Driver Shortages: Any Solutions in Sight?

Yogi Berra famously said, “It ain’t over til it’s over”. As an industry, we’ve been experiencing shortages of qualified drivers for several years, even through the worst period of high unemployment in recent history. And, to paraphrase Yogi, it doesn’t look as if driver shortages will end anytime soon. In fact, the ATA (American Trucking Associations) estimates that the industry currently needs between 20,000 and 25,000 more for-hire truckload (TL) drivers than it has.

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The repercussions weaken all links in the transportation chain. As an industry, this issue impacts all of us, not just the livelihood of logistics companies such as AFN and the carriers and shippers that we serve. The driver shortage also affects the economy as a whole by driving up the cost of goods.

Solving the driver shortage problem is, however, a complex undertaking. Answers are about as clear as mud. Digging deeper into the many inter-related reasons that contribute to driver shortages makes you realize that few of them are entirely within the control of any one private or public entity, agency or other body.

Consider the following contributing factors to driver shortages:

– The lifestyle. According to data released by the ATA last December, the annualized linehaul driver turnover rate at large truckload fleets exceeded 100% for the second straight quarter, and the churn at smaller truckload carriers rose to a five-year high.

– Regulations. While we can debate the relative pros and cons of CSA and other rules, it’s clear that the pool of qualified drivers is shrinking.

– Demographics. There simply aren’t as many age-eligible new drivers getting their CDL licenses at age 21. Those that do may not be insurable until they turn 23 or 24. At the same time, drivers born during the baby boom era are rapidly retiring.

– Competition from other industries. For example, as the construction industry improves, the pool of drivers decreases proportionately.

As further illustration of the complexity of the issue, look at the connection between driver pay for linehaul drivers and traffic congestion. Most local drivers are paid hourly so traffic jams do not take a bite of their wallet. In contrast, linehaul drivers are paid based on mileage driven – they make the same amount of money whether driving one mile in a single hour in bumper-to-bumper conditions or traveling that same mile, at 65 miles per hour down a highway, in a single minute.

The paycheck pain congestion causes can be considerable. And depends, to some extent, on what routes the driver is assigned. Texas A&M Transportation Institute’s most recent urban mobility report ranked Washington D.C., Los Angeles, San Francisco, New York City, and Boston as the worst cities for regular traffic congestion but also reveals a broad swath of other congested metro areas. The Institute’s Planning Time Index (PTI) actually measures the time any vehicle (whether passenger car, bus, or truck) needs to add to so-called regular travel times due to congestion. Washington D.C. ranks first on the list with a PTI of 5.72, almost three hours designated for a half-hour trip.

Looking at congestion issues alone as an example, it’s clear why a “fix” is often elusive and can be costly. You can increase pay per mile or use an index such as the PTI to offset driver pain by paying drivers more in the more heavily congested traffic lanes. You can also switch drivers to hourly pay. Add night shifts so that loading docks operate 24 hours/day. Or, even more radically, rebuild and redesign our road network to expand lanes in/out of congestion areas. The bottom line is that all of these efforts translate into increased costs that impact everyone. In fact, The Texas A&M Transportation Institute survey mentioned above estimates that $27 billion alone in truck congestion costs in 2011 was passed on to consumers in the form of higher prices.

And, even if the driver pay problem is resolved, you still need to solve all of the other challenges, such as lifestyle issues or demographics, listed above. The driver shortage problem is far from finding a solution, and the worst may be yet to come. Yogi Berra also said, “The future ain’t what it used to be.” While we’re hoping that driver shortages are resolved in the future, we’re also not overly optimistic.

Visit American Trucking Association for more information on driver turnover and the driver shortage.

For more information about driver shortages, please contact Oleg Yanchyk.