OP-ED: Supporting Truck Drivers Can Help Lower Grocery Prices
After a trying economic period that saw COVID-19-related supply chain disruptions take time to recalibrate, inflation has cooled significantly over the past several months – hitting a three-year low in August – and causing many economists to declare that the war on inflation has been won. This is especially welcome news for grocery shoppers, since food inflation in particular has moderated and currently sits below the 2% historical average.
While this news is encouraging, now is not the time for complacency. As we witnessed this week with the East and Gulf Coast port strikes, supply chain issues can arise at any time and we must be prepared for future shocks to our nation's economy and food supply chain by proactively addressing the root causes of inflation now. Today is National Truckers Appreciation Day, and a great place to start is to both recognize the vital role that truck drivers play in keeping grocery shelves stocked while we work to address continued shortages in both drivers and overall trucking capacity that could challenge our supply chain in the future.
Truck drivers are truly the backbone of the food supply chain. According to the USDA, trucks are responsible for transporting 83% of all agricultural freight in the United States, including more than 95% of all meat, poultry, fish and seafood, and more than 70% of grains. Yet a long-term shortage in truck drivers continues to pose a challenge to our economy.
[Read more: What Consumers Really Think About Grocery Inflation]
Growing Shortage
The American Trucking Associations first identified the issue back in 2005, when it reported a truck driver shortage of 20,000 drivers. Fast-forward to 2018, and the industry was short more than 60,000 drivers. That number jumped to 80,000 in 2021 during the height of the pandemic, and is predicted to double to a shortage of more than 160,000 drivers by 2030.
While truck driver shortages impact the entire economy, they particularly impact businesses across the food supply chain. In FMI’s annual food industry survey, 84% of retailers and 95% of suppliers said that trucking and transportation capacity negatively impacted their businesses in 2021.
Encouragingly, those pressures eased last year, with 35% of food retailers and 58% of suppliers citing trucking capacity as a negative factor impacting their business, which represented significant drops from 2021 and foreshadowed the easing of inflationary pressures we’ve witnessed this year.
[Read more: Retailers Weigh In on the Priority of Fresh Foods]
Crucial Link
Another crucial metric worth noting is that grocery store out-of-stock rates, which spiked during the pandemic (11.3% in 2023), also fell dramatically in 2023 (to 6.5%, below the historical average of 8%) as trucking and transportation pressures moderated. While the food supply chain is incredibly complex, this data clearly shows the crucial link between trucking and both out-of-stock rates and the price of food in general.
For instance, the August 2024 Consumer Price Index placed year-over-year food-at-home inflation at just 0.9%, while the price of groceries remained flat from July to August. Additionally, the U.S. Department of Agriculture’s (USDA) Food Price Outlook predicted just a 1% increase in food-at-home prices for the remainder of 2024 and only 0.7% for 2025. These positive inflation trends correlate directly with declining trucking costs. The Producer Price Index (PPI) charted a rapid rise in freight trucking during the latter half of 2020 through mid-2022, when food inflation was at its worst, but like food prices, trucking costs have stabilized in 2023 and 2024.
It is imperative that we address long-standing supply chain challenges, such as truck driver labor force and trucking capacity volatility and shortages. The PPI continues to demonstrate that trucking prices remain far more volatile month to month than they were pre-pandemic, as evidenced by the fact that rates for some trucks with specialized capacities like refrigeration have also continued to rise in 2024. Further, the prospect of a widening truck driver shortage in the coming years must be addressed both for the overall health and stability of our food supply chain.
This National Truckers Appreciation Day, let’s do our part to support truck drivers for the essential role in our economy and food supply chain so we can ensure that we are prepared to rise to the challenge of the next shock to the economy, whatever and whenever that may be.
