Driver shortage: Countdown to a capacity crunch, and a boost in rates?

| August 29, 2013

 Driver Raise Clock

Help-wanted ads in local newspapers are dominated by the 800- numbers of trucking companies looking for CDL holders. On the Internet, anyone who visits a few trucking-related pages soon will find banner ads by driver-desperate carriers appearing next to a favorite cat video. The quarterly earnings reports of publicly traded trucking companies caution investors about the high cost and potential dangers of the growing driver shortage.

Yet many company drivers and owner-operators are skeptical, having heard carriers crying wolf about a driver shortage for years. They want hard proof – higher pay – that would validate claims of high demand for drivers amid low supply. By some analyses, a substantial industry-wide pay raise is imminent, but that’s hardly certain.

The American Trucking Associations, assuming a current shortage of more than 20,000 truck drivers compared to available jobs, projects the gap to grow annually over the next 10 years.

The American Trucking Associations, assuming a current shortage of more than 20,000 truck drivers compared to available jobs, projects the gap to grow annually over the next 10 years.

Where pay's up 63 percent in a decadeThough pay in some trucking niches has jumped strongly, it has been flat for trucking as a whole. Since 2003, wages for the entire for-hire trucking industry grew 32 percent, slightly less than the entire private work force, at 34 percent.

 Some factors that could lead to a more severe driver shortage – and a resulting pay hike – are simple enough:
**A large number of long-time drivers are approaching retirement age.
**New regulations – notably the Compliance, Safety, Accountability (CSA) program – have pushed many drivers out of the industry, either involuntarily or in disgust.
**Productivity losses due to the new hours of service regulations mean more drivers are required to deliver the same amount of freight.
**Many fleets have been cautious about rebuilding their capacity since the recession, due to the sporadic recovery, and would be hard-pressed to quickly add trucks and drivers should demand spike.

One possible explanation is that the wage data does not count extra payments, such as hiring bonuses and increases in accessorial charges, says economist Noel Perry, managing director and senior consultant at FTR Consulting Group.

Indeed, nearly half of carriers are offering sign-on bonuses, compared to only 12 percent two years ago, consultant Gordon Klemp told trucking fleet executives during the 2013 CCJ Spring Symposium. Bonuses range from $250 to $5,000 for solo drivers and $2,000 to as much as $15,000 for teams, said Klemp, principal with the National Transportation Institute.

“Recruiters say bonuses are here for the foreseeable future,” he said.

Click through the image for a larger version of the table, showing truck driving job availability and wages movement, The number of jobs in long-haul trucking basically has been flat for the past decade, though with some substantial losses during the recession. Since its December 2006 peak, truckload employment has dropped 8.6 percent. Wages rose by a third over the decade, mirroring private sector wage growth. Trucking generally has fared better than manufacturing and construction in job growth and wages.

Click through the image for a larger version of the table, based on government data, showing truck driving job availability and wages movement. The number of jobs in long-haul trucking basically has been flat for the past decade, though with some substantial losses during the recession. Since its December 2006 peak, truckload employment has dropped 8.6 percent. Wages rose by a third over the decade, mirroring private sector wage growth. Trucking generally has fared better than manufacturing and construction in job growth and wages.

Also boosting productivity, Perry says, “Drivers are getting a lot of miles, so their W-2s are going up even though their per-mile wage is not. So that’s keeping them happy.”

Nevertheless, considering the demand for labor, “The fleets have been underpaying the drivers,” he says. “If this hits the fan in the next year, the industry will have to radically change its behavior.”

Many owner-operators appear to have fared better than company drivers in recent years, thanks to the entrepreneurial nature of their business and the timing of the economic rebound.

“Generally, owner-operators and smaller operators are among the first to experience either upturns or downturns in the economy,” says Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association.

Owner-operators likewise are seeing somewhat larger paychecks, said Matt Amen of owner-operator financial services provider ATBS during the Great West Truck Show in June. This is evidenced by averages of thousands of ATBS’ owner-operator clients. During 2012, ATBS clients saw net income rise 8.6 percent to almost $52,000, Amen said during an Overdrive Partners in Business presentation at the Great West Truck Show in June.

Those owner-operators drove 2,500 fewer miles on average than they did in 2011, but higher rates made up the difference. The segment with the biggest gain was true independents running under their own authority, whose average net income rose $5,813 to $55,994.

One reason for the lower miles is a major trend of recent years – the shortening in average length of haul Overdrive reported on in July– and it will continue, Amen said. “We’re going to see more regionalization of freight, and truck drivers are going to be staying closer to home.”

Even though many owner-operators have profited from the economic upswing, that alone doesn’t prove there is a driver shortage, by Spencer’s reasoning. “A tight driver market would mean better pay, better rates, better service in the loading and unloading environment,” he says. “It would include things that would encourage retention and recognize years of safe driving. If we had a tight driver market, you would see those things.”

Instead, he says, “There’s sort of a myth that floats around that because companies buy more trucks than they have drivers for, then they have a driver shortage. That’s not a shortage. When a third or more shippers say they’re having a hard time finding trucks, then we have a shortage.”

But Perry sees carriers’ “capacity buffer” already exhausted, so any boost in freight demand or additional regulations that cramp productivity will throw the market into “a really critical situation,” including sporadic supply chain failures, he suggests. “Maybe the industry has been crying wolf about hours of service, but I don’t think so,” he adds, estimating a 40-50 percent probability “that there will be a crisis.”

His current truck/driver shortage number is 200,000. While there might not be enough freight to support all those trucks, it does indicate shippers no longer can expect to find multiple carriers waiting at the dock, hoping for a load. At some point, shortages – and delays – are likely to emerge, compelling shippers “to compete aggressively for capacity increases,” Perry said.

 

Find Part 2 in this series, “Many are called, fewer are chosen,” via this link.

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  • William McKelvie

    Well said

  • David Johnson

    GI Joe, you are absolutely correct just glance at the content of this discussion. You are correct about the growth of wages under my plan the minimum wage is doubled to approximately 65 CPM. The topic of immigration reform is another subject however for the record DOT in Florida is pulling drivers over if you do not speak English the are talking your CDL on the spot, try coming up thru Laredo, TX checkpoint looking stupid think GWB’s great state of Texas is playing with you. So far as California no comments they should call there representatives. I am done this with discussion my position is clear. Be safe.

  • Guest

    Dave..this is Great News that FLORIDA is finally Taking the CDL away from the illegal alien on the SPOT!! Finally some Sanity!!
    They should ARREST these “fake drivers”..and investigate the company they work dor and CONFISCATE some ASSETS to pay for MORE of these ARRESTS.

  • David Johnson

    Guest, you are absolutely correct about Florida but read read the these post and illegal drivers just free reign. The scale in Tx between North Little Rock and TexArkana is always open and so it the one just above Laredo. I always get pulled in to the scale in Colorado. The problem appears to be California which I have no comments but having run Fontana to Utah do not recall mega truck companies with illegals running up and down the road. THIS DISCUSSION IS NOT ABOUT CALIFORNIA IT IS ABOUT OUR PAY!

  • Mike Smith

    My question is, “Why isn’t this magazine reporting that Florida is addressing the CDL driver’s who don’t speak English, or don’t speak it good enough”? Who is the audience of this magazine.

    The way I see it is the media is really supporting the corporations & businesses that pay for their ads.

    The media has become a PROPAGANDA MACHINE with a new modern slant. They smile and stab us in the back. The stabs are not with a knife. They are with lies, twisting the truth, and blacking out news to American Citizens about what is really happening on the subject of so many Mexicans being in our country, taking our jobs, and actually occupying our territory as they have done in SOUTHERN CALIFORNIA. If anyone knows FONTANA, CA they should know it’s one of the biggest TRUCKING TOWNS in the country, and it is now almost all MEXICANS. The names on the trucks are all Mexican, Mexican FAMILY NAMES. I speak to this area because I new it well going up there and watching it turn Mexican, thanks businesses, corporations, AND our OWN GOVERNMENT that has failed to protect our borders and it’s CITIZENS.

  • Mike Smith

    Your wrong again. It is about jobs. This discussion IS in large part about So California.

    If you’ve been running FONTANA, CA, you fail to state that all the trucks in Fontana, CA have Mexican names on them. Read what I wrote. They are no lies in what I wrote.

    I grew up right in that area. I saw what it was, and I see what it has turned into, a drity stinking $hut hole of Mexican’s over running the whole area as they do when they start moving into a local, by having 6 kids, pulling in their brothers and sisters, who have 6 kids. This breeds gangs. This runs people out of communities. It is a take over of our land. They have taken over Fontana, CA, and they have taken over TRUCKING, jobs in our country. This an ATTACK on our jobs and our resources. Wars are fought over the taking of land, therefore, resources, and therefore jobs. This is a prescription for war.

  • David Johnson

    Mike very good me plan is a minimum wage of 65CPM at 125,000 annually you can do the math. GI Joe stated that we are getting paid the same monies since 1998. What this means in small words for clarity a person invested $1 and 15 years later you return with the same $1 and blaming on whatever. Good luck to you on your theory of “war” hey man did not you say in your original post that Mexicans and blacks are currently at war in like LA? Really? The American negro has had enough of these wars i.e., the Civil Rights Act of 1964 remedial again I guess ? Since this is the 50th year of the march on Washington I do not recall any war between Mexicans and blacks then why in the @#$X% 50 years later baffling? The argument that trucking companies are being operated by a bunch of illegal Mexican drivers is absurd this is like saying a company is simply allowed to transport drugs across the country undetected nonsense. Be safe.

  • Mike Smith

    I did not say the Mexicans and blacks are currently at war. I said in L.A. in 1970’s, they were at war. and the Mexicans ran the negros out of Compton &Watts. (Although I do believe this is going on in the Chicago area). Read what I said. Don’t try & twist what I said.

    And I did not say that illegal aliens own the trucks, (although under the corrupt gov we live under this is possible). What I said was the trucks have Mexican names on them. This could mean that the, now grown children, of illegal aliens, ANCHOR BABIES, (whom I view as criminals enriched by this corrupt gov that has allowed them to become citizens by birth on our turf, in our country), own the trucks.

    You need to stop trying to argue my FACTS. It clearly presents you to be the foolish person you are. You can not support the illegal alien Invasion of my country in any way and be credible.

  • David Johnson

    Mike sounds great 65 CPM is the new minimum wage and I care as much as what you have say about who is driving a truck or anything else as do the truck stops selling fuel which has tripled or more since 1998 but our pay remains the same. Nor do I have any interest in DOT’s enforcement of the immigration laws that goodness they you to be concerned about that. Mexicans ain’t running blacks anywhere get real you talk about places you have never been and repeat thing you have heard shut up. Fyi, I do not go into the Mexican hood and they do not come into mine without an invitation that is how it is and will always be. Good luck to you. Be safe.

  • Mike Smith

    David says, “Mexicans ain’t running blacks anywhere get real you talk about places you have never been and repeat thing you have heard.” What the Foggen Hell are you talk’n about. YOU KNOW WHAT YOU SOUND LIKE. A fool. Because fools make meaningless, brainless statements like yours. Now you have made me angry you stupid $hut. AS I CLEARLY TOLD YOU. MEXICANS DROVE THE NEGROS OUT OF WATTS AND COMPTON to just give you 2 examples. This took place in So CAL in the 1970’s & 1980’s. I WAS THERE, you DUMB @$$. So don’t GOD DAMN TELL ME WHAT THE HELL HAPPENED. THE KILLINGS WERE IN THE NEWS DAILY IN LOS ANGELES!!!!!!! Don’t con’t to make yourself look stupid as you have been doing.

  • David Johnson

    Mike that is very interesting but if the Watts riots happen in 1965 and you were there what the hell was left by 1970? I am after black burn and tear up there own neighborhood America rush in to rebuilt it right? You are a liar Watts was black and ain’t no Mexican ran them anywhere dude stop. wikipedia.org/wiki/Watts_Riots‎
    http://www.history.com/this-day-in-history/watts-riot-begins

  • Mike Smith

    What hell are you talk’n about. “What was left?”. I wasn’t there in 1965. The killings started in the 1970’s a grew, and con’ted into 1980’s in huge numbers. Like I said you con’t to make a fool of yourself. Look at news on utube about Mexicans and negros in Watts & Compton. This may get you started on knowing something, because you have clearly shown you know nothing.

  • David Johnson

    You watch too much TV, everyone knows after we destroy our own neighborhood or in other words other peoples investment in our neighborhood typically they are happy take the insurance money leave often times do not come back. Yet another history lesson it takes a decade or more to rebuild a place like Watts with $40mm of property damage in 1965. I am wasting too much time with your nonsense which you clearly know nothing about.

  • Mike Smith

    My god you are a stupid @$$. I like I told you I was there. The only person here that’s stating nonsense is you. Your just way to stupid to know it.

  • David Johnson

    Mike you are still talking and lying
    http://en.wikipedia.org/wiki/Watts,_Los_Angeles in the 1970s when you say you were “there” or hell I do not know Watts was controlled by the gangs Crips and Bloods not LATIN KINGS over drugs. You are incorrect blacks were not run out of Watts by Mexicans they freak’n moved when they could of figure. Again this discussion is about DRIVER PAY discontinue your racist rant about immigration reform save it for another forum. Good Luck. Be safe.

  • Guest

    Mike, thank you are comments are well taken and “enlighting” I agree with you in history people have assassinated as you stated people like me having served in the military so let me take the throne for the readers of this discussion. 1. First and foremost, we the professional drivers are going to demand an immediate repeal of the exemption of motor carriers from the minimum wage laws both federal and in each state. 2. The new federal minimum wage for a professional driver with 1 year or more of experience will be 65CPM no exceptions not even “small” carriers or anyone with a foreign name on their truck. 3. The new minimum wage for any new driver with less than 1 year of driving will be 35 CPM and they must team up for least 6 months as an “apprentice” again no exceptions. 3. After 3 years + the new minimum wage for drivers will be 75 CPM or indexed for inflation no exceptions. 4. And so on 5+ years experience. 5. There will be surcharge of 5 CPM for any state where the speed limit is below 55mph on major the interstate, i.e. Oregon. 6. Under the new law, there will be a new tax for the established of the federal “Professional Driver’s Retirement Fund” this is similar to the Railroad Retirement Board and in addition to social social benefits. In support of these revolutionary changes the professional driver will increase safety and professionalism 7. The professional driver will not smoke for health reasons leading to better safety. 8. All professional drivers will sign up for the company’s wellness plan. 9. Every professional driver will meet the PT standards promulgated athttp://usarmybasic.com/army-ph…. 10. Every professional driver will complete leading to an AA degree over a 3 year period a safety class at any community college, 6 hours of American and World history, 3 hours of English, etc. 11. hours of community service in Crenshaw, Englewood, Bed-Stuv, or a church, homeless shelter, nursing home and the like.

    Any Professional driver that cannot meet these new qualifications whether they speak English or not should find another industry for low paying jobs end of discussion. Now unlike the new HOS rules that got passed and we complained thereafter make it happen. Be safe.

  • David Johnson

    Kurt, as I have been telling Mike Smith for 3 days without success you are absolutely correct we are entitled to a new federal minimum wage of 65CPM plus the Driver’s Retirement Fund which is in addition social security of probably 35CPM meaning 3 times what we are paid now.
    Mike, thank you are comments are well taken and “enlighting” I agree with you in history people have assassinated as you stated people like me having served in the military so let me take the throne for the readers of this discussion. 1. First and foremost, we the professional drivers are going to demand an immediate repeal of the exemption of motor carriers from the minimum wage laws both federal and in each state. 2. The new federal minimum wage for a professional driver with 1 year or more of experience will be 65CPM no exceptions not even “small” carriers or anyone with a foreign name on their truck. 3. The new minimum wage for any new driver with less than 1 year of driving will be 35 CPM and they must team up for least 6 months as an “apprentice” again no exceptions. 3. After 3 years + the new minimum wage for drivers will be 75 CPM or indexed for inflation no exceptions. 4. And so on 5+ years experience. 5. There will be surcharge of 5 CPM for any state where the speed limit is below 55mph on major the interstate, i.e. Oregon. 6. Under the new law, there will be a new tax for the established of the federal “Professional Driver’s Retirement Fund” this is similar to the Railroad Retirement Board and in addition to social social benefits. In support of these revolutionary changes the professional driver will increase safety and professionalism 7. The professional driver will not smoke for health reasons leading to better safety. 8. All professional drivers will sign up for the company’s wellness plan. 9. Every professional driver will meet the PT standards promulgated athttp://usarmybasic.com/army-ph…. 10. Every professional driver will complete leading to an AA degree over a 3 year period a safety class at any community college, 6 hours of American and World history, 3 hours of English, etc. 11. hours of community service in Crenshaw, Englewood, Bed-Stuv, or a church, homeless shelter, nursing home and the like.

    Any Professional driver that cannot meet these new qualifications whether they speak English or not should find another industry for low paying jobs end of discussion. Now unlike the new HOS rules that got passed and we complained thereafter make it happen. Be safe.

  • Sasha Renfrow

    IF ALL TRUCKS WOULD STRIKE ABOUT 2 or 3 WEEKS thats all it wold take!! Let the CSA need some freight and change would come. Drivers dont have to convoy to Washington just stay home and spend time with your families!!!

  • martymarsh

    Mike, the answer to that and many other questions is answered with another question. Who pays for the advertisements in this and many other magazines.
    But they do let us have our say, I can say that for them.

  • martymarsh

    Sasha, common sense don’t work.

  • feelforya

    Re regulation and a shift toward Union labour are the only things that give this a chance of coming true…It would be nice…but its highly unlikely

  • Jayne Strash

    here is just a thought… now I know it is not legal for drivers to strike and I would not encourage that.. with that being said, why can’t the vast majority of the independent drivers pick one state, say California, or new York, and just NOT pick up any loads or take any loads delivering to that location for one week? and then the next week pick a different state and do the same thing. wouldn’t this get the attention the drivers are looking for? cant u imagine if New York, and D.C had no toilet paper for a week, what ever would they do.. poor prez sitting on the jon.. if 880,000 to 1,000,000 motorcycle riders can get together and ride into D.C on the same day why cant truck drivers do the same thing? if u need help organizing this, contact me

  • rydermike

    I’ll believe there is a shortage when frieght is left sitting on docks collecting dust ! ONLY then will shippers pay what the rates should be and then maybe even the bottom feeding top 5 companies will actually go for higher rates instead of the constant undercutting!

  • Clayton Mallinson

    ALL of these comments are true, BUT, we perpetuate it all by NOT buying American (what little we still can) and by spending money at WALMART. Keep giving the Walmart-like companies our money, this will keep happening… But it is true: It’s the new world order.

  • patricia the dispatch

    where are you guys getting this information. The bottom line is that in order to get the contracts, everyone is cutting the rates. We’re still looking for those UPSWINGS you are talking about. Loads we were getting say $2200 for, they now want us to do it for about $1600 plus spot trailers and on and on and on. . .

  • BIG GOVERNMENT

    When my load arrived safe. The company should have his Drivers too take a break not WASHINGTON. Paying the government to tell me when I need take a break or go to sleep . Controlling my life and I’m not in jail…. But I’m in jail….when to eat…..when to stop and go…Tracking my every move…… A Jail Bird Driving ….. Going North, South,East & West……Gov.

  • Charles Fleury

    Dude….that’s America…

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