How far are U.S. trucking companies willing to go to recruit qualified drivers? How about Central Europe?
Two asset-based truckers, one a large well-known brand and the other a smaller lesser-known firm, have begun to explore the potential of importing drivers from countries in the region to operate their rigs, according to C. Thomas Barnes, president of Con-Way Multimodal, a freight broker and third-party logistics provider that spends about $2.4 billion a year across multiple transport modes. Barnes said he's had a "strategic dialogue" with top managements at both truckers, neither of whom he would identify. Nothing formal has been planned, he said.
Barnes said trucking companies will increasingly look outside traditional channels to recruit drivers amidst a shortage that appears to be becoming more pronounced. "Most asset-based transportation companies are looking for a new angle or process that will give them a competitive advantage in the increasingly difficult driver recruiting space," he said in an email. "This is an example of a different approach that has been talked about [in concept] by several companies."
Such thinking underscores how creative—or desperate—managements have become to put people in the cabs. For several years, there have been concerns about driver shortages, but no one saw it in widespread form. Now, however, it is starting to fully materialize, if comments and anecdotes from trucking executives and analysts are any indication. "The market for driver recruiting and retention was tighter than I've ever seen it in the first two months of the year," Darren Hawkins, president of YRC Freight, the long-haul unit of less-than-truckload (LTL) carrier YRC Worldwide Inc., said this week at the NASSTRAC annual conference in Orlando. As a 20-year industry veteran, Hawkins has lived through various periods of driver tightness.
The problem, which was thought to be confined to truckload carriers whose drivers could be away for weeks at a time, is spreading to almost every corner of trucking, according to John G. Larkin, transport analyst for investment firm Stifel, Nicolaus & Co. "LTL, dedicated, drayage, private fleets: They're all crying for help," Larkin said at the same conference.
Larkin said driver pay isn't the obstacle, noting that even carriers who pay drivers more than $70,000 a year, generally much more than the typical truckload carrier pulls in, are struggling to find labor. Even driving schools are having trouble meeting sign-up targets despite offering students and graduates bona fide job opportunities and making it easier than ever to repay loans. The problem is the "societal blackballing of the profession" that has made an unglamorous but critical and skilled trade undesirable to those looking for work, he said.
According to the American Trucking Associations, the trucking industry will require, on a net basis, 96,178 new commercial drivers per year over the next 10 years. That's after deaths, retirements, and departures of all kinds are factored in. The demographics are not favorable: The average U.S. truck driver is male, in his mid-50s, weights about 250 pounds and has a life span about 10 years shorter than the same person that's not in the field, according to Larkin.
Jack Holmes, president of UPS Freight, the LTL unit of Atlanta-based UPS Inc., said he hasn't had trouble finding and keeping drivers, noting UPS' relatively generous pay and benefits as well as the appeal of the LTL segment where drivers are generally better paid and drive shorter hauls, which gets them home more frequently. Still, Holmes notes that more folks are leaving the field for a variety of reasons than those entering it.
The situation is worsening as demand picks up—albeit moderately—and capacity continues to shrink in part because of the lack of qualified drivers, Holmes said. The days of 2006 when there was abundant supply will be turned on their head, he said. Without some form of capacity relief, such as changes in federal law allowing nationwide use of 33-foot double-trailers instead of 28-foot doubles, "it's going to come to a bad end."
CAPACITY CHALLENGES
The trucking supply chain was hammered in the first quarter by brutal weather that took many contracted truckers off the road and
forced shippers and their brokers onto the spot market. Unsurprisingly, spot rates soared as users searched—often in
vain—for available supply. In some lanes, the spot market load-to-truck ratio skyrocketed to levels not seen in recent memory.
Warmer weather is providing some temporary pause. A 16-percent increase in available trucks on the spot market for the week ending April 12 helped restore some balance to the load-to-truck ratio, according to data released today by consulting company DAT. As a result, spot market rates dipped significantly from last week's levels. Per-mile dry van rates out of Chicago dropped 18 cents, according to DAT data. Rates out of Columbus, Ohio, a key mid-nation truck market, dropped 8 cents, while rates out of Houston fell 10 cents.
But no one believes the market will flip with the bloom of daffodils. Mother Nature only piled on to secular problems that are constraining supply. Besides a shortage of drivers, there are equipment, wage, and fuel inflation and new government directives that have curbed productivity. The result is narrowing profit margins that make an already-demanding job that much harder. The burden is especially onerous on the nation's owner-operators, who account for about two-thirds of the nation's truck fleet. If the fleet backbone shrivels, so will the supply chain.
Eric McGee, senior vice president of transportation for Lowell, Ark.-based J.B. Hunt Transportation Services Inc., said the supply-demand scale is somewhat balanced at this time. However, that balance is so tenuous that it will only take one disruption—such as labor strife on the West Coast waterfront as management and ship labor try to make a June 30 deadline for reaching a new contract—to return to the ultra-tight conditions of February and March, he said.
Gartner, Inc.