Driver Shortage Hits Critical Level as Executives Fear Loss of Business

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Oct. 13 print edition of Transport Topics.

SAN DIEGO — Increases in truck tonnage and freight rates should make trucking executives happy, but the long-festering driver shortage has mushroomed to such a critical level that fleet managers meeting here said they either have made or may soon make radical changes in how they operate.

Some fleets attending American Trucking Associations’ Management Conference & Exhibition said that they already are saying no to shippers seeking trucks, and they don’t want that trend to accelerate.

ATA’s new chairman, Duane Long, did a lot of mixing with conference attendees and quickly concluded:

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“The main thing I’m hearing from people is that they could grow bigger, but it’s hard to find people to drive trucks. That’s the No. 1 issue.” He added that the problem is familiar to his own company, Raleigh, North Carolina-based Longistics.

Shepard Dunn, CEO of Bestway Express and chairman of the Truckload Carriers Association, was passionate about the need for drivers.

“Drivers are first, drivers are second, drivers are third and drivers are fourth. Shippers are fifth,” Dunn said in assessing his segment of the industry.

Dunn said that at his Vincennes, Indiana-based company he does not have enough seated tractors to handle all of the business tendered. Therefore, he is analyzing which freight is most lucrative and jettisoning the poorest paying.

He said the freight-rate climate is the best it’s been in about 20 years, and he knows what he wants to do with the money.

“Shame on us if we don’t use this chance to create fabulous jobs for drivers,” he said.

ATA chief economist Bob Costello released data on driver compensation that shows pay varying significantly by industry segment. Private fleet drivers hauled in the most at $75,000 a year, whereas for-hire, irregular-route truckload drivers had the lowest average at $47,000.

Tank-truck fleets offer among the highest levels of pay, according to Costello’s data, but they must compete for labor, somewhat with other trucking companies but mainly with their shippers, said Reggie Dupré, CEO of Dupré Logistics.

His Lafayette, Louisiana-based carrier services the oil-and-gas production and petrochemical industries that are flush with cash.

“The scarcest resource is good people to run your business with,” Dupré said at an MC&E educational session. Therefore, the company abandoned per-mile compensation and switched drivers to a guaranteed 40-hour workweek and paid overtime after that. Under ideal circumstances, he said, they work 50 to 55 hours a week.

Steven Rush, president of Wharton, New Jersey-based tanker Carbon Express, said he pays by the hour for shorter hauls and gave up on sleeper cabs. Instead, his drivers pull their day cabs into motels if they’re out overnight.

A marketing executive for a truck maker said sales are up, year-over-year, but they could be much better. “We’ve been told by customers they’d buy more trucks, but they don’t have the drivers. The best marketing I could do would be, ‘Buy a Truck — Get a Driver,’ ” he said, requesting anonymity.

Tommy Hodges, the 2009-2010 ATA chairman, said he was not optimistic. Hodges suggested that if both the industry and society as a whole fail to recognize the seriousness of this issue, the end result could potentially be as dire as pockets of the country being underserved by truckers, simply because there are not enough drivers.

Rodney Rader, director of technology for Prime Inc., said cash is important for retaining drivers, but not everything. The carrier has cobbled together a mixture of bonuses, a health-and-welfare program, a driver-recognition program and communication through a smart-phone application to keep drivers onboard.

“We really try to make it a total package, but regardless of what we do [for drivers], they deserve more,” Rader said.

Beth Carroll, a compensation consultant and the founder of Prosperio Group, does think a lot about cash.

“The driver shortage is huge,” Carroll said. “The demographics of the driver market are changing, so it’s becoming a lot more younger people that are going to need to get into the market, and they have different needs and requirements.”

She leans toward hourly rather than per-mile compensation, perhaps with a fixed minimum:

“A number of companies right now are going to say $1,000 a week. That’s going to get you to a number pretty quickly. A thousand dollars a week with vacation for 52 weeks is going to be $52,000 a year. That’s a number that now you can really start to have a rational competitive discussion with the industry about: What should the industry be paying?”

Philip Byrd Sr., whose term as ATA chairman ended at MC&E, said the policies of insurance carriers can often restrict the ability of small and medium-size fleets to attract young drivers. Byrd said insurers prefer fleets to hire experienced truck drivers.

Byrd said there should be a way, though, for carriers to work with insurers and construct vigorous safety and training procedures that would clear the way for hiring rookie drivers.

Stock analyst John Larkin, who has long followed trucking, summed up the situation for clients of Stifel, Nicolaus & Co.: “It is hard to imagine any easy solution to this most pressing industrywide challenge. Those with drivers will win, pure and simple.”

Editorial Director Neil Abt and Digital Media Editor Gary Kicinski contributed to this story.


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