ATLANTA—The truck driver shortage is worsening, threatening the trucking industry’s ability to serve the nation’s supply chains. The shortage will almost certainly cause fleets’ costs to increase and shippers’ rate to continue to rise.
“The driver shortage is as bad as ever,” Bill Graves, president and CEO of the American Trucking Associations, recently told the 28th annual meeting of the North American Transportation Employee Relations Association (NATERA). “It’s as bad as it’s ever been, and I don’t expect it to get better any time soon.”
ATA says there is currently a 35,000 driver shortage that is projected to grow to around 200,000 by 2020. It will reach as many as 240,000 by 2024, according to ATA projections.
Graves said one possible solution to finding news sources of drivers may the push for immigration reform in Washington.
“Our ability to solve this driver shortage will be tied to what we can do with immigration,” Graves said. “I think it’s very possible as the demand for trucking grows, we’re going to have to figure out how to use non-traditional employees to fill those vacancies.”
Until then, financial pressure on fleets will continue to increase compensation and shippers will be asked to pay higher rates to get freight moved, Graves predicted.
The $310 billion a year truckload sector moves the vast majority of freight in this country. And Graves said the shortage of drivers in that sector is impeding sufficient growth in the TL sector.
“The truckload sector is adding little if any capacity,” Graves said. “LTL is adding a small amount but remains well below all-time highs. LTL moves less than 10 percent of tonnage in this country, however.”
Some TL carriers have been reluctant to add capacity because their revenue per mile has increased up due to improved demand and limited capacity in that sector. That has led to increased merger and acquisition activity in the TL sector.
“I am starting to feel I am leading an association of really big members and really small members,” Graves said. “Anybody in that mid-size category is a good target to be taken over.”
TL carriers also are struggling to find sufficient numbers of independent contractors to fill capacity needs, according to Graves. Large TLs’ independent contractors are down 3 percent from January 2012 to September 2014. Smaller TLs are using 8.4 percent fewer independent contractors over that period, Graves said.
The changes in hours of service, which have resulted in about a 3 percent loss in trucking productivity due to fewer hours allowed during a week, have been cited as the reason for the decline in owner-operators in trucking, experts said.
“The revised hours of service rule was like the straw that broke the camel’s back,” Graves said. “A lot of independent contractors just said, ‘That’s it. I can’t make it any longer.’”
Fleets need to greater employ pro-active retention techniques, according to Kelly Anderson, president of Impact Training Solutions. That includes better pay, better recruiting, and ongoing actions to improve relations with drivers.
ATA says the number of new drivers needed per year over the next 10 years is 96,178. Retirements, industry growth and non-voluntary departures are all up, as is turnover in the TL industry.
Truckload driver turnover is now 103 percent for large carriers and 94 percent annually for smaller TL carriers, according to ATA figures. Demographics are working against the trucking industry, as well as the industry’s inability to attract younger people and women (who account for 5 percent of the nation’s 3 million long-haul drivers).
“We have to come up with strategies to find younger people,” Graves said.
And more money. Drivers for TL carriers earn an average of $43,000, while their compatriots at private fleets average about $73,000 per year. LTL drivers, by comparison, earn about $64,000 for over-the-road work. Turnover at private fleets and LTL are typically less than 10 percent annually, a direct reflection of their higher pay.
Some fleets already are raising pay. Con-way, for instance, earmarked $600 million for additional driver pay next year. U.S. Xpress recently raises entry-level driver pay by 13 percent. Melton Truck Line, a major flatbed carrier, also raised its driver pay by 2 percent.
“The industry is doing reasonably well due to tight capacity,” Graves said. But that won’t be the case if the industry continues to struggle to find sufficient drivers.
“The railroads aren’t in position to supply the kind of throughput to keep this economy moving,” Graves said. “Every day 3 million trucks move freight in this country. We have a lot going on in this industry to keep this economy moving along.”