Transportation Update | March 2022

The U.S. economy adds 678,000 payroll jobs in February.

• Crude, diesel prices soar in the wake of the war in Ukraine.
• Retail inventories see another solid increase.
• The surge in new trucking companies continues in February.
• Volatility is the order of the day for rail volumes.

The economy saw stronger job growth in February as the U.S. added 678,000 payroll jobs,
 seasonally adjusted. Over the past five months, job gains have averaged more than 600,000, and the low during that period was the solid 481,000 jobs added in January.

The economy continues to inch its way back to pre-pandemic job levels. Payroll employment is now 2.1 million jobs, or 1.4%, below February 2020, seasonally adjusted.

The unemployment rate fell to a pandemic low of 3.8%, and the labor participation rate ticked up to 62.3%, which is still down more than a point from February 2020.

Leisure and hospitality led the economy in total jobs added, but they remain 1.5 million jobs, or 9%, below pre-pandemic levels.

On a percentage basis, the biggest gains were in jobs related to petroleum production. The top job gainer was in support activities for mining – a category typically driven by roustabouts and other laborers related to petroleum. The second fastest gainer was oil and gas extraction. Jobs involved in manufacturing petroleum and coal products saw the economy's fifth strongest gain in jobs.

Other top gainers in percentage terms were jobs related to travel. Accommodation, travel arrangements, and scenic and sightseeing transportation were the third, fourth, and sixth fastest-growing industries in percentage terms.

Employment was up in industries related to freight transportation. Warehousing and storage added 10,700 payroll jobs, and couriers and messenger employment rose by 9,400 jobs.

For-hire trucking also saw a solid gain of 5,400 payroll jobs in February, but that figure is somewhat misleading. BLS revised initial January employment levels for trucking downward by 5,500. Total trucking employment is 33,700 jobs, or 2.2%, above February 2020, seasonally adjusted.

More granular data available through January shows local general freight still leading the recovery while total general freight truckload jobs barely exceed February 2020 levels and production/non-supervisory jobs still trail by nearly 12,000. Meanwhile, LTL in January built on its gains versus pre-pandemic levels, and the specialized segments saw their deficits relative to pre-pandemic levels shrink.

Trucking

The ongoing surge in newly authorized trucking companies continued and even accelerated a bit in February. The Federal Motor Carrier Safety Administration authorized more than 9,100 for-hire trucking operations, which is almost exactly the number approved in November and more than 500 more than were authorized in either December or January.

From the beginning of the surge in July 2020 through February, FMCSA has authorized more than 165,000 for-hire carriers. As of March 1, 83% of those carriers still held operating authority.

The shift of drivers from existing carriers to new ones has resulted in a huge increase in the total number of for-hire carriers. The number of authorized interstate for-hire carriers (excluding private fleets with authority) is up 57% since March 2020.

One development we are watching is a recent rise in the number of revocations of operating authority. Revocations were higher than typical in February but down from January, which had seen the most revocation notices in 16 years.

Given the unprecedented number of new carriers authorized over the past 20 months, an increase in revocations is not necessarily surprising. Moreover, the number of new carriers continues to exceed revocations by a healthy margin.

Spot Metrics

The strongest increase in flatbed load postings in seven weeks powered a 5.2% gain in overall volume in the Truckstop.com system during the week ended February 25 (week 8). Dry van loads fell by a similar degree as the prior week while refrigerated volume held steady after the previous week’s sharp decline.

As expected, total load volume did not quite match the same 2021 week, which had seen a major boost due to severe winter weather. Total load postings fell nearly 5% short of 2021’s week 8 but remained more than double the five-year average. Previously,
 spot volume had not been negative year over year since July 2020, but negative comparisons likely will become more common at least through May.

Dry van load postings fell 4.3% after declining 4.6% during the prior week. Dry van volume was 23% below the record level posted in the same 2021 week but was 80% above the five-year average.

Refrigerated volume was basically flat, rising just 0.1% after the 16.2% drop during the previous week. Refrigerated volume was 12% below the same 2021 week but more than double the five-year average.

Rail/Intermodal

Carload volumes have been volatile for the first two months of the year in a way that carload sectors have not historically been. A four-week smoothed basis shows a nearly flat line for carload freight despite strong underlying economic and trucking results.

The week-to-week numbers create a sort of whiplash for the analyst as they move around in most sectors. But overall, the four-week average shows freight volumes moving by rail do not show the same pressure that exists at ports and in trucking. The raging tensions in Eastern Europe should provide some upward momentum for coal, crude oil, and grain. Most carload commodities are below their five-year average levels in the latest week.

Intermodal volumes have held close to their five-year average level over the last nine months despite the strong pressure from retailers and others to move goods. In the last month, there are signs that congestion is easing at the U.S. west coast ports of Los Angeles and Long Beach. The number of vessels waiting for berths came down by a third over the course of February, but the reasons for that reduction are less clear.

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