US scrap consumers and dealers are struggling with rising trucking costs and dropped loads as the country's trucking capacity recovers from Covid-19-related disruptions and overall freight demand bounces back at a faster rate.
While contract fleets increased by 4.8pc between July and April, the US driver population, which also dropped sharply in April because of Covid-19, has only recovered by 3.5pc over the same period, according to data from the American Trucking Association (ATA).
"I think shippers are having a difficult time finding fleets because supply has gone down while demand has come up from the bottom," ATA economist Bob Costello told Argus.
The US Bureau of Transportation reported that 1.46mn Americans were employed as truck drivers in July, higher than the six-year low of 1.41mn drivers after the economy crashed in April amid social distancing measures, but still around a two-year low.
"Other ATA data show that for-hire truckload fleets are operating 3pc fewer trucks this summer than a year earlier, so it can be difficult to take on a significant amount of additional freight," Costello said in ATA's latest monthly report.
Still, US market participants shipping scrap and alloy via truck have expressed frustration about worsening driver availability, long before Covid-19.
"That is why I am only selling within a 75-mile radius to my yard. I would go to Davenport [Iowa], but it is out of the question with trucking," said Jacob Bronstein, chief executive of Merrillville Metal Recycling located in Indiana.
Davenport is home to Arconic and Novelis rolling mills that are major consumers of aluminum scrap.
"Trucking has been a horrible subject for a couple of months now. Too many loads, and not enough trucks," a Texas dealer told Argus.
"They will quote you one price a week out and on the day of pick-up, they come back and try to add $500-800 more and say take it or leave it," said a third, multi-location dealer in the Midwest.
US scrap market participants expect costs to rise and truck availability to stay tight through at least the holiday retail season, when it is normal for capacity to become constrained.
