Solutions

The Wheel in the Sky Keeps on Turning on the Truck Driver Shortage

Although the truck driver shortage has been building for several years now, many analysts warn the situation will get worse before it starts to improve.  The American Trucking Associations (www.trucking.org) reported that the turnover for large truckload carriers or fleets with more than $30M in annual revenue increased 6% in the first quarter of 2018.  The first quarter turnover rate for LTL carriers was up 2%.  The report also noted that the turnover rate for smaller truckload carriers dropped 7% in the first quarter, but was up 7% annually.  Finding enough qualified drivers remains the biggest challenge for the trucking industry, which moves 70% of the nation’s freight.

The Midwest has been badly hit by the driver shortage, but the problem also appears to be worsening all along the East Coast and in the South.  As freight demand continues to rise, so does the demand for drivers to transport those goods.  According to the AMA, the U.S. needs 50,000 truck drivers to avoid a shipping crisis, and the shortage is projected to top 174,000 by 2026.

The driver shortage is fueling capacity shortages, which result in shipping delays and increased transportation costs.  Organizations are already getting hit right in the P&L, leaving many to complain about how the driver shortage is impacting their business with higher operating costs and lower profit margins.

Key Drivers behind the Wheel

  • E-commerce demand is aggressively shifting the way products are moved
  • Port wait times
    • Drivers are not paid when they are sitting in line at the port; they only make money on the mileage they cover, not for the hours they are on the job
  • Lifestyle issues such as:
    • Long hours
    • Low wages
    • Being away from home for weeks on end
    • Many nights spent sleeping inside the trucks themselves
  • An aging workforce
  • Recruiting and retaining quality drivers
    • Lack of qualified applicants
    • 4% unemployment rate, which means less grueling, more attractive jobs are available
  • Regulatory Compliance
    • The electronic logging device (ELD) mandate took effect in December 2017 which limits the hours a driver can be on the road in a given day
    • The full stability regulation requires full electronic stability control systems be installed on tractors and Class 7 trucks
    • Interstate age restrictions; drivers are prohibited from crossing state lines until they are 21
  • Changing weather patterns
    • Overactive hurricane season in the Gulf region
    • A cold, harsh winter in the South

Give Me Forty Acres

Carriers are shifting into high gear to turn this rig around by increasing driver pay, raising sign-on bonuses, and providing financial aid options so that potential drivers can obtain CDL licenses.  Trucking companies are partnering with local technical schools to recruit younger people and trying to expand their talent pool to include woman and veterans.

Key stakeholders in food retailing, manufacturing, and supply are urging congressional leaders to push forward with the DRIVE-Safe Act.  Passage of this legislation would ease recruiting efforts by lowering the age requirement of interstate driving from 21 to 18.

Companies like Tesla and Daimler are developing electronic, semi-autonomous freight trucks, which can reduce fuel costs by up to 20% and help curve the driver shortage problems.  But, the trucking industry isn’t quite ready to go autonomous yet; driverless trucks are still decades away.

Keep on Trucking

What can American business do to mitigate risks associated with the driver shortage?  Here are a few suggestions.

  • Plan for longer lead times when managing supply chain, inventory, and time to market
  • Review shipping schedules and freight lanes to find the best possible rates
  • Consider re-routing cargo to ports with better, more efficient gating setups
  • Utilize Less than Truckload (LTL) shipping options to guarantee capacity
  • Partner with a truckload brokerage firm who can negotiate the lowest possible rates, secure capacity, and monitor delivery times to ensure your products are delivered on time
  • Face the possibility of paying more in order to secure a driver

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