The looming threat of a federal government shutdown seems like a frequent media topic these days. Government employees leave work one day and aren’t sure if they will be employed on the next workday.
At Anderson Trucking Service (ATS), we aren’t here for political commentary. However, our 68 years of trucking experience has taught us a thing or two about the trucking industry. While all shutdowns are unique, there are a few universal truths about how they impact transportation.
In this article, you’ll learn about how potential short-term and long-term government shutdowns could impact the trucking industry, including the impact on drivers and transportation providers.
How a Government Shutdown Impacts the Trucking Industry in the Short Term
Whenever a shutdown looms, government providers, as well as most government employees, face three possible outcomes:
- The shutdown is averted. Federal government budgets need frequent renewal and are often accompanied by a lot of political baggage.
While the period leading up to the budget renewal can be stressful for these employees and their families, in the end, these talks are often resolved at the last minute and everything is business as usual.
- Shutdown occurs, some employees are deemed essential. If a shutdown occurs, some federal government employees, especially those whose jobs impact public safety, will be deemed essential. These employees will report to work as usual during the shutdown.
Essential workers may find their work is more complex or harder due to the lack of support staff, but they will continue their required tasks.
Many of the government employees who interact with drivers, including inspectors and those involved in licensing, fall into this category.
- Shutdown occurs, other employees are deemed non-essential. Most government employees will be furloughed during a government shutdown. Many of these employees will use their paid time off during the shutdown to replace much of their lost income, but if that’s not available they will be unpaid for the length of the shutdown.
Drivers who haul government freight, excluding essential military supplies, are likely to be non-essential. If they are employed directly by the government they will be furloughed. If they work for a non-government provider, they may be redirected to private sector freight.
Most of the federal agencies that directly impact the trucking industry do essential work such as safety inspections, licensing and border security. These agencies will be partly or mostly staffed through shutdowns.
Even during a shutdown, the government does not want interruptions to the supply chain. Trucks hauling everything from essential food items to retail goods to construction supplies will stay on the road to keep the flow of goods moving.
While it would be easy to say that the trucking industry will be completely uninterrupted during a shutdown, that’s an oversimplification. There will be impacts to some transportation providers and some drivers.
Is Road Maintenance Done During Government Shutdowns?
Highways and roadways, including federal highways, are maintained at the local level. Routine road maintenance, including snowplowing, will continue during the shutdown.
A small number of roads are maintained directly by the federal government. Most of these roads are located on federal land, such as within national parks. These roads may not be maintained during a shutdown.
A Shutdown’s Impact on Federal Infrastructure Projects
Construction on federal roads and bridges is likely to stop during a shutdown. If this happens, the most likely scenario is that everyone working on the project will be furloughed for the duration.
This stoppage on federal road construction work includes the drivers hauling freight for these projects. This is a small percentage of drivers in the industry, but those drivers will most likely be laid off or pivot to hauling loads for the private sector during the shutdown.
How Are Truck Drivers Affected By a Government Shutdown?
The majority of drivers are employed by private sector companies who run business as usual during a government shutdown. However, drivers, carriers and brokers who carry mostly or only government freight may find themselves without pay during a shutdown.
Government freight includes items like infrastructure construction materials and some military supplies. These loads won’t move for the duration of the shutdown.
During a shutdown, transportation providers who specialize in government loads may pivot to looking for freight within the private sector. This may temporarily increase competition and the availability of capacity across the board, which should correct itself when the shutdown ends.
Is Freight Shipping Impacted During a Government Shutdown?
Private sector companies who maintain operations during a government shutdown won’t notice a significant difference to their shipping.
Trucking companies and drivers who are used to hauling all or mostly government freight will be scrambling to replace that income. As they pivot to taking on other types of freight, you may see a temporary increase in the number of trucks and drivers available — which could lead to short-term savings from increased competition for freight.
If your supply chain relies on the federal government — including military or federal infrastructure projects — you could see disruptions as those entities are temporarily shut down.
Because trucking companies and drivers are part of the private sector, you aren’t likely to notice a significant difference to your freight shipping plans during a short-term shutdown.
Will Any Changes to Trucking Laws Occur During a Shutdown?
Government shutdowns always start the day after the budget period ends. Legislation pending as of that date will be abruptly stopped.
This includes legislation that could impact the trucking industry.
- Items like medications and drugs that are pending government approval will not be approved during the shutdown.
- If pending legislation would impact international trade, those changes will not take place until after the shutdown.
Because budget approval and other pending legislation are determined by the same government bodies, there may be an incentive to rush certain bills through before the shutdown begins. If this happens, it’s possible that transportation could see some sudden, unexpected changes unrelated to the shutdown.
Most government shutdowns, if they occur at all, are short-term affairs with minimal impact to the trucking industry. However, a longer term shutdown will have added consequences.
Long-Term Impacts of a Government Shutdown on the Shipping Industry
A prolonged government shutdown will eventually mean less money in the economy. Furloughed workers will severely cut their spending. Companies that primarily serve the federal government will lose a huge portion of their budget and may also lay off employees.
If a government shutdown triggers a recession, this will impact the trucking industry and potentially supply chains across various industries as a whole. Historically, recessions have meant fewer goods to haul as both companies and individuals spend less money.
The trucking industry will likely respond as all industries do during a recession. Less work means some companies — especially smaller and less established companies — may fold and/or lay off workers. Larger companies with more diverse offerings are more likely to survive a recession.
If and when the economy picks up again, some of these companies may be able to recover and rebuild their businesses. However, many of their workers will have moved on to other jobs or industries. If enough workers change careers or decide to take early retirement, the downstream effects of a prolonged shutdown can be felt for years after the budget is restored.
While there’s no need to worry about long-term impact with each shutdown (on the rare occasion shutdowns occur, they are usually resolved within a few days or weeks), preparing your business and personal budget for a short-term income disruption is always a good idea.
How Will a Government Shutdown Affect Trucking?
Government shutdowns can cause a lot of uncertainty, especially for federal workers. However these are still rare events that usually only last for a short time.
The trucking industry is primarily made up of private sector companies and employees. A short-term shutdown will have minimal impact on these workers. Private sector shippers will also see minimal impact, especially during a brief shutdown.
No matter what is happening in the trucking industry, we at ATS are committed to keeping everyone as informed as possible. For timely updates and information, including what to do if a government shutdown occurs in the future, subscribe to our Learning Hub.
For a quote or question about your freight, contact one of our representatives.