The equivalent of two UT Austins just lost their truck driving jobs
I know this comparison is weird
|May 8, 2020||7|
I hope you are well. I switched from Tiny Letter to Substack a few weeks ago and then was too tired to write this newsletter for a little while. But… hi!
I don’t have a treatise for you today about the trucking industry. But, for new subscribers, here is a primer on why drivers earn up to 50% less than they did in 1980 and why many journalists don’t cover the industry.
And the two most interesting trucking stories from this week:
1) More than 88,000 truck drivers lost their jobs in April. This is the equivalent of two University of Texas — Austin undergraduate campuses. If you have a problem with this dumb comparison, I don’t know what to tell you. I couldn't find a college that had exactly 88,000 undergraduates and grad students.
Putting that aside, this is a very, very big deal. Since the federal government started tracking trucker employment in 1990, we have never seen such a giant single-month job loss of truck drivers.
Some may believe that truck drivers are more in demand right now. They are not!
Right now, we do not need any indicators that everything is horrible, but trucking does provide a good window into that. The industry is often looked at as an excellent leading indicator of where the rest of the economy is going — if factories are making less because manufacturing is hitting a standstill because people are buying less, building less, etc. etc. that means fewer truckers. (More on this here.)
Trucking was in a recession last year, which was kicked off by the manufacturing declines triggered by the US-China trade war. The current going-ons are only bringing a hard-hit group of laborers down even more.
2) Amazon is back at it again! The only thing I love more than informing you all on the trucking industry is informing you all on Amazon’s secretive moves to in-source all of their transportation needs and then become a transportation company to compete with UPS and FedEx. Analysts believe that, by 2022, Amazon’s transportation company will snag some $100 billion in revenue from FedEx, UPS and USPS. (The new AWS???)
This week, we learned that Amazon has expanded its truck brokerage service to all 48 states. Incredibly boring? Yes. But incredibly profitable, too (potentially). Retailers and manufacturers rely on truck brokerages to connect with drivers so your stuff can get made and put in stores. Getting in on that space means you can build deep connections with the trucking networks of tons of companies… and then, perhaps, be able to work with them on other parts of their supply chains.
We also learned that Amazon is in-housing its gateway associates. These are the people who load and unload packages from Amazon’s cargo jets. This, like the previous point, is extremely boring. But it already wiped millions in profit from one of Amazon’s airline partners this quarter.
These points are incremental and wonky. But Amazon is not going to become a transportation giant through drones and self-driving trucks. It’s going to happen through “boring” things like building an ocean freighter network and buying truck tractors.
And that transportation network is, ultimately, the reason you have a Prime membership — to get your windshield wiper in one to two days. The infrastructure behind that has nothing to do with flashy drones.
Eventually, it seems, Amazon’s transportation network will soon deliver and move your non-Amazon packages, just as AWS went from supporting Amazon’s cloud computing to being the cloud computer of, say, literally NASA. The build-up to that in transportation will be extremely dry, but I’ll keep you posted.
That’s it from me. Have a pleasant weekend. Please let me know what you think in the comments or simply email me (firstname.lastname@example.org).