Search By Topic The Green Supply Chain Distribution Digest
Supply Chain Digest Logo

Category: Transportation and Logistics

Supply Chain News: Is Long Predicted Acute Driver Shortage Finally Emerging, likely with Soaring Rates


JB Hunt Tells Customers Driver Issues May Send Near Term Rates Up 10%

Oct. 10, 2017
SCDigest Editorial Staff

The shortage of US truck drivers is a perennial crisis that just never seems to reach the level of impact many in the industry have feared.

As SCDigest wrote a few weeks ago, US truckload rates have for the most part remained weak for two years or more, driven in part by a generally lukewarm freight environment in the US.

Supply Chain Digest Says...

Hunt recently sent a letter to its truckload service customers saying that they should expect rate increases of 10% or more.

What do you say?

Click here to send us your comments
Click here to see reader feedback

And contrary to what you would expect in a very tight market for drivers, until last quarter, driver turnover rates have been falling. In Q1, for example, the ATA reported that the annualized turnover rate for large truckload carriers with more than $30 million in revenue was 74%, which the ATA said is at a "near-historic" low point and down 15% annually.

But maybe things are changing. The ATA recently reported that the turnover rate at large truckload carriers in Q2 jumped 16 percentage points to 90% – the highest it has been since the final quarter of 2015. The 16-point increase is the largest quarterly jump since the fourth quarter of 2010.

Mike Regan, an executive at TranzAct Technologies, has long been warning that the driver shortage is a real crisis, and likely to explode if the US sees a period of strong economic growth.

In late 2016, SCDigest reported on a panel discussion at the annual conference of MHI in Tuscon moderated by SCDigest editor Dan Gilmore and which included Regan as one of the panelists.

During the discussion, Regan said that if US real GDP growth starts to hit or exceed 3% for any sustained period, the country would soon face a severe driver and thus capacity crisis.

Well, recently revised numbers for Q2 showed real GDP growth of 3.1%. While the impact of various hurricanes likely will dampen Q3 GDP numbers, other signs point to a strengthening economy, such the September Purchasing Managers Index from the Institute for Supply Management, which reached a 13 year high.

And as if on cue comes a notice from HB Hunt that truckload rates may soon be up sharply, caused by a lack of drivers.


(See More Below)


Learn More about Softeon's Innovative Supply Chain Solutions


Hunt recently sent a letter to its truckload service customers saying that they should expect rate increases of 10% or more in coming months, as growing freight volumes combined with continued challenges with finding and keeping drivers are starting to really pinch capacity.

"This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon," Hunt CEO John Roberts said in the letter, as first reported by the Journal of Commerce. "The core issue is centered on qualified driver availability," the letter added, noting that "Going into 2017, we did not expect the staffing challenges to reach the severity levels that are now present."

Hunt noted that despite offering retention bonuses and a sign-on bonus of up to $10,000 per driver, the percent of open trucks in its fleet - meaning trucks for which it does not have drivers - continues to rise.

The letter said the looming requirement that all US drivers using electronic logging devices is likely to exacerbate the shortage, as drivers can no longer cheat on hours of service compliance.

So it appears the always just around the corner driver crisis may have indeed turned the bend.

What is your reaction to JB Hunt's customer letter? Do you see a driver shortage having a big impact soon? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback




Follow Us

Supply Chain Digest news is available via RSS
RSS facebook twitter youtube
bloglines my yahoo
news gator


Subscribe to our insightful weekly newsletter. Get immediate access to premium contents. Its's easy and free
Enter your email below to subscribe:
Join the thousands of supply chain, logistics, technology and marketing professionals who rely on Supply Chain Digest for the best in insight, news, tools, opinion, education and solution.
Home | Subscribe | Advertise | Contact Us | Sitemap | Privacy Policy
© Supply Chain Digest 2006-2013 - All rights reserved