Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In late June, Con-way Truckload, the truckload unit of transport logistics giant Con-way Inc., launched a partnership with a driver training school in Detroit. Under the partnership, students would receive reduced tuition rates while in school and be eligible to have up to one-half of that tuition reimbursed by the company when they graduate.
Con-way Truckload then extended an extraordinary carrot: It would waive the traditional "commitment" contract requiring a new driver to remain with the carrier for a specified period or else return the reimbursement. In other words, there was nothing to keep students from taking advantage of the subsidized training then moving on once they earned their commercial license.
Herb Schmidt, Con-way Truckload's president, said the waiver is an indication of the company's confidence in the quality of its work environment. "We want drivers to be here because they want to be, not because they are contractually or financially obligated to be," he said.
The waiver represents an unconventional approach to keeping drivers in what could become an unprecedented period of driver demand. While the nation struggles through a painfully prolonged period of high unemployment, driver jobs go begging. Consultancy FTR Associates estimates the industry is short about 188,000 drivers. National Transportation Institute (NTI), a firm that tracks driver employment and compensation trends, pegs the shortfall at about 30,000.
The revolving door
Beyond the shortage, however, lies a more pernicious problem: driver turnover, known in industry parlance as "churn." A report by the American Trucking Associations (ATA) estimated that, based on first-quarter numbers, 75 percent of drivers for large truckload fleets will turn over in 2011, the fastest clip since the second quarter of 2008. Turnover at smaller truckload fleets is projected at 50 percent, the highest annualized level reported since 2008's third quarter, according to the report.
Some of the turnover is due to attrition from death, retirement, and drivers' leaving the business. But Bob Costello, ATA's chief economist, said most of the churn comes from drivers becoming free agents who make their services available to the highest bidder. Costello said he expects the turnover rate to rise as freight demand accelerates, the number of retirees outpaces new entrants (one of every six drivers is 55 or older), and new safety regulations like CSA 2010—an initiative designed to winnow out marginal drivers through a complex grading system—give drivers with solid safety records more bargaining power than they've had in years.
For carriers, churn is a serious headache. Replacing a qualified over-the-road driver takes time and money. An unexpected departure also wreaks havoc on a carrier's network.
Shippers, meanwhile, get hit two ways: Not only does churn threaten to disrupt their supply chains, but it forces them to pay higher rates to compensate truckers for rising labor costs. Lana R. Batts, a long-time top trucking executive and now a partner in Transport Capital Partners LLC (TCP), a transport mergers and acquisitions advisory firm, said virtually all of the revenues obtained from rate increases will be sunk into paying escalating driver wages.
Estimates vary on the likely impact of wage increases on the nation's fleets. Leo Suggs, CEO of the former Overnite Transportation Co. and now chairman of Dallas-based contract carrier and third-party logistics service provider Greatwide Logistics Services, told an industry conference recently that wage hikes could drive up truckload rates by 5 to 15 percent over the next year. However, Schmidt of Con-way Truckload predicted only a 2- to 3-percent increase during that time due to general economic softness and labor slack in other industries like construction that compete for the same workers.
Schmidt added, however, that should the economy pick up appreciably, "there will be a driver shortage the likes of which we've never seen before." Right now, he said, "I've seen worse."
Ongoing wage problem
Carriers seeking to keep their drivers don't have much in the way of options. They can pay their drivers more, redesign their networks to provide drivers with predictable schedules and a better work-life balance, or a combination of the two.
Wages appear to be trending upward. Rates for owner-operators have climbed to $1 per mile from 92 cents a little more than a year ago, according to Gordon Klemp, president of NTI. Driver wages at for-hire carriers are also rising, though not at the same pace, he said.
Another factor in drivers' favor is that carriers are asking their drivers for more miles, which pads the paychecks of drivers paid on a per-mile basis, said Klemp.
But the industry has a ways to go to achieve the kind of wage levels that attract drivers or keep them from jumping to rivals. According to FTR estimates, the median annual salary for a truckload driver is about $48,000, though pay will range from $35,000 to $75,000 depending on the trucker's financial condition and the driver's qualifications. For drivers at less-than-truckload (LTL) and private fleets, the average is about $58,000, said Noel Perry, a senior analyst at FTR. Klemp pegs the median annual salary for a dry-van truckload driver in the Midwest at about $46,700. He did not have details on salaries for drivers at LTL or private fleets, but he said they are higher.
A recent survey of 150 fleets by TCP said wages need to be in the $50,000- to $70,000-a-year range to draw applicants into the field and keep them once they're hired. Klemp said the median driver salary needs to reach about $67,000 a year to accomplish both objectives.
Of equal importance is to narrow the wide gap between the wages of drivers working for truckers in the top quartile of payors, and those at carriers in the bottom quartile, Klemp said. The differential currently sits at a historic high of 16 cents per mile, well above the traditional gap of nine to 10 cents per mile, according to NTI data. Until the gap is closed, "you will continue to have churn," he said.
Batts of TCP said wages must rise to keep drivers performing a job so critical to the U.S. economy but which presents serious work-life challenges due to long periods of time away from home. "If you are going to have an awful lifestyle connected with the job, you need to be overcompensated for it," she said.
Keeping drivers content
Carriers, for their part, recognize this fact. For example, J.B. Hunt Transportation Services Inc., the company perhaps most closely associated with long-haul trucking, is diverting more of that freight to intermodal rail service as it focuses its truck network on more regionalized deliveries. Hunt and other carriers realize that intermodal service, besides reducing their line-haul costs, boosts driver retention because shorter hauls at the regional level mean more time at home.
Kane Is Able Inc., a trucker and third-party logistics service provider, keeps its 200 drivers operating at distances of about 300 miles each way, thus maximizing home time. That factor, as much as anything, makes driver churn a virtual non-issue, said Lawrence Catanzaro, the company's vice president, transportation safety and recruiting. "We don't have a lot of turnover. When we get drivers, we generally keep them," he said.
Most of the driver retention precepts are not rocket science, carrier executives say. Companies must stress communication with their drivers, create a pleasant work environment, provide opportunities for advancement either within the unit or with another company division, and monitor their competitors to uncover best practices and to stay a step ahead.
With CSA 2010 at the top of everyone's mind, carrier executives stress that working with drivers to improve their safety scores has the ancillary benefit of improving morale and minimizing churn.
"You are improving a driver's performance, which will make a company more valued in a customer's eyes. But it also shows the drivers that the company cares about their life and their work," said Charles W. Clowdis Jr., managing director, transportation consulting and advisory services at consultancy IHS Global Insight.
Shippers can play a part by making their freight more driver-friendly, executives say. "Attention to proper loading, adjusting pickup or delivery times to better accommodate [current driver hours-of-service] regulations, and managing driver [wait times] are more important than ever," said Mark Rourke, president of the truckload division of trucking and logistics giant Schneider National Inc. "Shippers need to be cognizant of the downstream impact of their freight on drivers."
"It's pretty simple," said Schmidt of Con-way Truckload. "Run an efficient dock, turn the loads quickly, and get the driver moving on down the road."
Churn, schmurn!
The problem of driver turnover, or "churn," keeps many trucking executives awake at night. But Herb Schmidt, CEO of Con-way Truckload, says he sleeps pretty soundly.
"It doesn't bother me one bit," said Schmidt, referring to driver turnover. Although "churn" is inevitable in trucking, he says, there are ways to minimize its impact on operations. The key, he explains, is to make sure the turnover is "planned."
In a program that the executive said is unique to the trucking business, the Joplin, Mo.-based carrier grants its drivers as much as four to five months of unpaid leave a year if the driver is considered a good worker and demonstrates a legitimate personal or business need for the time off.
Drivers using the program are technically terminated when they leave and do not receive any credits toward service tenure during their time away. However, they are guaranteed of rehire when their leave is over, and at the same pay, benefit, and seniority levels they had when they departed. The time off can be taken all at once, or it can be divided into intervals of the employee's choosing.
Schmidt said the program boosts morale and helps discourage turnover by giving drivers the freedom and flexibility to tend to other business or personal needs. At the same time, the company can plan ahead for their absence and minimize the risk of being caught short of drivers. Schmidt said that Con-way Truckload's driver turnover is about 30 to 35 percent below truckload industry averages.
The program is well suited for drivers who have second vocations—such as farming and ranching—with predictable seasonality to them, according to Schmidt. He estimated that less than 5 percent of Con-way Truckload's 3,000 drivers now take advantage of the program.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”