As Some Businesses Return to Work, how will this Impact the Freight Transportation Industry?

As of May 2, 32 U.S. states and 5 Canadian provinces (https://nationalpost.com/news/canada/reopening-canada-provinces-ontario-quebec-saskatchewan-alberta) have announced plans to reopen businesses on a phased basis. Each state and province has developed back to work guidelines to manage the process. These actions are being taken even though Covid-19 is a very contagious virus with 1.1 million reported cases and 65,000 deaths in the US and 55,000 cases and almost 3400 deaths in Canada. Currently there is no cure and a cure is at least a year or more away.

Government Health Care Guidelines

While there are various sets of guidelines that have been published, those developed by New York State and by the Province of Ontario (https://www.ontario.ca/page/resources-prevent-covid-19-workplace?_ga=2.258615434.1461890914.1588269926-1610310933.1584035138 ) are particularly thoughtful and will be referred to in this blog. The NY state document stipulates that to open their economy, hospital and ICU capacity should not exceed 70%. Moreover, the rate of transmissions should be less than 1.1 (i.e. one person infects less than 1.1 people). Adhering to these guidelines will limit the possibility of hospitals being overwhelmed by a surge of new cases. The CDC (Centre for Disease Control) in the United States suggests that there should be a 14-day decline in Covid-19 hospitalizations immediately preceding the lifting of restrictions. Should the number of infections begin to escalate, restrictions should be put back in place. Note that some states are lifting restrictions while infections are rising.

The NY state plan stipulates that a testing regimen should be activated with a daily objective of 30 tests per 1000 people. There should also be a satisfactory number of testing sites in each location; there should be an immediate turnaround on testing results to limit the spread. New York State suggests that an advertising program be created to educate the public about the need and the process of being tested.

In conjunction with the testing regimen, there needs to be a contact tracing program to connect with everyone who interacted with the individuals who test positive for Covid-19. The suggested metric is 30 tracers for every 100,000 people. Finally, those individuals who test positive for the virus need be isolated at home, or if this is not practical, there need to be sites to quarantine these people.

To make this all work, there is a requirement to establish a “control room” that monitors, measures and communicates the results of these health management metrics. Should a locale reach a “Danger Point” (i.e. close to the hospital room, ICU room capacity parameters), there is a requirement to advise the government so the program can be scaled back or delayed.

As we have all learned, front line health care workers are a critical element of any back to work program. They need to be equipped with PPE supplies to make this initiative work. The level of staffing in hospitals and nursing homes, which is a particularly vulnerable institution, must be maintained to protect their residents.

Guidelines for Businesses

The Ontario document details a set of requirements to facilitation implementation. It contains guidelines by business sector (i.e. Agriculture, Manufacturing, Construction). The document spells out the safety protocols (i.e. hand washing, social distancing etc.) to meet the demands of the “new normal.” Below are some of the key elements for the manufacturing sector.  The links to the items below appear in the governemnt document.

• Equipment operators and general labourers

• Quality control engineers and technicians

• Supervisors, production and operations management

• Warehouse workers, forklift operators and material handlers

• Warehousing sector

Workers in each occupation need to follow both the general guidelines and those specific to their profession.

Infrastructure Requirements

Of course, the smooth operation of businesses is dependent on a set of support mechanisms. These include transit systems, schools and daycare centers. Transit systems need to be sanitized on a consistent basis. Users must wear masks and practice social distancing. For parents to go back to work, their child support institutions must be operational and follow specific protocols.

How will these developments impact the Freight Transportation industry?

Guidelines for Freight Carriers

The Freight Transportation industry is facing several challenges. Their drivers, forklift operators and support staff must comply with a set of health and safety guidelines.  The links to each of the items below appear in the Ontario government document..

• Shippers and receivers (IHSA)

• Shipping (WSPS)

• Drivers and truck drivers

• Mental health awareness for drivers • Precautions for drivers

• Fueling of vehicles

• Handling and receiving packages

• Cleaning and sanitizing inside of your vehicle • Transportation services

• Rest stop hygiene

• Hours of service and fatigue management (for employers)

Since states and provinces are opening at different times and lifting restrictions on different types of businesses, this poses a new set of difficulties. There are currently 30 million unemployed Americans and this is increasing on a daily basis. This is likely having an impact on the demand (and volume/mix of shipments) for various products. Even as the pandemic reaches different stages in its evolution, many of these people may not be reemployed.

Then there is the issue that some non-essential businesses may not be allowed to open in certain states and provinces. Consumers and manufacturers will need to source certain products from companies in different markets, using different carriers and from different distributors and retailers that are open. This will disrupt carrier networks, reduce volumes on specific lanes, increase empty miles and diminish margins. There is a likelihood that some smaller carriers may not be able to survive until a vaccine is found.

This will result in a loss of capacity. Some experts are predicting that when there is a business turnaround, there may be a severe shortage of capacity and the possibility of higher rates. Shippers beware.

Finally, it should be noted that many people are questioning the risks of the push to reopen. We all understand the pressure on politicians to permit citizens to go back to work so they can feed their families and return to a more normal life. But this virus has proven to be very resilient and deadly. If states and provinces do not implement strong testing, tracing and isolation processes, it will be hard to control the spread of the virus. Similarly, if citizens do not follow the guidelines, this creates a further risk of spread. As we have already seen on the beaches of Florida and among the protestors in various states and provinces, there are many people who will likely not follow the guidelines. A failure of businesses and citizens to follow the guidelines could produce a spike in Covid-19 related cases and deaths. This may result in a new wave of business shutdowns. This would bring the freight industry back to moving only essential goods.

While we all want to return to our pre-Covid-19 lives, it takes an extended time to develop and test a vaccine. There is a high likelihood that we may see a second and third or more waves of the virus. Shippers and carriers need to consider the distinct possibility of multiple starts and stops, of disruption and unpredictability as they craft their plans for the next couple of years.

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