Dive Brief:
- The American Trucking Association estimated that the industry was short roughly 50,000 drivers in 2015, the Wall Street Journal reported Wednesday. Turnover was 100% in 2012, 90% in 2014, and currently stands at 80%, though that number is attributed to falling transport demand.
- A University of Pennsylvania sociologist believes the driver shortage goes hand in hand with an unsustainable labor model, the terms of which leave most drivers working 70-80 hours a week to repay debt and buy fuel. Students train at schools affiliated with big trucking companies, buy their rigs from affiliated lenders, then go on the road as independent contractors for those same companies.
- Sociologist Steve Viscelli believes the turnover exists due to low wages, as drivers are paid only by the mile, rather than inclusively, such as when waiting to enter a dockyard or unloading cargo. Signing bonuses are helpful, but do not completely ameliorate the issue.
Dive Insight:
The shortage of truck drivers available to for-hire trucking companies impacts the freight industry on two fronts: it increases the hemorrhaging of available truckers, as the turnover rate is incredibly high, but also will begin to have material impact on the companies that rely on the freight services where, even though they have a demand for their goods, an insufficient amount of qualified drivers will lead to costs in increased inventory, infrastructure and operating costs.
Trucking in the U.S. has historically been a profitable career for individuals, many of whom lack higher education, and led to the trucking industry on average to earn a higher relative wage than other nonunion, blue collar careers. Furthermore, there are few barriers to entry to learn the trade, and as recent statistics have revealed, it is the rare industry where there is no gender gap, and in fact women in trucking tend to outperform men as well.
The obvious question is, based on straight economics, if there is a labor shortage with steady demand, why don't for-hire trucking companies simply pay more to find and retain qualified truckers? The answer is as complex as it is unfinished, as no single trucking company is at fault, but rather it is an industry-wide concern. Since the trucking market is fragmented, competition is high and profit margins are constantly getting squeezed to remain competitive. With the rising importance of customer service, increasingly in the form of free shipping, being mandatory for competitiveness, a pay increase for drivers begins to erode that competitive advantage.
And yet, the problem is not going to go away on its own, as the demand will remain high and qualified truckers are seeking to gain a more firm foothold in how they are treated. As recent federal court proceedings have revealed, drivers' ability to be classified as employees, rather than independent contractors, which will further heighten the friction between trucking companies and the drivers they must have to deliver goods.
