Episode 18 - Senior Transportation Reporter Rachel Premack Part 2: Trucking Stuff

In this episode we continue the conversation we had with Business Insider Senior Transportation Reporter Rachel Premack and get deep into the latest Trucking news.

First we chat about the word "bloodbath" and how it has been the word for the industry in 2019.

https://www.businessinsider.com/truckers-warn-bloodbath-companies-bankrupt-lower-expectations-2019-6

Then we chat about a news story she broke the day we recorded, a report about how Amazon is paying their drivers a day rate instead of per mile. 

https://www.businessinsider.com/amazon-truck-drivers-pay-hourly-per-mile-2019-11

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Aaron Dunn:
Let's, get into the, word of the year contender for the trucking industry, which would be bloodbath. And are you the person to blame for this word or is that no?

Rachel Premack:
I'm 50% to blame. So.

Micheal Clements:
Welcome to Trucking for Millennials, where we engage with the future of freight happening now. My name is Michael Clemens.

Aaron Dunn:
And I'm Aaron Dunn, and we're here to help trucking and logistics professionals stay up to date and ahead of the curve as our industry evolves.

Micheal Clements:
We're connecting with every step of the supply chain as part of our mission to increase transparency and provide world-class freight solutions.

Aaron Dunn:
Hey, thanks for listening to trucking for millennials this is part two. So if you've already listened to part one, welcome back. If this is part two and you haven't listened to part one, you might want to. You might want to go to part one of this two-part podcast episode with Rachel Premack. Rachel is the senior transportation reporter at business insider. So in part two, this is what we're, you're chatting about, we're getting deep into the trucking stuff and for the first half of the episode we're going to talk all things freight markets essentially. So what's happening within the industry and the economy and what, the slow down has meant and what it could mean for the future, what she's been covering, what analysts that she's been talking to are saying and what to expect for the first half and perhaps the second half of 2020. You'll get that information straight from her.

Aaron Dunn:
And then we also chat about a story that broke the day that we recorded this episode. And that story was an article that she wrote for business insider about Amazon paying their drivers a day rate instead of a rate per mile, instead of a mile rate. So we chat about that and how that could possibly impact how drivers are paid throughout the industry or maybe it won't at all. And just how that is a unique way of thinking about driver compensation in today's time. So without further for me, I hope you enjoy part two of this. Two part episode with Rachel Premack. Let's roll

Aaron Dunn:
Let's, get into the, word of the year contender for the trucking industry, which would be bloodbath and are you the person to blame for this word?

Rachel Premack:
So I'm like 50% to blame. So Chad Boblett, who is the, I don't know if he's the moderator. He, created or is one of the creator of the rate per mile masters Facebook groups that I think like hundreds of thousands of truck drivers are in.

Aaron Dunn:
Yeah, we're in it.

Rachel Premack:
He started back then I reported out it quoting him saying blood bath and then also just put that in the, headline. Always quoting him. I never, said there was, I actually recorded that being a blood bath, but I never said like according to Rachel, this is a blood bath. Them saying this is what truck drivers say about it. I'm explaining that as a disclaimer just because some people said, I'm editorializing. It's like, no, this is what truck drivers are saying. They report on what they're saying about it anyways. But yeah, I'm 50% to blame for it. That disclaimer aside. Yep.

Aaron Dunn:
Yeah. So, being, that is the case, there's been so much talk about, what's happened in the industry. It kind of went through a boom season last year. And then Michael and I've talked about this on a couple episodes just on, what, what the future looks like and there's uncertainty in the market. And, as we were scheduling this conversation, you reported on, what is it 2000, that Cummins was going to lay off 2000 workers at their manufacturing facility? I think so I just kind of wanted to open up this discussion about what you, see is happening within the, industry in terms of the market slowing down. And when we go to publish this podcast, it will be toward the end of the year. We're at the end of the year now, but it'll be, in a couple of weeks it'll be 2020 at this point of publishing. So I just wanted to get your insight on trucking in 2020 and what people might expect based on this research that you've been doing.

Rachel Premack:
Yeah, so part of my interest in talking about this, this downturn from the perspective of truck drivers is that from all the analysts I've talked to, they've emphasized, 2019 is kind of, it's a below average year but not a crazy horrible year or just really bad compared to 2018, that's why you've been seeing those ridiculously those, 70% down, 8% down type comparison in the spot market or in new truck orders or used truck orders. But when you look at, when you talk to, people who have lost their jobs, people who can't afford to send, as much money home to their families, people whose entire fleets have gone bankrupt. It is a, literally a blood bath for them.

Rachel Premack:
It is incredibly challenging for them. That was kind of my interest in writing from that perspective, I guess. But all that being said, I do think that or just based off of my interviews with various experts in the field. It does seem like we're seeing obviously a downturn and a recession in the trucking industry and that might or may not foretell in a recession, like a macro recession and just for 2020 from what I've heard is that we'll see less MNA activity within these different transportation logistics companies. People aren't really foreseeing a lot of MNA activity at least for the first half of 2020. Maybe the second half if there's no macro recession, we might seem more, MNA activity, but I think just because there has been this slow down in adding capacity. There's been quite a few truck drivers who left the industry.

Rachel Premack:
I think perhaps bought rates might go up a little bit. That's what some people are saying. We are kind of seeing rates increase month over month, but yeah, it doesn't seem, from my perspective or from the perspective of people I've talked to that the first half of 2020 will be much better. Maybe the second half will improve if there's not macro recession. And obviously this is all dependent on trade and tariffs moves but that's kind of the, angle that I've been hearing quite a bit. So sort of first half of 2020 probably not so great. Second half we'll see depending on how the trade and tariff agreements all shake out.

Micheal Clements:
Yeah. You're on the freight waves insider podcast with Tim and you had mentioned on there that trucking was in a recession. Can you kind of elaborate on that a little bit? And when do you see the possibility of this recession ending? And also I guess when do you think that it started?

Rachel Premack:
Yeah, so from according to act research and then research from convoy, economic team, they say that the striking recession started either at the end of 2018 or beginning of 2019. It's hard to say when it will end. It really just depends on, a lot of it does, I think depend on the 2020 election, whether we'll see trade tensions lower a little bit. I think there needs to be more of a pickup on the industrial side of the economy, just more of these industrials being moved around. It's hard to say really. I wish I knew. I've been, asking analysts.

Micheal Clements:
I wish you knew too.

Rachel Premack:
I've been asking analysts this all year and like when is it going to end? And they were like, we don't know. And I'm like, okay. But, it seems like it's all very dependent on whether there will be a macro recession in 2020. Because often a recession in the trucking industry kind of predicts a larger economic recession. And obviously in 2015 or 2016 it didn't really predict that larger economic recession. But most kind of people who watched the, macro economy say we are due for a recession and it seems that 2020 could be the time for that unfortunately.

Micheal Clements:
We'll see.

Rachel Premack:
Yeah. Yeah.

Aaron Dunn:
It's going to be a lot of watching and waiting. It's going to be an interesting year. It's an election year and it's going to be an election year like no other. And that's always a cause for, uncertainty. But then, you compile everything else that 2019 has put together and who knows. Yeah, it's any, anybody's guess. To kind of close out, I do want to close out on some breaking news Rachel that you reported on today. So today's November 26 I think. Yeah, as we record and apparently you've got some breaking news. I'm just going to let you tee it up because you know it the best. I did a quick read through, I signed up for business insider premium based on this article just to see what you had to say. So tell me a little bit about what, you broke today.

Rachel Premack:
So according to some internal documents that were sent to my BI email address. Amazon pays their truck drivers rather than per mile, which is how virtually every other shipper pays or carrier pays. They pay per job, basically. So the three, types of jobs are solo one, solo two and team. So, one is a one day job where you have your 14 hour shifts and you go to maybe two different cities and then return to your base starting location and you take your 10 hour break at your starting location. So two is a similar kind of situation except, it's two days and you take your 10 hour rest break in the middle at some other location that's not your base location. And then team is obviously team truck driver job rather than one solo truck driver. So this is really, pretty interesting.

Rachel Premack:
It's kind of nitty gritty. I definitely had to explain to my editors and coworkers, no this is a really big deal. You guys don't get this, but it's a really big deal. This is just so interesting just because every other shipper pays per mile and it's, something that kind of, speaks to some of the lawsuits we've seen on the trucking labor side where truck drivers are arguing for being paid a minimum wage, being paid for time spent detained, being paid for when they're refueling. All these sort of like non-driving tasks. So for Amazon this is, actually kind of a step forward. I think some trucking labor activists could say this is a step forward for the trucking industry. But then other truck drivers I've talked to who worked for Amazon, they say that this is sort of an excuse for Amazon just to pay less.

Rachel Premack:
And that's because, if you're a beginning truck driver, you might not know how to like hack the per mile system. You might go all the way to Florida and then realize, Oh I don't have a load to take on the way back, I'm screwed. But if you have this Amazon per day type pay, you can actually be guaranteed, okay, I'm in Jacksonville right now. I can actually take a load and get out of Jacksonville and, I won't be messed up and I'll actually get some sort of pay out of this whole thing. So it was kind of an interesting story just because it's so, not clear cut, is this good for truck drivers, is this bad for truck drivers? But what the analysts who I did talk to, what he said is this is a really good way for Amazon just to get more truck drivers in general because they're just offering something so different that's kind of beneficial for some beginning truck drivers and they're expanding really quickly.

Rachel Premack:
They're in housing really quickly, so they definitely need more people. It's definitely an interesting way that they're doing this.

Aaron Dunn:
Leave it to Amazon for thinking differently and, grabbing market share in a way that nobody else, is. Michael, being that you've ran a trucking company for a number of years now, what is your take on, Amazon coming in and offering a day rate versus a per mile rate?

Rachel Premack:
Yeah.

Micheal Clements:
You know, I think it's like anything else. What I've seen in trucking is whenever someone does something new, it seems people flock to the idea of whether they like it or not. They flock to it and everybody has going to have an opinion. I think it boils down to whatever works best for a company. What we do is nothing like what Amazon does. What we do is nothing like just some of the trucking companies right down the road from us do. So, I think it really depends on the trucking company and what their goals are, what their goals are for their team members and just really what their longterm strategy is, what's going to be best and how to pay those drivers. Where, I think I 100% agree though with the people in the industry that say drivers are underpaid.

Micheal Clements:
I think they're not paid for a lot of their time. I mean all of us are going to get to go home, sleep in our beds tonight, be comfortable. These guys, it's 20 degrees, 10 degrees in Colorado and they've got to sleep in a truck to a snow storm. And are they getting paid to do that? Probably not. So, I look at these things I think that's good, but at the end of the day, driver pay across the board. I don't know what that solution is, but I think every company needs to be striving to find the best solution for their, drivers.

Aaron Dunn:
Yeah, that's a great point. I think that's a great point. And having maybe more pay diversity in the marketplace is a good thing to get people thinking differently about it. And it gives people who want to drive different styles, if, it's teams or like you said, the younger driver perspective, it's good for people to at least have an option. And there's always going to be people who hate on Amazon or hate on, whatever it is. But at the end of the day, if it's taken care of that carrier and what their goals are, then it's a win for them. So, who are we to judge I guess?

Rachel Premack:
Yeah. Yeah. And my, other thought, just because, when I do tell people about how low driver pay is these sorts of things, they're sort of really shocked and they say, Oh these companies are greedy, blah blah blah. I'm like, well do you want to spend more on your Amazon prime membership? Do you want to spend more on this, this and this? It's all, integrated sort of thing. So I do agree with you that driver pay is definitely a massive issue and something I report on quite a bit. I was just, it's just interesting. I'm wondering what the end consumer would feel about, because part of the reason driver pay is low is because, things have just gotten cheaper, so much cheaper in the past few decades. So it's, kind of an interesting debate. But I'm, glad that people are kind of talking a little bit more about the driver pay issue and hopefully we can keep talking about it.

Micheal Clements:
Yeah, I don't, I don't think that conversation's going anywhere.

Aaron Dunn:
Right, and it just came up on the, Trucking Research Institute, driver pay hit the top, I think top three or top two, something like that. As a top critical issue for the industry to address, at least from the driver perspective. Now leave it. But it's the first time that it has happened that the survey came out with that result from a driver perspective, that driver pay was a really, really important and top critical issue and also from the carrier side, I'm pretty sure it hit pretty high marks on that as well. Driver pay is really, really important at this time, so it'll be interesting, how this shakes out. Everybody's been really paying attention to Amazon in general and I think this is just going to highlight, what they're up to even more.

Rachel Premack:
Yeah. Yeah.

Aaron Dunn:
It's amazing that they've been doing it for two years too and it just came out.

Rachel Premack:
Right. Yeah. That was a little confusing to me because there was one truck driver who I talked to actually even before I saw the document who told me that this was a recent change, so I'll have to look a little, maybe it was two years, maybe they had the practice it for two years in some places and they rolled it out. They tend to kind of start small and then expand outward when they're doing new programs. So I'd have to check. I'd have to follow up and be like, how long has it been nationwide for two years. But it's larger discussion but it seems, it's almost every week. If there's a new Amazon transportation story, it's just, they're really revolutionizing a lot of this and it's, definitely been interesting to keep up with. It's almost like reporting on the trucking labor side is almost, and reporting on Amazon trucking has been kind of the same level of my attention or of my workload in some ways. So it's, definitely an interesting time to be reporting on this.

Aaron Dunn:
Yeah, for sure. Yeah, you're in the heart of the transition in a lot of ways. Well, awesome, that's kind of what I had for my, my docket here. Margo, do you have any kind of parting questions before we, do a sign off?

Micheal Clements:
Yeah. So, whenever you got into the transportation industry, Rachel, do you feel like you, there was a sleeping bear there that you just decided to go poke or something because I mean you have some really good opinions on the industry. From the stuff I've read and where I've listened to you, I got to, I agree with a lot of what you say. And that being said, this industry is, whenever you start talking about it and ruffling feathers, that bear's going to wake up and tell you something. So, I guess what motivated you to go after that bear and poke it?

Rachel Premack:
That's an interesting point. I'm well and good and bad to hear that that's going on. I guess, I grew up in the Detroit area. I have some family background in the trucking industry, very minimal, but it just seems an area, I'm just moving because, when I started reporting on this, I started reporting in this from the truck driver perspective and so many of the truck drivers I had talked to, kind of when we were talking about earlier, they were older, they were guys, probably not the first people I necessarily relate to, but I just really liked them and I really felt they weren't really getting their voices heard. So I just wanted to kind of elevate their concerns and elevate their voice a little bit.

Rachel Premack:
So I feel a lot of the reporting or a lot of my motivation is just to give them more of a voice or give them more of platform to kind of talk about their concerns and, analyze them too, not just say, this is what truck drivers are saying done, but this is what truck drivers are saying, these are what the numbers are saying. Kind of looking at both of them. I just think that, especially people in New York or people kind of on the coast don't really think about truck drivers as people that should be listened to, but they also don't really think of the fact that transportation freight underpin everything that we do and underpin so much of the economy and can say so much about what's going to happen next in the global economy and the national economy. So, I just like to bring this more to the forefront of the average coastal person or the average person in trucking and sort of dig into more about what's going on and hopefully keep people better informed about how the economy works.

Rachel Premack:
So I don't know if that answered your question very well, but that's kind of my thought about that.

Micheal Clements:
Well, we appreciate the work you and business insider are doing to bring more awareness to the industry and, at the end of the day, if it gets people talking, especially whenever it's the things that are affecting people's lives all across the country in a great, in such a big group like the transportation industry and specifically truck drivers, I think we can let these people's voices be heard. It's a that's a positive for the industry.

Rachel Premack:
Yeah, yeah, yeah, exactly.

Aaron Dunn:
Indeed. Indeed. Well Rachel, thank you so much for your time today. It was an excellent conversation. I think our listeners are really going to get a lot of value out of it. Definitely go to business insider and follow Rachel's ongoing journalism of the industry because I'm sure she's not stopping with us. And, let's see. Don't forget to subscribe and Rachel, anything else that you want to direct people to?

Rachel Premack:
No, I am on Twitter. I'm on LinkedIn. Inbox is always open. So, if there's anything interesting you want to tell me, I'm always happy to read your emails or read your tweets or anything along those. So everyone listening, just keep me posted and hope to be in touch with you all.

Aaron Dunn:
Awesome. Thank you so much, Rachel.

Rachel Premack:
Yeah, thanks so much.

Katie:
Hello, this is Katie from PDQ America. I wanted to invite you to join our newsletter, The Transmitter. If you'd like to receive the latest trucking news, industry insight and other valuable information every week, visit go.PDQamerica.com/podcast.