Why Every Company Needs to Pay Attention to the Truck Driver Shortage
For the last two years, we’ve been warning companies and shippers that the world as we know it is undergoing dramatic change; and that this impending change would throw the “rules as we know them” into chaos, ultimately resulting in significantly less predictability, much greater risk and higher costs.
Eighteen months ago we shared a report, The Near Future in Trucking, that provided the insights and actions you need to take to stay ahead. While there have been many companies who acted upon our warnings and advice, and as a side note have benefited greatly over these last two years, many more continue to operate in a business as usual approach.
Today’s USA Today highlights that the issues we’ve been talking about are no longer down the road, they’re having tremendous impact on businesses now. While Trucker Jobs Go Unfilled, Leading to Delayed Deliveries focuses on the extreme shortage for qualified drivers, the article also highlights the impact that this is having.
Here are the key insights from the article (with our thoughts in italics):
- A worsening shortage of truck drivers is pushing up freight rates and delaying some deliveries, defying the weak economy, high unemployment and falling gasoline prices.
This is precisely what we’ve been warning people about.
- Despite the 8.2% national jobless rate, many unemployed construction and factory workers can’t afford [the training expense to become qualified drivers.
There was a belief (that we disagreed with) that the driver shortage trend would be balanced by high unemployment. As this article shows, that’s simply not the case. The driver shortage is not a trend or even barrier. It’s a condition of the market. To succeed going forward, you must have (or work with someone who does) a clear driver recruiting strategy that ??first in class. You must also have a driver retention strategy that ensures you keep the qualified drivers you have.
- Another barrier: The government began publicizing the safety ratings of trucking companies 18 months ago, prompting some carriers to hire only drivers with unblemished records and narrowing the pool of qualified applicants.
CSA will continue to have a major impact on capacity and hiring restrictions. You must ensure that your vendors have a clear process to stay in compliance and ahead of the increasing standards.
- The annual driver turnover rate at large carriers rose to a four-year high of 90% in the first quarter from 75% a year ago, according to the trucking
association. The turnover rate at small carriers jumped even more sharply in that period, to 71% from 50%.
This highlights the importance of choosing an effective partner to support you supply chain. Turnover can have huge negative consequences on your costs, risk profile and even customer satisfaction . Those companies that manage this process effectively will provide you a tremendous advantage. For example, where the article shows turnover rates at 71% – 90%, Dupre’ Logistics’ turnover rate has remained below 20%.
Now, more than ever, it is absolutely essential that you take a total cost of supply chain management approach to vendor selection and management. Here’s the conclusion of the article:
The shortage has increased average driver salaries about 5% this year to $45,000 to $50,000, says Noel Perry, managing director at FTR Associates.
The crunch is expected to become even more dire next year when stricter federal limits on the number of hours drivers can work take effect. That safety move will force companies to hire more drivers.
Driver shortages are effectively limiting truck capacity and helping push up freight rates by 2% to 5% this year, despite the sluggish economy, says analyst Benjamin Hartford of research firm R.W. Baird. Also driving up rates are rising wages and truck prices that have increased as much as 40% the past few years because of modernized engines that must meet tougher emissions rules.
Card of Combined Transport says 10% of his deliveries are one or two days late because he doesn’t have enough drivers.