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The truck driver shortage helped jack up the prices for everything from Amazon Prime to Crest toothpaste last year — here’s why transportation costs are suddenly sinking in 2019

The truck driver shortage helped jack up the prices for everything from Amazon Prime to Crest toothpaste last year — here’s why transportation costs are suddenly sinking in 2019

Amazon, General Mills, and Tyson Foods said they increased prices in 2018 because of bottlenecks in trucking — namely, a truck-driver shortage. Procter & Gamble and Hershey’s said last year that they would have to increase prices in 2019 as well. But a softening freight market and a glut of trucking capacity are unexpectedly helping…


Last year, retailer after retailer sounded the alarm on the rising costs of transportation — and how those costs would have to be passed onto consumers.

Procter & Gamble, Hershey’s, General Mills, Tyson Foods, Mondelez (which owns brands like Oreo, Chips Ahoy, and Nabisco), andotherconsumer-goods companiestold investorsthat they did or would jack up prices because of trucking bottlenecks.

Amazonincreased the costof its Prime membership by 20% in April, partially because ofincreased shipping costs.

“Transportation costs caught so many large manufacturers by surprise,” Dean Croke, the chief insight officer of FreightWaves, told Business Insider.

Read more:There’s a shortage of truckers and it’s forcing the C-suite to dramatically rethink how they transport goods

Retailers expected the same issues in moving goods in 2019. The truck-driver shortage — the US could have ashortage of 175,000 driversby 2026 — hasn’t lessened.Certaininefficienciesin the trucking industry,which moves 71% of the US’s freight tonnage, are still being resolved. And as for the trucks themselves, there’sa backlog of 300,000that transportation companies have not received.

DAT Solutions; Andy Kiersz/Business Insider

Despite all that, the cost to move goods has plummeted so far this year. Van trucking rates sank by 13% from January 2018 to January 2019,according to DAT Solutions. Freight rates were down last month by as much as 5.7% from December.

One reason for the sinking rates is that while transportation companies boughta record number of trucksin 2018, the amount of goods needing to be moved has decreased. Spot-market trucking capacity was up 49% in January from the year before, while the loads that needed to be moved were down 34%, according to DAT.

Croke said the excess capacity was “driving rates down in most markets.”

“We’ve got this oversupply of trucks,” Croke said. “We’ve got this excess capacity on the market from a record amount of truck orders.”

Read more:A longtime Etsy engineering VP just joined one of trucking’s hottest startups — and it shows how the $700 billion trucking industry is becoming a tech darling

A slowdown in goods being moved is foreboding for the overall economy, as it indicates people are buying less stuff.

But a result of lower trucking rates could be that the sticker prices of goods like toothpaste, chocolate bars, and hot dogs might not see the same hikes they did last year.

Have you noticed an interesting trend in logistics that no one is talking about? Contact the author atrpremack@businessinsider.com.

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