Saturday, October 31, 2015
Trucking industry faces severe driver shortage
Oct 26, 2015 From the seat of his Freightliner, hauling brake rotors from Wisconsin to Ohio, bucking traffic around Chicago, regularly dodging close calls, Robert Johnson takes a dim view, generally speaking, of his fellow truck drivers.
"They'll put anybody in a truck," Johnson, who has 15 years at the wheel, said between bites of a sandwich and fries at the Richfield Truck Stop on I-41. "...Anybody who wants to drive."
That, of course, is exaggeration. Applicants are rejected frequently. But trucking companies in fact are harder pressed than they've ever been to attract enough drivers to an industry that carries nearly 70% of all the freight that moves in the United States.
"It's the worst we've ever seen," Bob Costello, chief economist for the American Trucking Associations, said of the current driver shortage.
The shortage — Costello estimates it at nearly 48,000 drivers, the great bulk of them in the long-haul, truckload sector — is being felt industrywide.
Companies such as Green Bay's Schneider, one of the country's largest carriers, are working to make schedules more predictable for over-the-road drivers. Marshfield's Roehl Transport lets them bring along a dog or cat under its new Pet Passport Program. Kreilkamp Trucking, in Allenton, has begun doing its own driver training.
"Experienced drivers are not out there, so we have to make them," President Tim Kreilkamp said.
Most significantly, the shortage has been driving up pay. Pay rates at Schneider have risen 4% to 10% over the last couple of years, Chief Operating Officer Mark Rourke said.
Kreilkamp, which says its drivers average $55,000 to $65,000 a year, has raised pay, too, and probably will raise it again, Tim Kreilkamp said.
Both firms pay bonuses for new drivers. Kreilkamp's bonuses go to truckers who bring in recruits. Schneider is paying retention bonuses of $5,000 to $10,000 to new drivers who stick with the company, something the carrier was not doing several years ago.
Nationwide, pay for long-distance truckload drivers has been increasing much faster than for production and nonsupervisory employees generally, data from the U.S. Bureau of Labor Statistics shows. From 2009 through 2014, the truckers' average weekly earnings rose 19% — half again as much as the increase for nonsupervisory workers as a whole.
That marked a sharp reversal from the previous five years, when the increase in pay for the truck drivers lagged far behind that of other workers.
But even with the gains, long-haul truckers' pay — it averages $46,000 a year, according to the Bureau of Labor Statistics — is not attracting enough people to a job with long hours and extended time away from home.
Boosting wages further isn't the entire answer, but pay definitely needs to rise more, Costello said.
"If we're at $46,000, $47,000 today, $48,000 — whatever that number is, because we don't quite know — where does it need to go?" he asked. "Well, it's got to go well north of $50,000 for sure, and probably pushing $60,000.
"But understand, you're talking about an industry with profit margins of about 5%," Costello added. "So it's not like if you're a fleet you can just say, 'You know what, I'm going to do the right thing and I'm going to pay all my folks $65,000.' Because if they don't get that from their customers they're going to be out of business real quick, and those drivers are going to lose their jobs."
Trucking has been down this road before, most recently about 10 years ago. The current shortage, however, is more severe and could rise to 174,000 drivers by 2024 if the trend continues, Costello said.
He estimates there are 800,000 drivers in the long-haul truckload sector, the almost entirely nonunion wing of the industry, where trailers are filled with a single load from one shipper to one recipient. Other estimates place the number of such drivers as high as 1.5 million.
Truckload is a relatively easy business to enter, making for intense competition that, historically, has tended to keep the brakes on shipping rates and wages. However, pay tends to rise during labor shortages, and the current situation sees carriers facing particularly stiff challenges.
The improving economy has opened more employment alternatives for people who might otherwise be drawn to trucking, Costello wrote in a recent report.
Meanwhile, the growth in the U.S. labor force has been slowing, economist Noël Perry of FTR Transportation Intelligence, a consulting and research firm in Bloomington, Ind., noted. When trucking demand outstrips overall growth in the workforce, Perry said, the industry increasingly has to recruit people "who are not inherently well-suited for this lifestyle."
Which gets to a key problem: Trucking does offer relatively good pay, but at a price.
The $46,000 a year that long-haul truckload drivers average is $9,500 more than the average for production and nonsupervisory workers as a whole, BLS data shows. Drivers with private fleets average $73,000, according to the ATA.
But the private-fleet jobs tend to go to experienced, proven drivers — and fortunate ones at that. Landing those plum spots may require years in truckload, and while some have a taste for it, for many it's a grind.
Truckers are allowed to — and do — drive up to 11 hours a day and work up to 60 hours a week. Work hours can be irregular. Drivers may be gone from home for a week or two at a time.
Johnson, who gets home on weekends, is making $60,000 to $65,000 annually — about 15% more than when he started with his current employer five years ago. That's good money, he said, but he'd rather be home with his wife every night.
"It's a job, that's all it is," he said.
While participants across the industry agree there is a driver shortage, freight is still moving. Spot-market shipping rates have even fallen this year, Perry said.
And while Rourke, of Schneider, said the company could easily add as many as 500 drivers right now if they were available, that would amount to less than 4% of its roughly 14,000-driver workforce. Kreilkamp, with just short of 400 drivers, would immediately add 20 if it could.
Those gaps, however, could easily widen.
For one thing, trucking is demographically challenged. The average age of an over-the-road truckload driver, according to Costello, is 49. It will take something like 40,000 new drivers a year just to replace retirees.
Add industry growth and other factors, and Costello estimates the industry will need about 89,000 recruits per year for the next decade — more than it has been attracting in recent years.
The situation has the trucking association supporting moves to ease the current rule that bars drivers younger than 21 from crossing state lines. Critics, though, question whether people in their late teens are mature enough to handle 80,000-pound vehicles.
Other regulatory changes could intensify the driver shortage. One imminent rule will require use of electronic log books. Another proposed regulation would establish a searchable database of drivers who failed drug and alcohol tests.
Electronic logs could have the effect, at least initially, of requiring more drivers, because truckers who are willing or pressured to exceed the allowed limits on their driving time would find it harder to do than with paper logs. A drug-and-alcohol clearinghouse, meanwhile, would potentially reduce the overall driver pool because those who failed tests at one carrier could no longer hide that fact from a new employer.
New regulation indeed stands to tighten the industry's labor supply, Perry said. However, within a decade, he said, the situation will reverse as increasingly automated trucks make driving easier and enlarge the applicant pool.
And as automation progresses and enhances safety with measures such as distance- and lane-control systems, and automatic braking, trucks will get bigger, Perry said. Which means fewer drivers will be needed.
"This is going to happen," he said of the automated future. "It's just a matter of time."http://www.jsonline.com/business/trucking-industry-faces-severe-driver-shortages-b99602189z1-337272521.html