Driver Shortage Continues to Challenge Transportation Industry

Dec 30, 2014 By:

The future is bright for the trucking industry—from shippers to carriers to all the players in between. As the U.S. population continues to grow, more and more freight must be hauled. 

According to American Trucking Associations (ATA) CEO Bill Graves, in 2006, the U.S. population was around 300 million; by 2043, the ATA expects the population to swell to 400 million.

“We’re adding the equivalent of Houston, TX, to the grid every year,” Graves said at the Iowa Motor Truck Associations’ (IMTA) annual conference in September. “Do you know of any other mode that has the ability to get to the places we get to to pick up and deliver that product? The answer is no. Trucking is going to take on a more and more essential part of the process of delivering product.”

But with the projected population growth—and therefore more necessary freight—comes many challenges. 

Increased demand for freight means increased demand for professional drivers, and the existing driver shortage will get worse. The industry needs to find an average of roughly 96,000 new drivers annually to keep pace with demand, and if freight demand grows as it is projected to, the driver shortage could balloon to nearly 240,000 drivers by 2022, according to data from the ATA.

In the American Transportation Research Institute’s (ATRI’s) 2014 survey of the critical issues facing the trucking industry, motor carriers identified the driver shortage as the number one concern—above other important issues like hours-of-service (HOS) rules, Compliance, Safety, Accountability (CSA), the economy, an electronic logging mandate and infrastructure funding. 

For some carriers, the shortage is so extreme that they have turned down new business because they cannot fill the seats with qualified drivers. In fact, according to the ATA, some companies have even downsized fleets to match driver availability. Transport Topics reported that revenue for 25 of the companies on the 2014 Transport Topics Top 100 list declined last year, and while total revenue for the Top 100 companies grew by 3.1 percent, 2011 and 2012 saw 11.2 percent and 5 percent growth, respectively. While demand for transportation services is increasing, the driver shortage is not allowing the industry to grow as much as it has the potential to. 

Contributing factors to the driver shortage include competition from other industries and changing demographics; congestion and infrastructure; regulations; lifestyle issues; and pay, among others.

Industry Competition and Changing Demographics

During the 2007-2009 Great Recession, thousands of truck drivers lost their jobs. They were forced to find work in other industries, namely manufacturing, construction and petroleum. When the economy started to recover, many of them stayed in those industries, refusing to return to an industry that often requires long hours away from home and inconsistent schedules. Competing industries continue to strengthen—just like the trucking industry—so there are plenty of jobs to go around. But not enough people.

Changing demographics are also an issue. Since the industry cannot license drivers until they’re 21 years old, it’s difficult to capture people who need to find a job out of high school—and are secure in other blue-collar jobs by the time they’re eligible for a CDL. Consequently, the trucking industry is failing to capture young drivers at the same time as current drivers are aging out of the industry. The Council of Supply Chain Management Professionals (CSCMP) estimates that one in six drivers is at least 55 years old and approaching retirement. Not nearly that many people are currently entering the industry.

Congestion and Infrastructure

A new study from ATRI recently found that congestion on America’s highways cost the trucking industry more than $9.2 billion in operational costs in 2013. Delays totaled over 141 million hours of lost productivity—that’s equal to more than 51,000 truck drivers sitting idle for a working year.

“Congestion is an unfortunate byproduct of our just-in-time economy, and it’s a significant roadblock to our country’s productivity as well as its global competitiveness,” said UPS Freight President and ATRI Board Member Jack Holmes in an ATRI press release. “ATRI’s analysis quantifies congestion in a way that clearly shows the urgent need for highway investment.”

Moving Ahead for Progress in the 21st Century (MAP-21), the highway bill passed in 2012, was intended to keep the Highway Trust Fund solvent through September 2014, but Congress was warned over the summer that the trust fund risked running out of funds in August. As a result, in early August 2014, President Barack Obama signed a $10.8 billion short-term measure intended to fund highway and bridge repairs and keep the Federal Motor Carrier Safety Administration (FMCSA) running through May 2015. Before May 2015, Congress will be faced with passing a long-term highway bill or creating another short-term fix.

Despite the May 2015 deadline, additional infrastructure funding from federal and state governments is unlikely anytime soon, especially as the nation approaches a presidential election.

“Congestion is going to get worse, and it is serious now,” Graves said. “It’s a serious factor in our inability to meet schedules, to attract people to our industry, to keep the U.S. competitive.”

Graves said that somehow more money is going to need to become available to maintain and improve the U.S. highway system, whether that’s through a fuel tax increase, tolls, fees for miles traveled, etc. States are considering different means to increase state road funding, but many of the congestion problems lie along the federal highway system.

Regulations

The regulations that guide the trucking industry often limit productivity and put drivers out of work—thus reducing the productivity of the current driver pool and reducing the driver pool entirely.

The industry is plagued by the productivity limiting effects of the hours-of-service rules that went into effect the summer of 2013. The rules dictate the number of hours each day and week that truckers can drive and work. Drivers can drive fewer hours in a day because of the 30-minute break requirement. However, the 34-hour restart provision was recently suspended, providing relief to when a driver can take a restart and allowing more flexibility. Ultimately, many carriers need some more drivers and assets to do the same amount of work as they did under the previous HOS rules. Consequently, the HOS rules are compounding the existing driver shortage, especially as demand for transportation services continues to increase.

Compliance, Safety, Accountability, a FMCSA safety initiative designed to reduce the number of highway crashes and fatalities, is also making it more difficult to find drivers. Truck drivers receive scores for violations in seven BASICs areas of compliance, and incidents stay with them for up to three years. Many scores disqualify drivers that were not previously disqualified, forcing some carriers to terminate drivers. And when these drivers apply for positions, human resources teams look at the scores—and quality carriers do not hire those with low scores.

While it’s important to keep unsafe drivers off the roads, the trucking industry is concerned about the data used for CSA, arguing that there are enforcement and reporting inconsistencies between states. Therefore, some driver scores could be inaccurate and subjective.

Lifestyle

Over the years, job fulfillment has gone down for some truck drivers, according to research firm Stilfel, Nicolaus & Co. Regulations dictate everything from when and where to sleep to how they must handle their logs. Carriers determine routes, where to fuel, speed, etc. The more defined trucking environment is less appealing to drivers.

In addition, truck drivers often struggle with health issues. They endure poor sleeping conditions—and must sleep when regulations allow them to. Drivers often suffer from sleep disorders, like sleep apnea, a condition that causes shallow or intermittent breathing, which can even disqualify drivers from working. Drivers must sit for up to 14 hours per day, and their food options along America’s highways are often undesirable from a health perspective. Unfortunately, more than 50 percent of truck drivers are obese, and 54 percent smoke cigarettes, according to Corporate Wellness Magazine. These health issues contribute to a truck driver’s average life expectancy of 61 years instead of 77 years like other Americans.

The FMCSA has taken notice of driver health issues that can negatively affect safety. Professional truck drivers must have updated medical cards to work. Previously, they could be certified for medical cards by family physicians. But beginning in May 2014, all professional driver medical exams must be conducted by an examiner who is certified under the FMCSA’s new National Registry of Certified Medical Examiner standards. The National Registry includes medical examiners who have been trained, tested and certified to perform medical examinations for commercial motor vehicle drivers in interstate commerce. Because of stricter standards, some drivers are not being approved for medical cards—thus putting more drivers out of work.

Pay

Driver pay is one of the most significant factors in the driver shortage. Over the decades, driver pay growth has not kept pace with that of other blue-collar industries, making it difficult to compete. According to Bloomberg, in 2001, truckers averaged $33,690 per year, trailing the average U.S. wage by 1 percent; in 2013, the average trucker wage was $40,940, nearly 13 percent behind the U.S. average. That means adjusted for inflation, truckers were paid 6 percent less, on average, than a decade earlier. Of course, recent regulations dictate that truckers cannot drive as many miles as they could 10 years ago, accounting for some downward wage pressure, according to the ATA. But at the same time, other blue-collar industries—like the booming oil and gas industry and rebounding construction industry—have not seen as much downward wage pressure.

Thanks to the competition from other industries and from within the trucking industry, qualified drivers have their pick of employers—and most are making the decision to commit based on pay. In fact, a recent truck driver survey conducted by National Retail Systems found that 79 percent of the more than 1,000 drivers polled said that salary is the most important factor when choosing a job, with home-time ranked second.

As a result, trucking companies are being forced to increase wages to attract new drivers—and keep the qualified drivers they currently employ. According to ACT Research, average driver wages could rise as much as 6 percent in 2014. And, many carriers are offering steep sign-on bonuses to help poach qualified drivers from other carriers—some bonuses are as high as $12,000 in especially tight markets.

However, raising wages is not simple for trucking companies, which are generally bound by contracts and earn thin profit margins. Customers are not likely to want to accept the additional cost of increasing driver pay, especially when costs have also risen for equipment, fuel, maintenance and benefits. By raising driver pay to seat drivers, many carriers incur the cost-differential, according to Fleet Owner. If they haven’t already, consumers will likely start seeing some of the increase reflected in the costs of their goods hauled by truck—which is basically everything.

Driver Turnover and Retention

In addition to recruiting new drivers to fleets, carriers are upping their efforts to retain experienced, qualified drivers. According to Commercial Carrier Journal, driver turnover in the truckload segment is close to 100 percent—and only 16 percent is non-voluntary. Industry growth, industry competition and retirements account for the remainder of the turnover. That means carriers, on average, are losing more drivers than they keep seated in trucks.

Trucking companies are effectively competing against each other to poach qualified drivers. As a result, carriers are doing all they can to keep their drivers. Carriers are employing a variety of tactics from changing compensation methods to offering expanded training programs. They are expanding onboarding programs for new hires and working to treat drivers more like valued employees rather than numbers. Many carriers are training dispatchers to treat drivers with more respect. And while truck driving schools had once nearly gone by the wayside, they are again growing in popularity, with many carriers even opening their own truck driving schools.

Industry Efforts

Overall, the transportation industry as a whole needs to do a better job of recruiting young people to the industry, who will eventually have to fill the seats vacated by older drivers. The ATA and state trucking associations are currently engaged in a campaign that positions truck driving as a career—not just a job. The Trucking Moves America Forward initiative has a series of commercials and materials designed to educate the public about the importance of trucking—and attract new truck drivers to the industry. The mission “is to establish a long-term industry-wide movement to create a positive image for the industry, to ensure that policymakers and the public understand the importance of the trucking industry to the nation’s economy, and to build the political and grassroots support necessary to strengthen and grow the industry in the future,” according to Trucking Moves America Forward.

Long term, industry experts recommend that changes be made in the age eligibility rules for commercial truck drivers so carriers can more effectively recruit younger workers into the industry. State minimum age requirements to obtain a commercial drivers limit may be reduced to 18 or 20 years in order to capture individuals who bypass college before they choose a different career.

The industry continues to lobby Congress for reasonable regulations that both promote safety and allow for productivity. Infrastructure spending will be an ongoing battle—one that needs to be resolved in order to relieve congestion and increase productivity. Carriers will work to promote healthy workplaces and lifestyles to increase the overall health of truck drivers. And companies will continue to evaluate pay structures to ensure truckers earn competitive wages. Finally, carriers will work with shippers to ensure that few pick-up and delivery delays exist to maximize driver productivity and limit unnecessary downtime.

The Ruan Approach

At Ruan, our professional truck drivers are part of the family. We understand that they are essential to our success. With Ruan’s dedicated fleet opportunities, Ruan drivers are primarily assigned to a single customer, which puts them in the perfect position to gain an understanding of our customers and their supply chains. Consequently, we value their suggestions for improving processes and customer service.

Working with a single customer also provides predictable schedules that keep our truck drivers close to home. More than 60 percent of our drivers are home every night, and nearly all of our drivers are home multiple times per week. That makes for very satisfied drivers—and is one of the many reasons our driver retention rate is five times the industry average. In addition, we offer free benefits, competitive pay and health and wellness programs and resources.

Safety Focus is our first Guiding Principle at Ruan, and we do all we can to ensure the safety of our professional drivers, making them feel like the valued, respected team members they are. Our safety program—which consists of extensive onboarding, quarterly training, regular safety communications and an awards and recognition program for safe driving—is a contributing factor to our high retention rate. And, our drivers are provided with well-maintained, late-model equipment.

Because Ruan is an employer of choice with a low turnover rate, we do not have to replace as many drivers as some other carriers. However, to account for growth and retirements, we have a comprehensive strategy in place that has allowed us to hire more than 1,300 drivers in 2015.

Ruan employs a variety of strategies to recruit drivers. Our current team members are our biggest advocates and our best resource for recruiting qualified drivers; they are incentivized with a $1,000 referral bonus. Our experienced driver recruiting team attends job fairs across the country and utilizes a wide range of print and online advertising resources, including social media, to recruit drivers.

You may have seen our recruiting billboards in 2015 in states such as Minnesota, Pennsylvania and Iowa. And many of our trucks across the country are equipped with decals and truck wraps that serve as rolling billboards for jobs and brand awareness.

Our goal through our recruiting and retention efforts is to employ America’s finest fleet and be an employer of choice for professional truck drivers. Everyone at Ruan—from our CEO to terminal dispatchers—works together to achieve this goal.