• DRIVERS IN DEMAND! Driver Shortage Increases to Nearly 50,000!

DRIVERS IN DEMAND! Driver Shortage Increases to Nearly 50,000!

America is in desperate need of more truck drivers as the driver shortage increases to nearly 50,000, according to the American Truckers Association’s (ATA) latest report, released in October 2015.  Their key findings are staggering:

  • Over the next decade, the trucking industry will need to hire an additional 89,000 drivers each year for the next decade to keep up with demand. This equates to an incredible demand for drivers in 2015 that averages a need for over 1700 newly hired drivers each week across the country.
  • Almost half, 45%, of demand comes from waves of drivers retiring, leaving thousands of trucks and routes empty as they make their exit from the industry.
  • Across the industry, recruiters are under more pressure due to rising turnover rates, which have reached an industry average of 90% for both small and large truckload fleets.

ATA’s Chief Economist, Bob Costello, highlights that this growing need for drivers stems from a bright future for the freight industry as consumer needs across the country increase. According to his figures, the number of Class 8 trucks in use will grow from 3.56 million in 2015 to 3.98 million by 2026 while freight volume increases by 29% over the next decade.  Costello points out that “Continued population growth, expansion of the energy sector and foreign trade will boost trucking, intermodal rail and pipeline shipments in particular.”

As freight volumes and regulatory pressures grow, we can expect the truck driver shortage problem to get worse in the near term while the trucking industry struggles to find long term solutions for the shortage.

While No One Was Looking

These astonishing figures seem to have snuck up on us as our economy focused on recovering from recession in 2008. Nearly every period of economic growth is accompanied by a driver shortage, and the recovery that began in 2009 put the driver shortage on the national backburner while our nation focused on the national unemployment rate.

While no one outside was looking, freight volume continued to increase and “the trucking industry edged even closer to 100% utilization,” according to the Council of Supply Chain Management Professionals in their State of Logistics report released in June 2015. The report continued to state that current industry indicators for hauling capacity indicate “that truck capacity has grown extremely tight.” Carriers and shippers continue to need more trucks on the road and more drivers to manage demand. For current truck drivers and new drivers in 2015, this could mean salary increases as companies compete to fill shipping needs.

Trucker Salaries Are Booming

Projections for 2015 trucker salaries are set to outpace the national average salary increase rates. In 2014, independent truck drivers saw an average salary increase of 8.7%, the largest segment gain in the transportation industry. This compares to a national increase of only 3% across all industries, according to The Society for Human Resource Development.

Owner operators saw the largest increases, according to the nation’s largest owner-operator financial services provider, ATBS. This segment of the industry experienced a 7% increase above last year, with averages of $56, 167 in 2014 and $52,406 in 2013.

ATBS’s President and CEO, Todd Amen, points out that this is $2,000 higher than their first projections for the year. This change came largely from fuel cost reductions in the fourth quarter which have continued throughout 2015. Although ATBS reports “all segments had a really good year,” flatbed haulers experienced only minimal change in salary for 2014.

Independent drivers and flatbedders have “higher highs in the good times and lower lows in the bad times” because they are more volatile than other industry segments, according to Gordon Klemp, head of the National Transportation Institute (NTI). Every year the NTI tracks compensation of drivers at medium and large fleets through an annual survey, the National Survey of Driver Wages. The 2014 survey reveals that most “independent contractors are operating in the independent and flat markets on percent of load type programs, so their pay adjusts quicker.” Other segments of the industry take more time to keep up with changes in supply of drivers and demand of shipping needs.

No Simple Fix

Resolving the driver shortage is a complex industry issue with no one-size-fits-all solution.  From recruitment issues to higher costs for trucks, the root of the driver shortage is scattered across different areas of the industry.

Finding and retaining enough compliant truck drivers “is the biggest single challenge for us as an industry,” according to the leader of the nation’s largest refrigerated carriers, Daniel England of C.R. England. England has more than 7,500 drivers, 4,300 trucks and over $1.3 billion in revenue in 2014.

Compliant drivers must fit within national regulations, including age restrictions that start no younger than 21 years.  As the trucking industry continues to find itself without qualified drivers, the shortage is made worse by changing perspectives on quality of life expectations by younger populations that otherwise would be filling the gaps in the trucking industry.

Even when companies hire drivers in their 20s, they face higher insurance costs which impact their ability to offer broad incentive programs.  The cost of recruiting this demographic is exorbitant as companies try to increase the appeal of being a truck driver. With long hours away from home, few options for continued comradery and social stigma in some parts the nation, younger demographics may only see appeal in bonus incentives and substantial guaranteed pay.

Once carriers get drivers in the door, keeping them there has proved to be difficult. “The economy may be growing at a slower pace than a year ago, but the demand for qualified, experienced truck drivers is pushing up driver turnover at large truckload fleets,” the American Trucking Associations says.

The 2015 State of Logistics report states that turnover rates for smaller fleets grew to 95%  in the last quarter of 2014. Larger fleets are attracting drivers away with higher pay, bonuses and better benefits,” Nearly 390 companies with an average of 27 vehicles declared bankruptcy in the first quarter of last year. These rising costs for retaining drivers have translated to higher prices for shippers. Industry leaders fear that rising pressures on trucking companies put the national transportation system in a dire situation.

Answers All Around

Organizations across industry segments are trying innovative solutions to address the driver shortage from different angles. Recruitment and training programs have seen huge changes in the past year while other companies focus on increasing the appeal of being a truck driver from quality of life improvements to incredible compensation incentives.

Changes in training programs from both public and private institutions are focused on increasing the number of available, compliant drivers. Richmond Community College addressed their communities need for drivers by cutting the price of their CDL Training Program from $2,500 to only $990 from start to finish, including getting a commercial driving license.

Wylie Bell, the school’s communications director, said that the change came from much needed help at the state level as Senator Tom McInnis rallied for funds to subsidize the course. Local trucking companies are hopeful that this will ease their need for drivers. Joe Everett of Superior Cranes in nearby Rockingham said that they could immediately hire 10 drivers in the area if they were able to find qualified applicants.

Trucking companies have shifted their focus to retention, creating programs that strive to ensure a better quality of life for drivers including better trucks with safety and comfort upgrades, more consistent routes and increased home time.

One company, JCI Transportation, is providing as many comforts of home as possible in each of their trucks. Each truck in their fleet has a flat-screen television and satellite radio.  For more food options than the every day truck stop, companies are supplying refrigerators and making sure that trucks have the ability for drivers to plug in a microwave if they want.

A Second Career

Recruiters are atargeting individuals that make truck driving their second career choice after economic struggles from the recession. These individuals are typically over 40 and were laid off or experienced a drop in compensation in the past couple years. Looking for a fresh start with higher pay, they turn to the trucking industry where recruiters meet them with open arms and sign on incentives over $1,500. For team drivers, these sign on bonuses can be up to $15,000.

Werner is leading the nation in a different strategy for filling gaps in the driver shortage: veteran apprenticeship programs. With the support of the Department of Veterans Affairs, eligible veterans can use the Post 9/11 GI bill to receive up to $22,555 of their tax-free education benefits while driving for Werner. This benefit amount is distributed on top of their company pay and sign on incentives, making truck driving a lucrative option for veterans in need.  In 2015, this program has brought 2,200 veterans to Werner.

For the best return, recruiters must focus their efforts across demographic groups. In 2013, 29 percent of truck drivers were in the 45 to 54 year age group, compared with 23 percent for all industries, the American Transportation Research Institute said in a recent report. Trucking employs a greater percentage of persons age 65 or older than 20-24 year olds, which are 6.1% and 4.9% respectively.

Changes For Shippers and Carriers

Some industry leaders are recommending permanent changes to the way that shippers and carriers work together to fill the gaps in driver shortage.  When shippers see an increased demand for the services, they often turn to the same large carriers that are experiencing shortage issues.

Jeff Tucker, president of Tucker Worldwide which is the nation’s largest freight brokerage, says there is more than meets the eye in the driver shortage issue. Tucker points out that many smaller carriers and upstarts are not experiencing the same capacity issues that are felt by larger carriers. In fact, Tucker explains that government transportation data reveals the total number of active for-hire carriers has gone up 20 percent from 155,000 carriers at the end of 2012 to 186,000 today.

“The fact is the economy is picking up, and people are willing to drive trucks.” According to Tucker, who thinks that shippers are simply looking in the wrong places when it comes to finding drivers or capacity.

“Every large shipper has the same carriers on speed dial and when the economy ticks up just a little bit, all of them call the same carriers and then, of course, the shipper will call one of the biggest brokers and the brokers will have you churning in the owner operator field and that is not capacity, or at least that is not the capacity shippers are used to dealing with,” he said.

Hitting Close to Home

At the recent Council of Supply Chain Management Professional (CSCMP) Annual Conference in San Antonio, Rosalyn Wilson, author of the Council of Supply Chain Management Professionals Annual State of Logistics Report, summed the industry’s issue in one heavy hitting sentence: “the driver shortage could be the leading problem for the entire economy.”

With the holiday season upon us, American consumers are headed into the time when the driver shortage can be felt on the front lines. Shipping needs increase during the last quarter of the year as Americans increase consumption in both commodities and luxuries. With the trucking industry responsible for over 69% of all national freight tonnage, the US economy relies on an increasing number of drivers behind wheels. For Thanksgiving celebrations alone, the National Turkey Foundation reports that truck drivers deliver over 46 million turkeys in November of each year. As leaders in the trucking industry continue to try new solutions to address the driver shortage, much more than millions of Thanksgiving tables are at stake.

Colm Foreman

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