Rising to the challenge

Truckload carriers are finding creative solutions to some nagging problems.

By -- Logistics Management, 9/1/2000

TIMES ARE BOTH GOOD AND BAD FOR THE truckload (TL) industry. In a booming economy, the demand for TL services is strong, and the outlook for the near future couldn't be rosier. A forecast for the industry, completed last year by the American Trucking Associations, predicts that trucking will continue to be the major method of freight transport in this country for at least the next several years. In a red-hot economy, you couldn't be in a better position.

But the same booming economy that's led to unprecedented growth in the truckload industry is also the cause of its biggest headache: a shortage of qualified drivers. The driver shortage, which has been a perennial problem for TL carriers, has only been exacerbated by the good economic times when alternative job opportunities are plentiful. Drivers who find the time spent away from home and tight delivery schedules a burden have plenty of other options. Today, industry estimates peg the number of unfilled TL driving positions at 80,000. And should a bid by U.S. regulators to change truck drivers' hours-of-service rules prevail, an additional 60,000 new drivers would be needed, according to the proposal's critics.

The hours-of-service issue isn't the only regulatory nightmare looming for truckers. The U.S. Occupational Health and Safety Administration (OSHA) has tightened guidelines for forklift operations, which can tie drivers up at the loading dock. OSHA is also considering imposing a directive to reduce "ergonomic risk factors" in the materials-handling process, which will affect those motor carriers whose customers require drivers to load and unload freight.

And then there's the price of fuel, which seems to know only one direction-up. Costs today are about 33 percent higher than they were last year, putting carriers in the unenviable position of either imposing fuel surcharges to recover those increased costs or taking the financial hit in order to preserve business relationships with customers.

Although all of this is having a negative effect on carriers' ability to deliver the goods, truckload carriers are adopting a variety of strategies to address these challenges. Here's a look at some of these challenges and how the truckers are coping with them.

Drivers Wanted

Today, carriers from all over the country are feeling the effects of the driver shortage. Robert Sturgeon, CEO of Barr-Nunn Transportation in Granger, Iowa, says the scarcity is limiting capacity for the national TL dry-van carrier founded in 1982. Even though his driver turnover rate is just over 40 percent in an industry where the average is 98 percent, Sturgeon says Barr-Nunn's policy of paying drivers well (34 cents a mile for drivers with five years' experience) and providing them with steady work, more at-home time, and home-office support while on the road isn't enough to keep the company from being affected.

"We have about 45 trucks that are empty because we've got no one to drive them," he says. "We're also running empty miles, which is bad for our bottom line." The shortage is the main challenge facing the TL industry because it's damaging to the overall economy, according to Sturgeon. The inevitable slowdown in the delivery of goods will ultimately result in rising prices, which in turn will prompt the U.S. Federal Reserve Board to raise interest rates in an anti-inflationary move, he predicts.

Scott Arves, chief operating officer at Green Bay, Wis.-based Schneider National, North America's largest TL hauler, says his company is scrambling to keep the 14,500 company drivers and contractors it needs. Schneider recently instituted an across-the-board pay increase for drivers and is creating what Arves calls a "more driver-friendly environment" to make it easier for them to handle at-home demands while they're on the road. This includes a ride-along program for passengers at least 18 years old (or 13, if they're immediate family members); a "Touch Home" program with in-cab e-mail, personal 800 telephone numbers, and free computer hook-ups at company centers; and the "Advantage Club," which rewards top performers with a week of vacation, a $500 Christmas shopping spree, or a NASCAR race weekend, among other prizes.

Schneider is also using its driver-training program to recruit newcomers without commercial drivers licenses (CDLs) and CDL-holders who are inexperienced. Schneider offers 11 days of classroom and in-truck training, then pairs new drivers with trainers for on-road experience.

Robert Low, CEO of Prime Inc., a refrigerated, flatbed, and tanker carrier, says the driver shortage means that 2 percent of his 2,000 trucks and more than 2,500 trailers are now idle. As disappointing as that is at a time when customer demand is so high, he says, "that's a pretty good performance, relative to the industry."

Prime decided to take a somewhat different tack in its driver-recruitment efforts, Low says. "Instead of asking, 'How do we get new drivers?' we started asking 'Why do our long-term drivers stay?'" he explains. The answer was that drivers stay where they perceive they are valued and treated well, according to Low. To that end, Prime recently opened the 40,000-square-foot Millennium Building at its Springfield, Mo., headquarters to provide its 3,400 drivers with a child-care center, fitness center, convenience store, accounting services, physician's office, upscale food services, a 44-seat movie theater, and concierge services including mail and laundry.

Bill Roberts, executive vice president of Miller Transporters Inc., one of the largest bulk carriers in the United States, says that although the driver shortage isn't having a significant impact on his company's business, Miller is having difficulty finding drivers who can meet company standards. The 55-year-old company, headquartered in Jackson, Miss., has switched from team driving to solo drivers to cope with the dwindling pool of drivers.

Miller is also being more responsive to drivers' family and business concerns-offering legal services to drivers, for example. An attempt at offering marriage and family counseling fell flat, though, he says.

The things that do work in recruiting and retaining drivers, says Roberts, are better working conditions-roomier cabs that are more comfortable, better truck suspensions that reduce damage to cargo, engines with better torque for improved performance, a responsive and informed home office-the kinds of changes that make the on-road experience smoother and easier for drivers.

Hours of Service Under Review

At a time when the driver shortage has reached crisis proportions, the U.S. Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) has proposed new hours-of-service rules that could aggravate the situation. Should the proposed rules be adopted, the TL industry's need for drivers will increase an additional 30 to 35 percent, estimates Roberts of Miller Transporters. The Truckload Carriers Association (TCA), an association that represents truckload carriers in North America, opposes the changes and is lobbying to delay, and perhaps dismiss, the effort.

Arves says the hours-of-service proposal needs rewriting. The government's new proposal was created without industry involvement, he reports, adding, "The government missed the mark in three or four areas." Revamping the rules is supposed to increase safety by discouraging drivers from operating from midnight to 6 a.m. But Arves says that will actually add more trucks to rush-hour traffic, with the potential for increasing highway accidents and the number of fatalities.

The mandatory two-day break in drivers' workweeks proposed by the FMCSA is another sticking point. The agency says the move will reduce driver fatigue. But Arves points out that drivers who are required to go off duty must also take their equipment out of service. Arves says that will reduce productivity by 20 percent, meaning that shippers will pay higher rates.

It will also make life on the road worse for drivers, Arves continues. "There aren't enough driving and parking facilities available for drivers away from home," he reports. "[Drivers] are going to be idle for two days. What are they going to do? Where are they going to go? We think that's poorly thought out."

Barr-Nunn's Sturgeon agrees that there won't be enough truck stops and rest areas for drivers to use during FMCSA-ordered rest periods. "It's really hard for drivers to find a place to park that's safe," he says. The federal agency's intentions are good, but its proposals to address the problem of driver fatigue are flawed, he adds. Sturgeon hopes that ultimately technology could solve the driver-fatigue dilemma by creating a method for drivers to self-test their levels of fatigue via a system that will disable a truck's ignition if they are too tired to drive safely.

Schneider favors running longer, heavier trucks on the nation's roadways, according to Arves. Currently, there is a bill before Congress seeking approval to increase the maximum vehicle weight from 80,000 to 97,000 pounds, with installation of an additional axle. There is also another proposal to allow longer trucks on the nation's highways.

"We believe the technology exists to do that safely," Arves says. "It would solve a lot of problems-use less fuel, improve productivity." Additional axles on heavier trucks would lessen their loads' impact on the U.S. infrastructure, he argues, and driving techniques that improve braking would address safety concerns.

Also causing headaches for TL carriers are OSHA's new forklift regulations calling for extensive training for anyone driving forklifts or using pallet jacks or motorized handtrucks. The training has to be tailored to the specific make or model of the equipment, and trainees must be certified before they're allowed to use it-including drivers who normally operate powered industrial trucks while loading and unloading. A study commissioned by the TCA says it may be impossible for motor carriers to meet this OSHA standard because they cannot know what type of equipment shippers and consignees have at their worksites.

OSHA is also working on new ergonomic standards aimed at reducing repetitive-motion injuries during the materials-handling process. Because many carriers require drivers to perform manual handling as a customer service, drivers will be covered by this standard. Carriers will have to decide whether to spend the money for training and new equipment (such as lift gates for trailers) or stop offering this service, says the TCA report.

Fuel-Price Woes

The continuing upward spiral in fuel prices has prompted all of the companies that we contacted to impose surcharges on consignees. Although the surcharges provide some relief, the carriers all say they are not recovering 100 percent of the increased cost of fuel.

Low says Prime is now collecting about 80 percent of the increased costs and paying its contractors 100 percent fuel reimbursement. "We recognize that the cost of fuel is something they can't control," he says.

Drivers are conserving fuel as best they can, but their efforts can't offset the rise in fuel prices, he says. Although he'd like government intervention to bring down the cost of fuel, Low says he's reluctant to invite the camel into the tent, so to speak. "We believe that less intrusion on the part of government is a good thing," he says.

Sturgeon at Barr-Nunn says drivers are being encouraged to reduce trucks' idling times and drive conservatively to encourage fuel economy. The company uses a special software program to hunt out the lowest prices for fuel and has been able to negotiate volume discounts with some fuel operators. "It's cut into profits," he says of the increase in prices. "Every trucking company is experiencing the same thing."

Help From Shippers

Ultimately, motor carriers may turn to their customers for help overcoming these challenges, say trucking executives. A joint effort to improve productivity would benefit both parties, says Roberts.

One change that could ease the strain on carriers right now would be for shippers to grant the industry some slack on delivery times and the 15- to 30-minute delivery timeframe that shippers sometimes promise customers, he says. Under current conditions, the routine 9-to-5 delivery times are simply too restrictive, according to Roberts. And delivery windows requiring shipments to arrive within 15 to 30 minutes of the promised time may not be realistic right now, he adds.

In order to increase productivity, Schneider's Arves says his company is trying to get shippers and consignees to support efforts to shorten the time drivers spend waiting at docks to load and unload freight. "It's a chronic industry problem," he says. Shortening the waiting times means drivers can be more productive, he says, which ultimately benefits shippers and consignees.

A study commissioned by the TCA this year identified major obstacles that motor carriers faced in their efforts to increase productivity. Along with proposed regulatory changes and the driver shortage, the study found that drivers' waiting times had a significant impact on their job-satisfaction ratings-a significant finding for an industry whose annual turnover rate is approaching 100 percent.

The survey, conducted among dry bulk and refrigerated drivers who load and unload their trucks, showed that drivers spent nearly seven hours waiting for each freight shipment that they picked up and delivered. That represents a significant concern to drivers who aren't paid for their waiting time. Drivers are also under time constraints imposed by current DOT hours-of-service regulations-not to mention the regulations that would apply if the agency were to tighten up those rules. If the DOT changes are approved, the TCA study predicts that a dry van driver would lose 40 percent of the maximum driving hours currently allowed. Refrigerated drivers could lose 70 percent of driving time, if hours spent loading, unloading, and waiting are counted as hours on duty.

Given the complexity of both the regulatory and the marketplace challenges facing TL motor carriers, it seems clear that truckers will not be able to work them out on their own. The resolution of far-reaching problems like these, says Barr-Nunn's Sturgeon, will most likely require a joint effort by carriers, shippers and consignees, and government regulators.