According to the Bureau of Transportation Statistics, the U.S. transportation network hauled more than 13 billion tons of goods worth nearly $12 trillion in 2007. Trucks transported almost 9 billion tons of freight valued at more than $8 trillion for that same period. [Transportation Statistics Annual Report ][1]
Shortages of truck drivers are delaying some deliveries of products and raw materials across the USA and raising freight costs. The crunch is defying a tepid recovery and near-10% jobless rate that should supply a vast pool of unemployed construction and manufacturing workers. Experts say that the shortages are likely to worsen when the economy heats up and new rules kick in later this year that will make it tougher to hire truck drivers with poor safety records and could limit the number of hours drivers can work.
For the many unemployed truck drivers across the US, it may be surprising to learn that there is currently a nationwide shortage of qualified and experienced truck drivers. According to [USA Today][2] “Shortages of trucks and drivers are delaying some deliveries of products and raw materials across the USA and raising freight costs.” In the context of an almost 10% general unemployment rate in the U.S., such a shortage seems unlikely and out of step with the experience of the wider economy. The USA Today report uses examples from companies such as Con-Way truckload freight company, who had to offer $10,000 bonuses to entice the 70 new drivers they required this summer. [USA Today][2]
According to the [U.S. Truck Driver Shortage: Analysis and Forecast][3], done a few years ago (2004 to be specific), “the truck transportation industry in the U.S. is experiencing a national shortage of truck drivers that has become a limiting factor in the operations of many companies. This study takes a systematic look at the long-term structural problem of the availability of truck drivers relative to the future requirements for drivers that will be created by retirements of an aging driver workforce and by economic growth”. The principal findings of the analysis of the potential future supply of long-haul heavy duty truck drivers were:
• Although that there have been some positive developments in demographic trends affecting the growth of the truck driver workforce over the past ten years (1994 to 2004), the demographic trends will turn against the industry over the next 10 years. The size of the white male population of ages 35-54 – a demographic group that currently provides over half of all truck drivers – will decline by over 3 million persons between 2004 and 2014.
• A major problem for the trucking industry and the U.S. economy as a whole is that the annual rate of growth of the overall labor force will slow sharply, from 1.4% currently to only 0.5% by 2012.
• If the trucking industry is to attract the higher share of workers that it needs to achieve the growth projected over the next 10 years, earnings in the industry must, at a minimum, return to the relative position that prevailed during the 1990s. [U.S. Truck Driver Shortage: Analysis and Forecast][3].
According to Office of Publications & Special Studies [4], the employment in trucking generally follows the larger business cycle. Consequently when the demand for goods is stifled, the call for freight services is likewise sluggish.
A dramatic slowdown in consumer demand has been crippling the Nation's trucking firms, making job losses during the current recession worse than at any time since the series began in 1990. (Below Chart - Chart # 1)
According to a Bloomberg Report [5], U.S. trucking companies may face a 30 percent surge in wage bills by 2014 as rising demand for freight shipments threatens to push the industry’s driver shortage to the longest on record. The current shortfall will double in a year to about 300,000 full-time positions, or 10 percent of the workforce, said Noel Perry, managing director at consultant FTR Associates in Nashville, Indiana. A three-year deficiency would top the 300,000 vacancies lasting for about a year in 2004, he said. [5]
Increase in Spending
Saia Inc. (SAIA) said this month it would increase wages by 2.5 percent for drivers and many other employees. The added cost will be $10 million, according to the Johns Creek, Georgia-based company. That is about 1.1 percent of 2010 operating expenses. At Con-way’s truckload unit, some routes are being limited to only four to five states so drivers can be home once a week. A new “lifestyle” program allows drivers to alternate between two weeks of driving and time off.
Possible Solutions
What amazes me is that the cost to ship freight is higher not because of anything else, but in most cases it is the simple demand and supply rule. In other words, if a customer wants to move their freight to an area that does not have any other freight identified, they obviously raise the cost of shipping. Obviously, the trucking industry does not function like a taxi stand, as the overheads are very high. It includes fuel, driver wages, logbook time, and the time taken to transport a load and more. It is just that the operating costs are far more expensive. This is particular evident for independent owners and operators. They are the ones who have to worry about getting decent freight costs, cost of repairs, fuel costs, high insurance costs, taxes among other overheads. They work close to 10 hours a day and virtually live in a truck. It just is not a nine-to-five job as it is completely a different lifestyle.
Most of the independent operators are not surprised about the low pay rates. Besides, as the job gets more dangerous day by day, it's not surprising that they are not getting drivers to work under the salary/ pay that is being offered. How many would be prepared to be gone from their home for over four to six weeks on a stretch and living and sleeping in areas where they have no idea about. Besides, how can they manage to lead a happy family life.Given the current conditions, to become a trucker they must be prepared to sacrifice. Therefore, it is not shocking that the freight industry is faced with a shortage of drivers and it is fast losing even more.
Given the above reasons, the primary reasons that people still accept a driver’s job is money and thanks to the recession, it is the only commodity, which is in short supply. Perhaps with increase in pay and better terms, America can reverse this situation in a couple of years.
References :
[1] - Transportation Statistics Annual Report
[http://www.bts.gov/publications/transportation_statistics_annual_report/2008/pdf/entire.pdf]
[2] - USA Today
[http://www.usatoday.com/money/economy/2010-09-09-truckshortage09_ST_N.htm]
[3] - U.S. Truck Driver Shortage: Analysis and Forecast
[http://www.cdlschool.com/_pdf/ATADriverShortageStudy05.pdf]
[4] - Office of Publications & Special Studies
[http://www.bls.gov/opub/ils/trucking.htm]
[5] - Bloomberg Report
[http://www.bloomberg.com/news/2011-08-25/driver-shortage-shows-gain-in-u-s-truck-cargo-freight-markets.html]
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