Speed Bumps – Transportation’s Unique Staffing Situation

Speed Bumps – Transportation’s Unique Staffing Situation

There’s a particularly challenging problem slowing down shipping and transportation commerce in Indiana, and it’s not a pothole or a traffic jam. While there’s plenty of goods to be delivered, and strong demand for Hoosier-made goods, there is a considerable shortage of people to get those goods to their destinations. In some areas of the state, the workforce shortage of truckers and other transportation professionals has reportedly been “catastrophic” for company growth.

According to the American Trucking Association (ATA) and several different Indiana-based trucking companies, the lack of available drivers is the number-one problem facing the industry today. Incredibly, last year saw employee turnover levels in trucking across the country reach a shocking 90 percent.

If current trends hold, the U.S. will be short about 174,000 drivers by 2026. At the moment, we’re down about 51,000 truck drivers nationwide for this year. That’s a whole lot of shipments going unfulfilled.

Worse yet is the fact that the industry will need to produce about 900,000 drivers over the next 10 years just to replace drivers leaving the industry, the majority due to retirements.

“In addition to the sheer lack of drivers, fleets are also suffering from a lack of qualified drivers, which amplifies the effects of the shortage on carriers,” said Bob Costello, chief economist for the ATA. “This means that even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain, and for the economy at large.”

There is, indeed, a large-scale ripple effect caused by this situation. Prices on virtually everything are impacted, from your toothpaste to the shingles on top of the roof of your home. When shipping costs increase, those costs are transferred to the consumer and, in turn, affect corporate profit margins, the entire stock market in general, and of course production figures.

As an example, economists with the International Food Policy Research Institute reported that shipping costs make up only a small portion of typical grocery prices, about 3.6 percent. The constraints in demand will mean the average grocery buyer will see their total costs go up by only a few cents a week.

When other industries are examined though, the results become more pronounced. Shipping costs make up about 6 percent of the retail industry’s overall prices and that portion is expected to grow as the shortage does. Shipping prices in the manufacturing sector have been varying widely over the past few years as many companies have had to increasingly rely on variable “spot rate” immediate deliveries. Companies such as John Deere, Amazon, Tyson Foods, Black & Decker, and others, have all reported having to increase prices this year in part due to freight costs.

What’s compounding the problem so urgently thus far in 2018 actually arises from a positive notion. Our economy is doing well and more people are working, meaning that more people have money to buy things. Unfortunately, there just aren’t enough drivers to meet this new surge in demand.

Source: ATA

What Kind of Recruitment Strategies are in the Works?

The industry is taking on several different approaches to help get more drivers on the road, namely with increased compensation and proposed legislation changes. Among the more-discussed options for regulation changes, industry groups are supporting legislation that would allow drivers younger than 21 years of age to cross state lines for shipping freight. In most states, an 18-year-old can obtain a commercial driver’s license (CDL) and become a trucker, but they are prohibited from driving outside state borders until they are 21.

Advocates for the rule changes say lowering this age restriction would help recruit more drivers right out of high school and would help address the shortage. Opponents argue that additional younger interstate drivers on the roads poses a safety hazard in that they could be involved in more fatal accidents.

In what could very well become a compromise between the two, the Developing Responsible Individuals for a Vibrant Economy Act (DRIVE Act) introduced earlier this year by Rep. Trey Hollingsworth of Indiana and Duncan Hunter of California calls for allowing teens to drive between states after completing a 400-hour training program and additional probationary restrictions. Industry organizations are supporting the DRIVE Act for both the additional training and the relief it could bring to the shortage.

Additionally, signing bonuses and wage increases have been climbing throughout the trucking industry. Survey data conducted earlier this year by the ATA reported that the median salary for a truckload driver working a national, irregular route saw a 15 percent increase from where they were about five years ago. Private fleet drivers saw gains of nearly 18 percent.

Aside from increased wages, companies are offering generous signing bonuses and benefit packages to attract and keep drivers.

“Carriers are offering thousands of dollars in bonuses to attract new drivers,” Costello said. “And once drivers are in the door, fleets are offering benefits like paid leave, health insurance, and 401(k)s to keep them.”

These are great first steps to help start addressing the shortage, but the industry is also going to have to increase its visibility and marketability if it’s going to compete with similar staffing concerns that exist in other associated industries like manufacturing and warehousing, which compete for similar labor demographics. It’s going to be a long road (pun intended), but one that Indiana and the rest of the U.S. will have to travel to keep our economy rolling strong.

To view the full report from the ATA mentioned in this article, click here: ATAs Driver Shortage Report