right_division Green SCM Distribution
Bookmark us
SCDigest Logo

Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All

From SCDigest's On-Target E-Magazine

Jan. 19 , 2011


Logistics News: Will Carriers and Shippers Really Come Together to Solve the Driver Shortage


The Problems are Known, but Solution will Require Higher Pay, Increased Rates, and Changes to Shipping/Receiving Practices that Improve Driver Lifestyles

SCDigest Editorial Staff


As long been discussed, a shortage of over-the-road truck drivers is both a long-term and immediate problem within the logistics industry, adding to capacity tightness in many markets right now, and ultimately leading to rising costs for carriers and shippers over time.

But is the industry really willing to do something about it, or will competitive conditions continue to cause driver pay levels and lifestyles to be near the bottom of the employment barrel, perpetuating the problem even as it impacts US and individual company supply chain performance.

SCDigest Says:

Hodgen said that estimates are that to recruit needed drivers, wages will have to rise by as much as 30% by 2014.
What Do You Say?
Click Here to Send Us Your Comments
Click Here to See Reader Feedback

Estimates vary, but nearly everyone agrees there is a driver shortage in the US. FTR Associates has estimated there will be a shortage of about 180,000 in 2012, and transportation economist Noel Perry has said that could rise to as much as 350,000 over the next couple of years, rivaling the extreme shortages of the 2005 era, a period that saw severe capacity issues for many shippers.

On a recent webinar on the topic, put on by Bulk Transport magazine but really applicable to the broader US trucking industry, John Conley, president of the National Tank Truck Association, said that it is time the entire industry starts thinking about what he called "driver sustainability."

"Truck drivers are the lifeblood of our industry. They are critical human resources in the same way that clean air and water are environmental resources," he said, adding that the industry for too long has not really thought that way.

There are many disturbing trends. The overall driver population continues to age, with some 1 in 6 now over age 55, and many more nearing that mark. The career is simply not drawing in younger workers, for both pay and lifestyle reasons.

Conley showed an interesting chart illustrating how after peaking in 2007, the number of long haul truck drivers has fallen about 18%. While much of that is due to the recession, the fact that there is a large driver shortage right now shows that the economy is not the only reason for the drop.

And after declining during the heart of the recession (mostly because most trucking companies greatly reduced hiring of new drivers who have the greatest dropout rates), driver turnover levels are on the rise again, averaging about 75% annually, according to estimates from the American Trucking Associations.



"The quantity and quality of drivers appears to be declining," Conley said.

Greg Hodgen, president of Groendyke Transportation, later added that that only 8.5-10% of applicants Groendyke considers will meet the company's first level qualification. That also leads to higher costs for recruitment and training, which now average at least $7500.00 for each new driver the company hires.

Hodgen said that studies estimate that average over-the-road driver wages averaged about $48,000 per year in 2011, a number that in real terms hasn't budged and has even fallen of late from levels in the 1980s. The overall range of wages is between $35,000 and $75,000, and Hodgen added that the gap from the top quartile to the bottom quartile is increasing in terms of compensation per mile. Compensation for the top quartile was 16 cents more per mile than the bottom quartile, versus the historical average of just 10 cents, he noted, and the gap continues to increase. That naturally drives those at the bottom back out of the industry.

(Transportation Management Article Continued Below)




Hodgen also showed an interesting chart illustrating how weekly earnings for truck drivers compared with workers in construction and manufacturing. Note that around 2001, driver earnings dropped sharply, and have stayed on par with earnings for manufacturing jobs versus their historic parallel with construction wages. But manufacturing work doesn't require the 60-70 work weeks that truck drivers put in, the irregular hours requied, long time spent away from home, etc. Is it any wonder workers are leaving the transport industry, Hodgen asked.



Steve Rush, president of Carbon Express, noted the weekly wage comparisons don't factor in that drivers on the road have to buy all their own meals on the road, where costs have risen sharply over the past decade even as driver pay has stagnated.

Wages and Costs Have to Go Up - or Do They?

Hodgen said that estimates are that to recruit needed drivers, wages will have to rise by as much as 30% by 2014.

"This move simply cannot be sustained without substantial increases in revenue," he said, meaning freight rates will have to increase by proportionate amounts.

But will shippers stick with carriers that have to raise rates to meet the need for driver wage increases - or simply jump to the next carrier who (for a period) thinks it can grab business by holding rates, or keep rates lower by hiring less quality drivers at below market wages?

Hodgen added that during periods of slow freight and other dynamics that hit the generally low profit margin industry, "drivers bear the brunt of the impact," adding that scenario will have to change to alter the driver shortage landscape.

Not only will pay and shipping rates have to go up, but shippers and receivers have roles to play in improving working conditions and lifestyles for drivers, especially the younger generation the industry needs to recruit from, Hodgen and Rush both said.

Rush said he believes, for example, that the common practice now of having drivers on the road on national holidays so a shipment can arrive the first day back will ultimately be changed.

He added he still sees lots of times when "drivers will be stuck at a stop for 8, 9 10 hours, and they aren't getting paid for that time," adding that "if shippers are trying to find ways to get around paying the demurrage charges for that, you're cheating the driver."

He said the older drivers who grew up with those kind of practices are just sort of used to living with them, but he doesn't believe the next generation of drivers will put up with that kind of treatment.

"Neither carriers nor shippers can treat drivers like some kind of commodity that you can go out and get every week, or we will all be in trouble. We are in trouble," Rush said.

He believes, however, that broad use of electronic on-board recorders (EOBRs), or what he simply calls electronic logs, will play an important role in improving the lifestyle of drivers, since they no longer will be able to fudge the records to meet at times almost impossible demands of carriers or shippers, skirting hours of service or other rules.

He said that as his company has moved to electronic logs and used that move in their recruitment ads, the number of applications has actually fallen sharply - but that the smaller pool was of much higher quality, and ultimately Carbon Express hired them at a much higher rate.

How do you see the truck driver shortage playing out? Will shippers be willing to do their share in terms of higher rates and treating drivers better to contribute to "sustaining" the driver pool? Or will we be having this same discussion and willing to accept capacity issues to keep rates and costs from rising much? Let us know your thoughts at the Feedback section below.

Recent Feedback


No Feedback on this article yet