Fleets’ famine

| December 12, 2008

White males 35 to 54 years old, who now account for more than half of truck drivers, are expected to decline by more than 3 million over 10 years.

Certain phone calls this year brought the problem home to Gordon Klemp. Never in the 10 years since he began the National Survey of Driver Wages had less-than-truckload fleets called to inquire about their competitive position.

“Not that they’re hurting, but for the first time they were actually losing some drivers to truckload carriers,” Klemp says. For LTL fleets, known for better pay and home time, to experience higher turnover rates meant truckload carriers were seriously raising the ante to woo new drivers.

More than ever, the supply of drivers – especially skilled, safe, over-the-road professionals – is not keeping up with demand. While the industry scrounges for new sources of drivers, carriers and shippers face the continuing headaches of high turnover and lower efficiency in moving freight.

On the flip side, this is good news for long-haul driver pay. Based on most analyses, the good times have only begun to roll.

Would you believe annual increases of 6 percent to 7 percent for the next three years? That’s the conclusion of the most current in-depth study, done by Global Insight for the American Trucking Associations. For the mid-range of owner-operators and company drivers, earning roughly $40,000 to $50,000, such increases would mean raises of $2,500 to $3,500 in the first year.

It could get even better. A year ago, carrier executives at the Freight Transportation Capacity Crisis Productivity Summit mentioned $60,000 to $65,000 as the target wage needed to seriously reduce the shortage in the near future. Klemp puts the bar at $70,000 or $80,000.

“I would guess that pay should double,” says Peter Swan, assistant professor of logistics and operations management at Pennsylvania State University. Trucking consultant Eric Starks agrees, forecasting $85,000 within 10 years.

Such bold prophecies could be dismissed as knee-jerk responses to the first flush of an economic rebound. However, evidence points to fundamental problems that aren’t going away any time soon.

The last time the industry howled about a driver shortage was the late 1990s. A 1997 ATA study concluded the industry needed to hire 80,000 drivers a year through at least 2005. ATA Chief Economist Bob Costello notes that this oft-quoted figure included industry growth and driver attrition.

Costello adds that the study did not necessarily find a problem with driver supply; also, unlike the recent Global Insight study, it covered the entire trucking industry, not just long-haul truckload.

In late 2000, though, driver demand plunged as the economic downturn began. Sign-on bonuses all but disappeared. Pay actually fell for about two years. Costello attributes this to fewer available miles, though Klemp says his wage survey indicates pay rates also fell.

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