relies on trucks to shift key exports such as soybeans, coffee and sugar to ports, shipments have also slumped. Carlos Litti, director for road transportation at the National Confederation of Transport Workers, said firms were now delaying critical maintenance work such as tire retreading, as government support for the sector had been insufficient.

“At the moment, there is no way to pressure the government,” Litti said. “The economy just has to turn around.”

SMALL CARRIERS VULNERABLE

In March, U.S. freight rates surged on fears the virus and the closure of highway truck stops would discourage drivers from making long trips. But with many factories shut and port traffic down, rates have plummeted as truckers battle over jobs to try to stay afloat through the crisis.

If the pain is prolonged, smaller U.S. carriers that cannot spread their costs across a large fleet could shut their doors, pushing skilled drivers out of the business and accelerating a longer-term shortage of truckers, industry groups say.

Some 97% of trucking companies in the United States operate fewer than 20 trucks, and 91% have six or fewer, according to the American Trucking Associations. Those workers rely more often on one-off jobs than long-term contracts.

Some routes are paying just 75 cents to 80 cents a mile, less than half of what’s needed to pay for fuel, insurance and other operating costs, according to five truckers. Pay is mostly determined by distances driven and they have also dropped.

When energy firms hit by the slump in oil prices stopped giving work to Hutchens in Oklahoma, he parked his rigs instead of rushing, like many other truckers, to haul essential goods such as food and medical equipment at loss-making rates.

Bids in the spot market have crashed to the lowest in years as shuttered factories, schools and malls have left scores of truckers that usually have longer-term contracts searching for new cargo to haul.

“In some lanes, rates are lower now than they were 15 years ago, but all of our costs, from fuel to insurance, have gone up,” Hutchens said.

He has laid off one employee and may have to begin selling his equipment if business does not return to more normal levels in the next two to three months. Relaxed restrictions on driver hours and more transparency on shippers’ margins could help smaller operators compete, Hutchens said.

“We’re a small company. There’s not a whole lot we can cut,” he said. “When we do come back online, we don’t know what the volume is going to be, so we don’t know how quickly things are going to return to normal.”

For an interactive graphic on average U.S. truck freight rates click on: https://tmsnrt.rs/2Z3sgYG

‘WE’RE BEING GOUGED’

ERL Intermodal says it earns more from pre-contracted shipments than spot market loads but revenues for the central New York trucker have also dropped. Six ERL drivers have been furloughed and paychecks for those left have dropped 30% as their hours behind the wheel decline.

To make ends meet, ERL leased nine of its refrigerated trailers to the Department of Homeland Security for use as makeshift morgues for COVID-19 victims. The company also tapped an emergency government loan program to help to pay salaries.

“Financially, it probably wasn’t the best decision, but good drivers are hard to come by,” said ERL’s Sperbeck.

At the Mexico-U.S. border, some truckers are carrying just one full load south for every seven full northbound trips, well below the usual three-to-one ratio, according to data from freight forwarder Nuvocargo.

“We are very concerned that if business does not come back to usual … it’s going to result in things like bankruptcies and losing jobs,” Nuvocargo chief executive Deepak Chhugani said.

Dozens of U.S. truckers parked near the White House in Washington for over a week this month to protest over the low freight rates and industry regulations they say are disproportionately hurting small, independent truckers.

Standing by make-shift shelters, truck driver Mike Landis from Pennsylvania said his workload had dropped by up to 50% since the pandemic struck, and most of the jobs available were being offered at rates below operating costs.

“After being told we’re essential and told by the government to stay out here and basically risk our health to continue moving the things that the country needs, we’re being gouged,” Landis said.

“We’re here as middle-class people, the people that put the president in office, and we’re here asking him for help.”

(Reporting by Karl Plume in Chicago; Additional reporting by Lisa Baertlein in Los Angeles, Alberto Alerigi in Sao Paulo and Emma Farge in Geneva; Editing by Caroline Stauffer and David Clarke)

On the road through a pandemic, some truckers fear for their lives

By Andrew Hay

LAS VEGAS, N.M. (Reuters) – At a truck stop here, a driver sprays his shoes with disinfectant to protect himself and his partner from coronavirus, another laughs and sees no threat, while a veteran trucker says he’s heading for the hills, in fear for his life.

They are some of the millions of U.S., Canadian and Mexican truckers tasked with hauling food and goods to keep grocery stores stocked and essential services running as over half the U.S. population is told to stay home to stop the virus’ spread.

In a windy truck park by the side of an eerily quiet Interstate 25, drivers hold up masks and gloves given them by loved ones for protection. Others say they don’t need them for a “virus panic” created by the media.

Like nearly all these truckers, Marvin Gakin, 71, is determined to keep working. He hauls beef and pork and recognizes his essential role if Americans are to eat.

“I’ve had pneumonia four times, so it would kill me, and I’m very cautious, but I want to keep doing this job,” said Gakin, of Chamberlain, South Dakota, cleaning his hands and credit card with disinfectant wipes after buying a sandwich.

Keeping rest stops like this one open is essential for truckers, whose biggest challenge these days is finding food and bathrooms as retail businesses shut down, said Sean McNally, a spokesman for the American Trucking Associations.

HOAX?

Here on the edge of the Southern Plains, where drivers can be heard speaking in English, Spanish and French, two truckers from Canada try to keep their cab safe as they head to Arizona to pick up Mexican lettuce.

“I’m not scared, we’re doing what we can so this doesn’t overwhelm us,” said a Canadian driver, spraying disinfectant on his passenger door handle as his co-driver sat nearby, holding up company-supplied masks.

Truckers from nearby Texas are not so worried.

“I think it’s bullshit. The news media made it worse than it is, and I’m not the only one who thinks that,” said Floyd Smith, out of Dallas, Texas, joking with a fellow driver as they cleaned windshields on their Peterbilt trucks. “I don’t think it’s dangerous.”

Still, the drivers from Texas said they were staying away from people and washing their hands more often. None of the U.S.-based drivers had been provided masks, gloves or disinfectant by their employers.

“A lot of these truck drivers are saying ‘I’m not going to get it,'” said Brad Turner, 63, of Golden, Colorado, taking a break in his cab with his dog. “They still have that idea it’s a hoax.”

Turner, a life-long smoker who owns his rig, said his pediatrician son told him to get away from people as he would die if he caught the virus. So he left his trailer behind and was heading south to hole up in New Mexico.

“I’m not risking my life over it,” said Turner, who planned to stay with a childhood friend near Albuquerque. “I was hauling a lot of imported wine to Denver, and people can live without wine.”

(Reporting by Andrew Hay in Las Vegas, New Mexico; Editing by Bill Tarrant and Dan Grebler)

Mexican truck drivers travel in fear as highway robberies bleed economy

Trailers are pictured on the Mexico-Puebla highway, on the outskirts of Mexico City, Mexico, March 8, 2018. REUTERS/Edgard Garrido

By Noe Torres and Lizbeth Diaz

PUEBLA, Mexico (Reuters) – Glancing constantly at his rear view mirror, truck driver “El Flaco” journeys the highways of Mexico haunted by the memory of when he was kidnapped with his security detail by bandits disguised as police officers two years ago.

Back then, El Flaco, who spoke on condition of anonymity for fear of reprisals, was beaten, blindfolded and taken to a house near Mexico City where his captors threatened to kill him. Three days later he managed to escape and flee.

Today he travels with a machete and a satellite tracking device in his cab that can pinpoint him in emergencies.

Truckers covering Mexico’s vast territory often move in convoys to reduce the risk of robberies, which in 2017 almost doubled to nearly 3,000. Some drive with armed escorts traveling alongside them. Others remove the logos from their trucks.

Signs that read "Protected via satellite" are pictured on the side of a trailer on the Mexico-Puebla highway, on the outskirts of Mexico City, Mexico, March 8, 2018. REUTERS/Edgard Garrido

Signs that read “Protected via satellite” are pictured on the side of a trailer on the Mexico-Puebla highway, on the outskirts of Mexico City, Mexico, March 8, 2018. REUTERS/Edgard Garrido

Companies like brewer Grupo Modelo, a unit of AB InBev , and the Mexican subsidiary of South Korea’s LG Electronics have stepped up efforts to protect their drivers, deploying sophisticated geo-location technology and increasing communication with authorities.

The problem is part of a wider Latin American scourge of highway robbery that acts as a further drag on a region long held back by sub-par infrastructure.

“Roads are getting more and more dangerous, you try not to stop,” the 50-year-old El Flaco said, as he drove in the central state of Puebla, the epicenter of highway freight theft.

“Since I was kidnapped, I’ve gotten into the habit of looking in the mirror, checking car number plates, looking at who’s gone past me,” he added. “I look at everything.”

On the most dangerous roads, like those connecting Mexico City with major ports on the Gulf of Mexico and the Pacific, it is almost certain that one in every two truckers will be held up, a study by U.S.-based security firm Sensitech showed.

While no official data on losses exist, insurers paid out almost $100 million in 2016 to crime-hit cargo operators, up 4.5 percent on 2015, Mexican insurance association AMIS says.

The true sum is likely far higher: only one in three loads is insured due to the cost, according to industry estimates.

More than 80 percent of goods are transported by road and rail in Mexico, and the thefts are hurting competitiveness at a time the country is seeking to diversify trade and tap new sources of business.

Fuels, food and beverages, building materials, chemicals, electronic goods, auto parts and clothing are all top targets, Sensitech said.

COMPETITION SQUEEZE

Upon taking office in December 2012, President Enrique Pena Nieto promised to get a grip on gang violence and lawlessness. But after some initial progress, the situation deteriorated and murders hit their highest level on record last year.

Highway robberies of trucks fell through 2014. But they almost doubled in 2015 to 985, hit 1,587 in 2016 and reached 2,944 last year.

The government has responded by stepping up police patrols in affected areas and lengthening prison sentences for freight robbery to 15 years.

But robberies are still rising and most are not even reported due to the arduous bureaucratic process involved, Sensitech says.

“It’s hurting productivity and competitiveness,” said Leonardo Gomez, who heads a transportation national industry body.

Some drivers are armoring cabs in trucks made by companies like U.S. firm Kenworth, an expensive move that still only covers a tiny fraction of the almost 11 million trucks crisscrossing Latin America’s second-largest economy.

Last year, 53 trucks were armored against high-caliber weapons, up 40 percent from 2016, according to the Mexican Association of Automotive Armorers.

Attacks are not confined to roads. Some 1,752 robberies were recorded on railways last year, official data show.

Criminals have also become more sophisticated.

They are turning to high-caliber weapons and employ devices to block Global Positioning Systems (GPS) to prevent trucks communicating their whereabouts, experts say.

Previously, companies that suffered robberies were generally able to recover their vehicles. Not any more.

“It’s not just the goods they want, it’s the trucks too,” said Carlos Jimenez of Mexican insurance association AMIS.

(Reporting by Noe Torres and Lizbeth Diaz, Writing by Dave Graham, Editing by Christian Plumb and Rosalba O’Brien)