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Supply Chain News: Lifestyle, New Regs, Lack of Parking Spots – No Wonder there is a Driver Shortage


ELDs May be Good for Safety, but Reducing Driver Pay; Hunt for Spots to Park often Takes Many Miles of Driving

June 25, 2018
SCDigest Editorial Staff

After years of warnings, the US does seem to be in a truck driver shortage crisis – sending freight rates higher. The market conditions that are pushing costs up are exacerbated by carriers raising pay to keep and retain drivers, adding a cost-push factor in rising rates.

A week simply does not go by without some carriers increasing driver compensation. Just last week, Central Oregon Truck Co. implemented a pay structure that gives new drivers $65,000 a year in base pay and experienced drivers more than $90,000 a year in pay. Its new "Weekly Driver Salary Pay" program guarantees COTC drivers at least 2,430 miles a week with a minimum salary of $1,250, according to CEO Rick Williams, for drivers wanting to work fewer days.

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The driver shortage looks likely to continue on, slowed only be a recession, which is harsh cure.

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The Cass Linehaul Index, which measures US per mile truckload rates before fuel surcharges and any other accessorials was up 9% year over year in May – the highest single monthly gain since the index was created in January 2005.

With that backdrop, there was an interesting article by Virginia Postrel on las week that looked at several factors related to the lack of drivers.

Lifestyle is of course at the top of the issues list. The article cites the example of a man named Branden Miller, who is co-owner of a small trucking firm, but also continues to drive a rig himself. And that means he sees his wife and two young children only three or four days per month.

Not good.

It often doesn't take long for new drivers to decide this lifestyle is not right for them. Miller told Bloomberg a story of a recent new hire Miller had trained as a student and then hired full time, but the man quit after working just a couple of months. The driver took a local pickup-and-delivery job with a company that used to require three to five years of experience before even considering a new driver. But in this market, they can't be so picky.

The US trucking industry is short about 50,000 drivers, according to estimates from the American Trucking Association – and that is expected to get much worse in the next few years, long before self-driving trucks perhaps provide some relief.

New hours of service (HOS) regulations that further constrained when and how much a driver can work, combined with brand new requirement for use of electronic logging devices (ELDs), are another factor working against retaining drivers. That's because the elimination of paper logs means drivers can no longer cheat on driving times.

That may be good for safety (though some criticize some of the existing HOS rules), but rightly or wrongly also impact how much a driver can earn.

The Bloomberg piece cites a recent article written by Theodore Prince, the CEO of carrier Tiger Cool Express which laid out the math. Under the previous rules, a driver making 40 cents a mile might drive 750 miles in 15 hours, averaging 50 miles an hour and making $300. His paperwork would claim 11 hours at 68 mph. Now, however, his time is electronically tracked and the 11-hour limit is strictly enforced. At 50 mph, he makes only $220. To keep even, his pay would have to rise to 55 cents a mile.

That's too high for many routes, Prince argues, pushing shippers to look at rail/intermodal alternatives.

Now add to those issues woes relative to an adequate number of parking spots at truck stops. SCDigest has reported before on this major issue, and how a lack of spots was actually pushing some drivers out of the industry. (See Forget the Driver Shortage - Parking Spots for Truckers Increasingly Hard to Find.)

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The Bloomberg article notes that of course big-rig drivers need somewhere safe to stop their trucks, even if just for a required 30 minute break, though frequent overnight parking is also needed.

With more trucks on the road, parking harder it is to find.

"There's a lot of parking out in the rural areas, but that's not where I'm delivering to," Miller tells Bloomberg, adding. "I might be delivering to Kansas City, where there's no parking, so now I have to stop my day early where there is parking." That means lower pay too.

The problem is said to be particularly bad in the Northeast, where open land is expensive and lots of freight, including fresh produce, needs to move into major urban areas. After evening deliveries in northern New Jersey, Miller says he has driven all the way back out to Pennsylvania to find a spot - a trip of about 80 miles. That means more than an hour of driving — time deducted from the 11-hour maximum day — that isn't progress toward a delivery. It also wastes the fuel that constitutes a third of operating costs.

While several companies are developing technology to show drivers where available parking is, that won't address many of the fundamental issues about where the open spots are relative to routes.

The bottom line: The driver shortage looks likely to continue on, slowed only be a recession, which is harsh cure. Between now and when the self-driving trucks actually make an impact, plan for rates to continue to move higher.

Do you see anything changing truck driver market dynamics? Let us know your thoughts at the Feedback section below.


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