by Pride Transport | Jan 03, 2020
Like most of the big questions; what’s the meaning of life, what happens when we shuffle off this mortal coil, how much IS that doggie in the window, the answer to this question is not as simple as it may seem.
Depending on your religious views and your personal beliefs, what happens when we’re done here can be answered in many ways. Depending on your view of the market, are we experiencing a driver shortage, can be answered in many ways as well.
The Nitty & The Gritty
The short and most popular answer to the question is yes. Yes, we are experiencing a shortage of truck drivers. Statistics show that nationwide the industry is about 60,000 drivers short. A number that has held steady for some time. A number that some experts believe will grow in the coming years.
The ATA, the American Trucking Association, agrees with that number and adds that the shortage of drivers could top 100,000 in the next few years, with some analysts putting that number at 160,000 by the year 2023.
How Bad Is It?
Most people still don’t fully understand the impact the trucking industry has on their daily lives. It’s easy to go day to day, make purchases, go shopping for groceries and remain oblivious to how often the things we use, eat and wear are moved across the nation's highways by truck
More than 68% of all freight in the U.S. alone is moved by trucks. The keyboard you’re writing on, the screen you may be reading this article on, the shirt, the shoes, and pants you’re wearing most likely all got to the store and then to you by truck.
Who Is Affected?
Technically every single person in the country is affected by the driver shortage. There are very few times in our lives when we aren’t using something that has spent time being moved by truck. But, are there some who will be hit harder as the shortage gets worse?
Mark Furguson is a professor of Management Science at the University of South Carolina. Professor Furguson specializes in the research of supply chain management and logistics. Over his years of looking at the trucking industry, he believes the shortage will have it’s effects on small, local businesses most severely.
The thinking here is that transportation companies, when they become strapped for drivers, will service their larger, more lucrative accounts first leaving smaller accounts to fend for themselves. Drivers, of course, will go where the money is and eventually, these smaller businesses will be unable to carry on.
Here’s where the question gets more complex and less easy to answer.
According to the U.S. Census Bureau data, the number of truck drivers is at an all-time high. The agency stated in materials they published in early June of 2019, that in June of 2017, the number of drivers surpassed 3.5 million.
What makes a shortage hard to believe is data like that from the census and some historical information.
Almost a decade ago, during the great recession, about 3.4 million people were truck drivers. The recession ended in 2009: by 2010 there were fewer than 3 million drivers. Now, as the census data shows, the number of drivers has risen and currently sits at 3.5 million drivers. That census data seems to have held steady. So why the talk of shortages?
So, What’s The Answer?
Again, it’s not easy to say. Stats on the industry have shown that in the past for every four drivers that retire there were three drivers coming into the industry. This was keeping the numbers up and the worry down. But these stats have changed drastically over the past ten years. Stats now show that for every four drivers that retire, there is only a half driver coming in to fill the void. That is, of course, a statistical number, half a person isn’t applying for a job to drive a truck.
The American Trucking Association chief economist, Bob Costello, agrees with the census and believes that the number of drivers is rising. Slightly. He contends however that despite the number of drivers being on the rise the shortage persists because there are not enough drivers to keep up with the demand.
Costello says that the problem isn’t that the number of drivers has been in constant decline, it's that the number is not growing fast enough. The amount of consumer goods moved by truck on a daily basis is growing at a tremendous rate. Online marketing has increased shipping and supply chain needs. The small increase in the number of drivers is just not enough to keep up with the demand. Costello believes the number of drivers must increase much more quickly to keep up. Consumer demand certainly isn't going to decrease without a major change or a drastic recession so there must be more drivers.
But wait, It’s A Good Thing
There are some who view the driver shortage as a market problem and they contend that, when examined, a driver shortage is a good thing. What they suggest is that the market has a capacity shortage.
This group says that capacity shortage, in which the market doesn't have enough trucks available for dispatch at the moment- are good for carriers and drivers alike.
Rates go up when there is a shortage of capacity. Carriers gain more volume which encourages them to add more trucks. Once the available pool of drivers for these new trucks dries up, carriers increase wages and incentives to attract more drivers.
In 2018 there was a capacity shortage. Driver wages and incentives shot up and carriers fought aggressively for new drivers. With the wage increase, more new drivers joined the industry and a number of new fleets began operations. Also during this time, a number of drivers bypassed the carriers and joined the industry as owner-operators. The thinking in this situation was that in a perpetual diver shortage the carriers will always have pricing power so why not be a “carrier” themselves.
It’s Great, ‘til It’s Not
All was good for drivers and owner-operators until 2019. And this is where the shortage nay-sayers get their soapbox to stand on.
Now, in 2019, they say there is a glut of capacity on the road, the market is oversupplied, owner-operators have lost pricing power and carriers are in charge again and they claim there are too many drivers sitting in trucks available for dispatch. They contend the only way to correct the capacity situation is to either to increase freight volume or have fewer drivers.
Freight volumes are a function of economic demand so the industry can only control the amount of capacity it adds or subtracts. The driver shortage deniers say that drivers are the capacity constraint so the industry needs fewer drivers now.
This is an interesting theory and, for the most part, it tracks, especially if you cite the anomaly of 2018. However, the whole notion falls apart when you realize that the amount of freight being moved daily is constantly increasing and the reality is, there are just not enough drivers to handle the volume of freight as it is.
Why The Shortage?
This is actually the second most important question to ask and one that has a number of answers. Most will agree that there are two main factors to the driver shortage. The first: retirement rates and the second: the stigma associated with truck drivers.
As stated before, the number of drivers retiring far exceeds the number of drivers coming into the industry. But, this isn’t a surprise. This information didn’t just suddenly appear out of the blue. Most drivers who have been in the industry for 30 plus years have seen the retirement wave building for a long time and now it has come crashing down on the industry. Mass retirements are taking a serious chunk out of the industry and that chunk is not being refilled.
The second problem is the stigma of the truck driver. The occupation is characterized by only modest levels of education. For so long now, this country has been pushing higher education. A push to get those big money, office occupying, tech or management jobs. Consequently, trade-skill labor has been pushed to the back burner and manual labor, jobs that are in serious demand, like truck drivers, are looked at as suspect.
A Difficult Job
Another factor in the driver shortage is that being a truck driver is a very difficult job. The time on the road, time away from family and friends, the pressures of the road and the lifestyle all add up to making driving a truck a rather daunting task.
Also, drivers do not feel taken care of. For example, drivers who work in any aspect of Interstate Transportation are not availed of the Fair Labor Standards Act’s overtime provision, which governs the majority of other private and public sector jobs. Drivers are governed by the federal Hours of Service regulations.
The HOS regulations limit drivers to approximately 60 hours of work over a seven-day period and do not require a time-and-a-half premium for weekly hours over 40. You’d be hard-pressed to find a driver on the road today who doesn’t work far in excess of 40 hours per week.
There’s also the fact that drivers are paid by the mile and waiting for a rig to be loaded and unloaded is time away from miles which is money not in their pocket.
What Can be Done?
And now we come to the $64,000 question. This is the most important question being asked and the one the industry needs to examine very thoroughly.
Many will point to driver pay as being too low for the amount of time and sacrifice that a driver deals with. The ATA’s Bob Costello says that trucking companies boosted pay sharply in the past year. Gordon Klemp, president of the National Transportation Institute agrees and figures that the increase was close to 10% on average. He says that this increase now makes the driver’s average salary of around $60,000 per year. Is that enough to stem the rising tide of the shortage?
The Industry Needs Women
Many will agree with the need for better driver pay or that the industry is still in the process of cleaning up the stigma that surrounds truck drivers are important factors in the shortage. But that stigma may be the key to the industry’s inability to attract more women to the industry.
Not attracting women to the industry is a major factor in the continued driver shortfall. Both Costello and Klemp agree- the industry has got to do more to attract women. Currently, only about 8% of long-haul drivers are women. For the industry to thrive, that number has got to increase.
In the long run, the ATA believes that more automated truck features that make driving easier, an across the board pay increase, along with the continued work of dispelling the old truck driver stigma will attract more drivers, especially women, to the industry.
The Answer is Yes
Setting aside those few who follow the capacity shortage thinking the real answer is yes. Yes, there is still a driver shortage and yes, it is serious.
But, things may be changing. Oddly enough with new trucks, better EPA ratings for trucks and a growing awareness of just how incredibly vital the trucking industry is to the economic health of the country there is a new possibility for driver recruitment, Millennials. This is a group of people who are attracted to experiences more than stuff, so they are looking toward the trucking industry as a viable career choice.
There is a lot at stake. The country simply cannot survive without trucks and even with the rise of automation, the industry cannot survive without drivers for those trucks.