For the first time since May 2013, employment in the trucking industry has declined.

The Department of Laborreleased March employment numbers, announcing a drop of 6,800 jobs in the for-hire trucking industry, marking the biggest decline in two years. BeforeMarch, jobs in the trucking industry had been slowly climbing to near pre-recession employment levels, with 64,600 new jobs created by more than 100,000motor carriers since June 2013. The situation may not be as bad as it first appeared, and many in the industry remain hopeful for an employment rebound.It is worth noting that the last big employment dip in the trucking industry (March 2013 with a 10,400 jobs loss) was followed by a boom of 13,800 jobs in April 2013.

All considered, employment numbers in the trucking industry are significantly better than at the start of 2014. For example, since March 2014, for-hire trucking as an industry has added 39,300 jobs, which shows a significant improvement over the past few years.

At 1.438 million, the trucking industry is 14,600 jobs shy of peak levels set in January 2007, indicating steady recovery despite minor setbacks. Hourly earnings figures are also improving, and in March, $22.91 was the average hourly wage in the transportation and warehousing sector. Predictions for the remainder of 2015 remain positive. While March’s job loss may not be a reoccurring trend in the industry, it is raising concerns over the driver shortage and already tight capacity in the trucking industry.

Impact on Capacity

March’s slower than expected economic growth has cast some doubt on whether the economy is recovering as quickly as expected and what exactly that means for the trucking industry. Although non-farm payroll employment increased by 126,000, and the unemployment rate held at 5.5% in March, this increase does not match the growth of the previous 12 months. Employment growth had averaged an increase of 269,000 jobs per month. American Trucking Association’s chief economist, Bob Costello, noted that the drop in trucking employment was significant, but not out of line with the weaker January and February data.

Although the first few months of 2015 were slightly disappointing, there is hope that warmer weather and the initiation of construction season will bring an economic surge in the second quarter. However, a growing economy may also mean a tightening capacity for a trucking industry already dealing with low driver retention rates. Due to rising equipment costs over the past 5 years, strained capacity and increased driver pay, the cost inputs for asset-based carriers is on the rise. The U.S. economy is expected to grow 3% this year, which would be a .6% increase from last year. The predicted economic growth may drive a steady increase in employment, but whether that employment rise will meet the needs of increasing capacity remain to be seen.

Driver Shortages

With the trucking industry already facing a driver shortage crisis, the decline in jobs is troubling, even if it is temporary. Freight shipping companies report paying more to hire trucks and drivers, partially due to the shortage in drivers. Job turnover in the trucking industry is notoriously high at over 90% in truckload fleets, and the turnover gap between large and small fleets is at its smallest margin (5%) since 2000, according to the ATA. As larger fleets raise pay rates and offer bonuses to attract new drivers, small fleet drivers are taking notice, causing a greater turnover in small fleets. Bob Costello states “…The driver shortage, which we now estimate to be between 35,000 to 40,000 drivers, is getting more pervasive in the truckload sector. Due to growing freight volumes, regulatory pressures and normal attrition, we expect the problem to get worse in the near term as the industry works to find solutions to the shortage.”

With the average driver age hovering around 50, and few young hires in sight, any decline in trucking jobs is a cause for concern. For small to mid-sized fleets who cannot self-insure, hiring, training and retaining young drivers is difficult. Many carriers are taking steps to appeal to a wider driver pool, including young women and military veterans. Some recruiters are altering their marketing techniques to appeal to new driver pools and strengthen their chances of hiring young talent. For example, some companies have produced advertising campaigns directed towards women, and they’re also making women more visible in management roles. Other tactics include matching veterans with other veterans for training, or offering apprenticeship programs through the Veterans Administration. These endeavors reflect the industry’s hope to solidify a strong and diverse workforce.

Trucking industries will no doubt keep a watchful eye on upcoming monthly employment statistics. Over the rest of the year, the trucking industry is expected to remain on healthy economic footing. With a positive outlook for the nation’s economy and expected pressure on carriers, the ultimate focus is less on recent job losses, but rather on finding and hiring enough drivers to match expected capacity. Although the employment losses were significant, economic growth is expected to mediate some of the issues causing March’s decline. Deeper issues like driver turnover and retention rates will be of primary importance as the industry recovers and pushes forward.