Opinion: Multiple Strategies Can Mitigate Driver Shortage
While the demand for trucks to haul freight is showing no signs of slowing down, the number of experienced and available truck drivers is not keeping pace. Today’s shortage didn’t happen overnight.
And the unfortunate reality is the shortage of truck drivers is predicted to only worsen, causing major disruptions in the supply chain, massive delays and a slowdown in overall economic growth.
Demographic changes in the workforce are at the core of the problem.
Bureau of Labor Statistics data for 2018 indicates 55% of the driver base is older than 45, and fewer than 25% are younger than 35. A 2015 American Trucking Associations truck driver shortage analysis showed the average age of U.S. truck drivers to be 49, compared with 42 for the average American worker. Simply put, drivers are “aging out” of the industry faster than they can be replaced.
In 2018, ATA set the driver shortage at 60,000, and forecast the number to exceed 80,000 by 2020. Unless a major strategic change occurs in the industry, this number has the potential to reach 175,000 by 2026!
At the same time, the overall economy is booming, particularly for trucking. The industry conditions couldn’t be better, yet the driver shortage persists.
Strategies to Manage
While there’s no single solution, trucking companies do have ways to alleviate the driver shortage. These include:
Investing in driver retention: While the trucker lifestyle can’t be completely changed, it can be improved. The use of “hub-and-spoke” distribution systems — in which traffic agents-planners organize shorter routes as a series of “spokes” connecting outlying points to a centralized “hub” where drivers hand off trailers that continue on to another hub or final destination — can reduce the length of haul and, as a result, decrease the amount of time drivers spend on the road. Although the initial administrative and infrastructure investment in this model can be substantial, its other benefits are significant: a reduced number of required routes, better driver compliance with hours-of-service regulations, reduced costs and improved service.
Also, consider adding amenities that elevate the perception of the profession. For example, don’t always require drivers to book themselves into the cheapest motel for overnight accommodations. Get creative by implementing programs, such as safety and fuel-economy bonuses, which deliver both increased driver compensation and improved overall fleet performance.
Attracting new talent: Focus recruiting efforts to attract talent from demographic groups previously excluded from consideration, such as women. Although women account for almost 47% of the U.S. workforce, Bureau of Labor Statistics data also shows only 6.6% of truck drivers are female.
Companies also can lower entry barriers by reimbursing drivers for the cost of acquiring a commercial driver license. And when recruiting drivers for local-intrastate routes, consider offering candidates a clearly defined career path that will enable them to train and qualify for their interstate rating.
Embracing technology: There are many technology solutions being developed to improve drivers’ working conditions. For example, Uber’s transfer hubs — currently being tested in a California-Arizona freight hub venture — utilize an on-demand brokerage to link drivers with shipments using the same type of smartphone-based matching system on which its passenger car service is based, and combines self-driving and conventional driver-operated trucks. This allows drivers to spend less time away from home. Investing in these types of solutions can make companies more attractive to a dwindling candidate pool.
Increasing your prices, reinvesting in personnel programs: Despite the rise of intermodal logistics services, trucks still account for nearly 70% of all tonnage moved in the United States. Trucking companies can take advantage of this by developing pricing strategies consistent with service demands, and generating increased revenue for reinvestment in technology and programs that ensure a steady supply of driver talent.
Meanwhile, trucking currently remains one of the highest paying careers for people without a college degree. The recent talent shortage actually has had a positive impact on salaries.
According to the National Transportation Institute, a data group, in the first half of 2018, median pay rose 8.2% to 39.8 cents per mile. Indeed.com estimates the average annual salary for a U.S. truck driver at $73,000.
Some companies have taken additional steps by offering sign-on bonuses. However, this isn’t a long-term solution as salaries can’t continue to increase indefinitely.
Ultimately, by investing in driver retention, embracing technology and more effectively managing prices, trucking companies have the ability to mitigate the driver shortage, and perhaps can make being a truck driver as appealing as it was back in its heyday.
Sven Wengler is director of the logistics and transportation practice at Simon-Kucher & Partners, a global consulting firm providing strategy and marketing consulting, and is a leading pricing adviser worldwide.