Trucking association estimates 239,000 drivers needed by 2022
As pool of eligible drivers shrinks, carriers see costs rise, struggle to hit earnings estimates.
The nation's truckload sector will find itself short of hundreds of thousands of drivers by 2022 unless current trends change, the American Trucking Associations (ATA) said in a report released on Monday.The report, "Driver Shortage Update November 2012," forecast a shortage of 239,000 drivers in 10 years. Most of the shortage will occur among truckload carriers, whose drivers travel long distances and can be away for weeks at a time. By contrast, the less-than-truckload (LTL), private fleet, and dedicated contract carriage segments—whose drivers operate shorter runs and are home more frequently—will not face anywhere near the same issue, the report said.
In all, the trucking industry will need more than 96,000 new drivers a year over the next 10 years just to keep up with the projected growth in traffic volumes and to replace drivers who retire or leave the business for other reasons, the report said. Nearly two-thirds of the shortage will be caused by the combined effects of retirement and traffic growth, the report said.
Currently, the truckload segment is short between 20,000 to 25,000 drivers out of universe of 750,000 cabs. ATA called that ratio symptomatic of an "acute" driver shortage.
About 90 percent of truckload executives said they are already having trouble recruiting qualified drivers, ATA said. The situation is bound to worsen as the trucking industry feels the twin impact of the new driver hours-of-service regulations and the CSA (Compliance, Safety, Accountability) 2010 initiative developed by the Department of Transportation (DOT) to winnow out potentially unsafe drivers, the report concluded.
The hours-of-service regulations, which are slated to take effect next summer, would result in a 3-percent cut in truck productivity and force companies to employ more drivers to haul the same amount of freight, according to the report. The trucking industry is challenging the new regulations in court.
As for CSA 2010, the report found that 7 percent of the driver pool is responsible for most of the carrier infractions when companies are scored by the Federal Motor Carrier Safety Administration (FMCSA), the sub-agency of DOT that implements the program. While it will take time to push all substandard drivers off the road, their eventual departure will curtail the available driver pool, the report said.
Noël Perry, head of consultancy Transport Fundamentals and an expert on driver compensation issues, said his estimates of a driver shortage are double that of ATA's. Though Perry said the current shortage isn't as dire as ATA contends, he agrees that there will be a significant supply problem sometime in the future.
WERNER HIT BY DRIVER COSTS
Even though the driver shortage has not yet peaked, many truckload carriers are already feeling the effects on their balance sheet. Werner Enterprises Inc., a leading truckload carrier, said the combination of increased driver compensation and increased advertising costs to recruit drivers were major contributors to the Omaha, Neb.-based company falling short of its third quarter earnings estimates. Derek J. Leathers, Werner's president and chief operating officer, said the company's driver compensation rose the equivalent of two cents a mile system-wide in the third quarter.
The company's inability to pass on those costs to customers led in part to the earnings shortfall, he said.
Leathers said truckers face a multi-year period of higher driver wages, particularly at the entry level populated by younger drivers being groomed to replace those close to retirement. Entry-level drivers make between $38,000 and $42,000, a range that will need to be bumped up by at least 10 percent if the industry wants to bring in new blood, he said. The median age of the long-haul driver is between 55 and 57 years of age.
Leathers said the industry, over time, will move strongly towards a model that compensates drivers for hitting stated performance targets. By contrast, using supply-demand factors to drive compensation will become less of a consideration, he said.
The Werner executive cautioned, however, that the industry confronts multiple obstacles in bringing young people into the fold. By law, individuals must be at least 21 before they can obtain a commercial drivers license to operate in interstate commerce. This makes it problematic to recruit drivers out of high school into the trade unless they are willing to operate just within the state where they are licensed, he said.
Another problem is that many younger drivers aren't "independent spirits" like their older brethren and don't see the attraction of being on the open road for extended periods, according to Leathers. In that vein, many younger drivers working as independent owner-operators aren't as skilled as older drivers at performing on-the-road fixes of a balky rig when a repair facility is nowhere nearby, he said.
Leathers added that prospective drivers are deterred by what he said is a smear campaign to paint all truck drivers as dangerous cowboys who think nothing of bearing down on an SUV with a family of four if it means getting to the unloading dock on time.
"These are negative stereotypes that simply don't match the reality on the road," he said.More articles by Mark B. Solomon
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