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Supply Chain Graphic of the Week: US Truck Driver Pay Easily Explains Driver Shortage

 


Real Wages Fell 20-25% after 2005, Just Now Getting Back to those Levels after Major Increases in Past Two years

June 8, 2016
SCDigest Editorial Staff

We clearly have a truck driver shortage of sorts in the US, though views on the size and impact of that shortage varies by pundit.

Whatever the current shortage is - and it has clearly moved to the back burner a bit currently with the slowdown in the freight environment - there is near universal agreement among pundits that the situation is likely to get worse in coming years  - perhaps much worse.

 

That will come from a combination of inceasing freight volumes over time, the impact of more regulations on effective trucking capacity, an aging and soon retiring driver work force, and other factors.

 

The National Transportation Institute (NTI), a research organinization, has done some outstanding work in this area in recent year. and has compiled data that shows just how poorly pay for drivers (both those employed by carriers and independents) has kept up with inflation and income generally.

 

As shown in the graphic below, from a presentation NPI founder Gordon Klemp recently gave in conjunction with John Larkin, transportation industry analyst for Wall Street investment firm Stifel, driver wages in constant 2016 dollars actually fell 20% or more in the years following 2005.

 

Company drivers saw wages fell 25% until bottoming in 2008, while owner-operators saw the bottom in 2011.

 

 

 

Source: National Transportation Institute

 

Faced with the driver shortage, wages finally started to rise noticeably in 2011-13, but have really taken off in the past two years.

 

Carriers implemented numerous driver pay hikes during the 19 months bracketed by July of 2014
and January of 2016, during which average driver pay increased approximately 14% - finally returning pay in real terms to 2005 levels for independents and near that for company drivers.

 

So is it any wonder the US saw a driver shortage emerging in the past few years? We think not.

 

You can count Klemp as among those who worry a major driver shortage is looming.

 

"The fact of the matter is, we're at a point where we probably are at the lull before the storm and the regulations start to take effect," Klemp said on the broadcast. "You know, even through a very weak economy, we've struggled to find drivers that are qualified."


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