Crisis Always Seems to be Around the Corner but Never Gets Here, but That Might Change

The dreaded US truck driver shortage is a looming crisis we've been hearing about for years - yet it somehow never quite materializes.

Most observers believe there really is a current driver shortage, with the American Trucking Associations estimating the country is short about 50,000 workers from what it needs this year. And certainly in their quarterly earnings calls, trucking company CEOs continue to cite the ability to land and retain drives as one of their largest challenges

Supply Chain Digest Says... Some are concerned that younger workers will have little interest in the often tough life style that comes with over the road freight hauling What do you say? Click here to send us your comments Click here to see reader feedback

And yet…

US truckload rates were down year-over-year for 13 months until a recent four-month streak of increasing rates, according to the Cass Linehaul index, which measures US per mile truckload rates before fuel surcharges and accessorial fees. The rate picture is hardly one of insufficient capacity as a result of an inadequate supply of drivers, driving rares higher.

And turnover rates are falling. In Q1, the last period for which data is available, 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.

So what's the real story? Most characterize the overall freight market outside of parcel deliveries as having been soft in recent years and so far in 2017. And the US hasn't seen full year economic growth of 3% plus since 2005, the longest such streak on record.

Some observers, such as Mike Regan of TranZact Technologies, believe a few quarters of greater than 3% real GDP growth would cause significant driver and capacity issues. But will we ever see that?

In addition to the soft freight environment, another factor impacting the lack of a painful driver shortage in recent years is the fact that nearly if not all larger carriers instituted double-digit percentage pay hikes roughly two years ago.

And it appears those pay increases are not over. Just this week, CRST Expedited, part of CRST International, announced it is boosting pay for new contract student drivers by 15%.

Also, Dart Transit s giving some owner-operators that live along major freight lanes and growing markets up to an additional 4 cents per mile. The company says experienced owner-operators now have the potential to earn up to $156,000 a year - though we will note there has been much recent research showing many carriers have the exaggerated the earnings potential of contract drivers.

Worries about Millennials Mount

Despite continuing to avoid a full blown driver shortage crisis thus far, many are legitimately worried for the years ahead.

First, the amount of freight needing moved continues to grow, driven by usual economic growth now augmented by the rise of ecommerce, which in the end probably creates more total freight miles from all the "last mile" deliveries.

When UPS and FedEx hire more drivers, it removes some potential drivers from the truckload and LTL pools.

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And with a rapidly aging population of drivers in the US (and in other countries), some are concerned that younger workers will have little interest in the tough lifestyle that comes with over the road freight hauling.

And some experts say it really is the lifestyle more than the pay that causes drivers to leave the industry.

"If you ask executives what is causing people to quit, seven out of eight believe it's pay," Timothy Judge, director of research at driver-retention consultant Stay Metrics recently told Bloomberg. "For employees, one out of seven say it's pay."

Everything from lack of parkin spaces at truckstops to issues with dispathers often rate higher than pay as issues.

About 95% of US truck drivers are men, and about 75% are white, leading some to think better recruitment of women and minorities could help solve the problem. But neither of those paths are likely to be easy - even if some carriers do acquire cabs designed for the generally shorter bodies of women drivers.

And add to the mix an uncertain future - are autonomous trucks going to obviate the need for millions of drivers in the end? Who wants to go into a field where hgue percentage of the jobs will soon be lost to technology?

And that's where the perfect storm could actually come in, causing a true driver shortage crisis. If hundreds of thousands leave the profession or fail to join it over fears of automation, but that automation takes much longer to make it to the market than people might think, then a real problem could emerge, leaving carriers and shipper scrambling.

But that point doesn't appear to be imminent, as usual. Steve Viscelli, a sociologist at the University of Pennsylvania and former driver says that "If ecommerce goes up a lot and the introduction of autonomous vehicles is slow and the industry does not shift to millennials, we could see actual shortages 10 years out."

So maybe we have another decade to figure it out.

So, how real or not is the US driver shortage? Is it likely to erupt in a big way soon - or not? Let us know your thoughts at the Feedback section below.

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