How The Truck Driver Shortage Impacts BusinessesThe transportation industry is facing a growing problem: a significant shortage of truck drivers. The New York Times reported in July that the truck driver shortage has hit a record deficit nationwide, with approximately 50,000 more drivers currently needed to meet the ongoing and increasing demands of a thriving economy. The Safety Resource Center reports the actual demand, not just openings, is enough to fill 120,000 driver positions. While this is by no means a new problem — the trucking industry has been struggling to employ enough drivers for some time — these numbers mark a potential tipping point that could have a ripple effect through the economy. Let us explore this issue and how these shortages are and will impact businesses in general.
Why the Shortage?There are a variety of factors affecting the driver shortage, but they can generally be boiled down to two issues that go hand-in hand:
- The job itself is physically challenging. Truck drivers work long hours. They are also frequently faced with shifting deadlines based on conditions at both pickup and delivery Safety can sometimes become an issue.
- The pay is frequently inadequate. The Bureau of Labor Statistics places the median wage for truck drivers at $42,480 a year. There is more pressure to pay as much as $50,000-$70,000 for good drivers, but today, competitive freight rates do not have that type of margin to cover that level of driver compensation.
- Truck driving as a profession can require long hours and extended time away from home.
A Ripple EffectOver time, the driver shortage has had a cascading effect, impacting almost any business that either sells or uses physical products. For example:
- Delays in delivery can create scarcity and put upward pressure on prices for the products.
- Transportation costs also go up by creating additional though inefficient transport to make up for missed or short deliveries.
- An increasing number of companies (Walmart, for example) are insourcing their transportation, manning their own fleets, and paying very attractive wages to their own drivers rather than outsourcing to third-party logistics companies.
- Those outside carriers now face an even greater shortage with more drivers gravitating to the wages paid and operating model (drop and hook) by companies insourcing their logistics.
- …and the cycle continues.
SolutionsThere are no easy answers to this ongoing problem, but thought leaders are working on ways to alleviate the truck driver shortage. Some possibilities that may help:
- Easing of government restrictions that make drivers’ jobs more difficult or make the entry points too steep. The federal government is considering, for example, reducing the driving age from 21 to 18 for interstate drivers.
- Working toward autonomous trucking. Self-driving trucks could theoretically reduce the demand for truck drivers. However, safe applications and insurance-related issues for this technology are still a long way off, so we do not anticipate seeing these trucks hitting the mainstream anytime soon.
- Since the above two possibilities are out of the hands of many companies, we believe the best options is to create greater incentives for drivers, either in the form of higher pay, better benefits or working to change the appointment to delivery model.