IRU Media Prize winner, Mike King, reports on driver shortage and the new opportunities for transport through e-commerce.
This article, which has been awarded the IRU Media Prize, originally appeared in US publication, Breakbulk, August 2018.
Fears that immigrants, robots and foreigners are taking U.S. jobs have rarely been more pronounced, which is surprising given that unemployment rates hit an 18-year low at the end of May.
In economic terms the U.S. is now, by most definitions, experiencing full employment, or close to it, so labor shortages in some markets, at certain times, are to be expected. Hiring warehouse workers and office staff for shippers and forwarders has become difficult, for example, and the construction and retail sectors also regularly bemoan the challenge of finding workers.
But the labor crunch is nowhere more apparent than in domestic trucking. One report from the American Trucking Associations said,
the industry needs to hire almost 900,000 more drivers to meet the rising demand generated by a U.S. economy which is enjoying rapid growth.
The supply-demand imbalance is having a predictable impact on higher supply chain costs, as a barrage of shippers reported fast-rising trucking costs in first quarter financials. According to DAT Solutions, flatbed spot rates were up 31 percent in May 2018 compared with a year earlier.
“The scarcity of trucks, along with rising fuel costs, led to higher spot market rates in each segment,” said the analyst. “The national averages for both van rates and reefer rates each increased 4 cents per mile, while the national flatbed rate continued to add to its record high, climbing another 2 cents to US$2.75 per mile.”
Brian Bourke, vice president of marketing at Seko Logistics, said shippers moving non-standard project cargo in the U.S. have been particularly affected because capacity shortages were most obvious in the market for specialty trucks including flatbeds and for those undertaking long hauls. “Trucking rates are rising between 10 percent and 30 percent already this year, depending on mode and geography,” he added. “Make no mistake, we are absolutely entering crisis mode for U.S. domestic trucking.”
Soaring rates have prompted sales of big rigs to spike, up 110 percent year-on-year in May to 35,600, according to ACT Research. However, with the quantity of freight up 9.5 percent year-on-year in April, DAT Solutions said there were still 8.4 trailer loads for every available truck as of early June.
Challenge of Finding Drivers
In terms of driver recruitment, attracting the young to trucking has proven frustratingly difficult for at least a decade. Long hours, sleep deprivation and low wage growth have been factors.
Many would-be truckers also face paying US$5,000-US$10,000 for their own training.
While chatter about automated vehicles diminishes the job’s attraction to those with an eye on career longevity. As a result, the average age of a commercial truck driver in the U.S. is now 55 years, according to the Bureau of Labor Statistics.
A new Electronic Log Device, or ELD, mandate, which entered into effect in December and has been enforced since April 1, has also taken capacity out of the market. The mandate states that commercial trucks must be equipped with ELDs that monitor the time drivers spend on the road, and they must not exceed the maximum number of hours they are permitted to work. By making it harder to cheat and drive extra miles, analysts estimate the rules have reduced U.S. trucking capacity by 2 percent to 5 percent.
The new rules not only limit earnings but also require the purchase of ELDs, further discouraging self-employed owner-operators from remaining in the industry. Early anecdotal evidence suggests that the ELD mandate has impacted the flatbed and specialist handling trucking markets more than unitized and full-truckload sectors purely because, for safety and expertise reasons, more driver time is expended on securely loading and unloading freight, and monitoring the load in transit.