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Supply Chain Chain News: ATA Chief Economist Pushes Back on Labor Report on Driver Shortage

 

Bob Costello Makes Good Points in Rebuttal, but does not Address Core Issue of Pay Levels

 

April 9, 2019
SCDigest Editorial Staff


Last week we reported on a new analysis from some economists at the US Labor Dept. that seemed to question some widely held beliefs about the US truck driver shortage. (See US Labor Department Report Challenges Beliefs Relative to a Truck Driver Shortage.)

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Costello said researchers had difficulty isolating the over-the-road segment of the industry in their analysis.

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In great summary, the analysis challenged the idea that this was somehow a broken labor market, that driver turnover out of the trucking industry was actually about the same as many other occupations, and –perhaps most critically - there is a simple answer to the driver shortage – increase wages.

For example, the Labor Dept. report makes this interesting comment: "The long-distance TL segment has high levels of competition, similar average costs across all scales of production, and a very limited ability to differentiate prices in the product market. These characteristics result in labor market conditions in which individual firms are forced to accept high turnover as a cost-minimizing response to their competitive position in the market for their outputs."

In other words, carriers don't believe they can raise driver wages sufficiently to alleviate the driver shortage because they think they won't get paid for it by shippers.

Well, the folks over at the American trucking Associations didn't like much of analysis, which seemed to question some its research over many years on what the ATA says is a major issue.

ATA Chief Economist Bob Costello told Transport Topics, the ATA's own magazine, that "Trucking is very different than almost all other blue-collar jobs. I think they [the report authors] made some critical errors."

For example, Costello said researchers had difficulty isolating the over-the-road segment of the industry in their analysis.


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"We know anecdotally it's in that segment where the shortage is," Costello said. "They're saying that the truck driver shortage was not a long-running problem - that there might be years of it being a problem, but in the long run it functions like any other blue-collar job. What I'm saying is that is not true, in my opinion."

 

Colstello continued: "At the end of the day, forget my research, forget the Department of Labor research," Costello said. "Go ask trucking companies and go ask for-hire truckload carriers if they can find enough drivers. If that's true then why are all of these fleets complaining?"

 

Costello also added that "On the demand side we're looking at how much freight is out there, how many trucks are out there, and how much we really need to optimally move that freight. Then we match those up. When we matched those up in 2017, we said we could have used almost 51,000 more tractor-trailer drivers in that year. We know anecdotally that the private fleets do not have a problem, and we know anecdotally that the less-than-truckload fleets do not have as big of a problem."

 

The only thing we'll note that even if Costello is right, he doesn't seem to dispute the core finding that the problem would simply be addressed with higher driver pay.

Any reaction to the data in this interesing report and/or the ATA push back? Let us know your thoughts at the Feedback section below.

 

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