Transportation Update | January 2022

U.S. payroll job growth was weak in December, but the labor market is complicated.

• Job openings remain near record levels as job quits set a record.
• Truck spot rates set a record to end 2021.
• Nearly 110,000 new trucking companies entered the market in 2021.
• Rail and intermodal volumes see typical movements during the holidays.

The U.S. economy added just 199,000 payroll jobs, seasonally adjusted, during December for the weakest growth since the decline in jobs a year earlier. Although the Bureau of Labor Statistics revised the November estimate slightly higher, November and December saw the weakest payroll job growth of all of 2021.

The labor market showed considerable strength elsewhere, however. Total employment as measured by the BLS household survey rose by 651,000 in December after jumping by more than 1 million in November. The economy is seeing solid job growth, it just is occurring outside of payroll employment.
Also, the labor participation rate was 61.9%, which is the strongest during the pandemic. BLS revised the November estimate upward to 61.9% as well. The participation rate is still 1.5 points below February 2020, which equates to nearly 4 million people still absent from the labor force since the pandemic began. The number of unemployed individuals fell by 483,000. The unemployment rate fell to 3.9%.

Within payroll employment, growth was consistently underwhelming. The only two sectors to see seasonally adjusted declines in payroll jobs in December were government and utilities, and both were small.

Freight transportation saw little strength in employment. Warehousing added 8,800 payroll jobs, but for-hire trucking added only 300, and parcel and local delivery was basically flat at a loss of 100 jobs. The trucking industry has essentially fully recovered overall to pre-pandemic levels, but growth in local trucking has offset declines in long-haul.

Job openings and quits

Data released earlier by BLS regarding job openings, hires, and separations appear to reflect the dichotomy between weakness in payroll growth and strength in overall employment growth. Job openings in November were down only slightly from the near-record level posted in October. However, job quits in November were the highest on record at 4.5 million. In light of the data released Friday in the employment situation report, it appears that many people are quitting payroll jobs to set up their own businesses or work as independent contractors. Of course, we are seeing the same phenomenon in monthly business application data released by the Census Bureau.

New trucking companies

The Federal Motor Carrier Safety Administration in December authorized just under 8,600 new trucking companies, which is the fewest since February 2021. However, that figure is far above any month prior to March of last year. Moreover, November and December tend to be weaker months in general for new authorizations, so the weaker figures in the past two months do not necessarily mean that the surge that began in July 2020 is ending.

Authorizations during the fourth quarter were down from Q3’s record and also the number authorized in the Q2 figure, but the nearly 28,000 trucking companies authorized in Q4 were by far the largest ever aside from those two quarters.

The nearly 110,000 for-hire trucking companies authorized in 2021 were about 85% higher than 2020, which had been by far the strongest year on record until 2021.

FTR estimates that the approximately 112,000 carriers authorized since July 2020 and still in business as of today account for nearly 169,000 drivers. Excluding operations that do not operate tractors, the approximately 76,000 new carriers account for more than 113,000 drivers.

Rail/Intermodal

Service issues remain top of mind for rail shippers as the calendar page flips to 2022. Service metrics showed their normal seasonal improvement over the holiday period in response to the weaker volumes that occur over the last two weeks of the year. The uptick in absolute service levels was not enough to change the overall narrative of service metrics operating below their historical averages as the gain was not enough to nudge most metrics back to five-year average figures.

The eastern carriers were dealt a blow to start the year as a major early-year snowstorm snarled main lines across the Mid-Atlantic and led to some routes being out of service for more than a day in spots. It is certainly not how the carriers wanted to start the year from a service perspective.

The Surface Transportation Board will kick its regulatory year into high gear shortly with a public hearing on the proposed acquisition of New England regional railroad PanAm by eastern Class I CSX. The hearing will be a precursor to the board deciding whether the proposed transaction should be approved.

The PanAm-CSX transaction has largely flown under the radar because of the much larger merger between Canadian Pacific and Kansas City Southern but the regional railroad’s acquisition could have major implications for freight flows in New England. The hearing will also provide the first public hearing for many of the new board members sworn in during the Biden administration and could provide insights into how they view rail mergers generally, in addition to the views provided on the merits of the PanAm-CSX transaction.

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