Kuebix - Driver Shortage Study

New Study Questions Validity of the Truck Driver Shortage

It’s been taken as fact for many years that there is a shortage of truck drivers in the United States. Companies report problems covering their loads and even the American Trucking Associations announced that there will be a shortage of 174,000 drivers by 2026 if the current climate continues. Here are just a few of the logical reasons many believe there is a driver shortage.

For instance, the growth in popularity of e-commerce ordering has increased the frequency of shipments, especially for the final mile. Trends like “the Amazon Effect” have warped customer expectations to the point that most people expect their orders in just a few days, meaning shippers need to work hard to position orders to arrive in time. It’s also understood that Millennials aren’t replacing Baby Boomer truckers at a swift enough rate as the older generation enters retiring age. All of these reasons couple together to paint a picture of a truck driver shortage.

A recent study by the U.S. Bureau of Labor Statistics is questioning this assumption. The study released in March 2019 questions whether the U.S. labor market for truck drivers is really broken. According to the study, discussion of a supposed driver shortage has been happening in the industry on and off since the late 1980s. They posit that real disequilibrium in a specific job market can only be sustained long-term if there is a systemic issue.

“This disequilibrium suggests either some unusual and persistent causal factor at work, such as a skills mismatch or a regulatory constraint preventing workers from entering employment or changing occupations, or a misapplication of economic terminology in describing the business situation.”

In layman’s terms, there needs to be some external factor making it impossible for enough drivers to be hired. Otherwise, as the study suggests, the market would naturally correct itself with rising wages and benefits. They suggest that since there are no causal factors preventing entry into the truck driving job market, there cannot be a driver shortage.

If you’ve ever taken an Economics course, you’ve probably come across the Law of Supply and Demand. This theory is generally used when discussing markets for purchased goods but is also relevant when discussing jobs. “The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.” In this case, price = drivers’ salaries.

According to the study, if there is a real need for a service, prices will rise to bring the market back to equilibrium. There were, however, “indicators suggesting that the market for truck drivers has been tight over the period from 2003 through 2017: wages in the occupation have been strong relative to those in similar occupations…” To put it simply, there has been a shortage of drivers, but the market rebalances itself with adjusted wages to entice new talent to the industry.

Even though it may be difficult for companies who need to ship product to find drivers, in the end, they are finding enough. Somehow products are being delivered and sellers in every industry continue to be able to do business. If this is all true, the argument could be made that the availability of drivers is tight and getting tighter, but not at the point yet where vast changes in salaries take effect to bring the industry back to equilibrium.

women in supply chain kuebix

Celebrating International Women’s Day with a Look at Women in Supply Chain

In recent years, women have become increasingly integral in all things supply chain, an industry that has traditionally been male-dominated. A survey published by Gartner in 2018, however, shows “sustained strong representation of women in the senior-most ranks of supply chain organizations relative to other functions.” This study was conducted in partnership with an executive women’s networking group that focuses on advancing women’s supply chain leadership in the U.S. called AWESOME.

The War for Talent

In another study by Gartner, the Emerging Risks Survey, they identified the talent shortage to be one of the preeminent risks for companies worldwide heading into 2019. Right now, more than 50% of the professional workforce in highly developed markets are comprised of women, and this number is rising. Therefore, industries that do not put an emphasis on attracting, retaining, and advancing women could find themselves at even greater risk from the talent shortage. Research studies have additionally found that more diverse teams perform better and are more innovative.

The Driver Shortage

Initiatives to attract and retain women in supply chain management roles have begun to grow in popularity. Right now, 37% of today’s supply chain workforce are women and that number is expected to trend upward. However, the percentage of women drops significantly for truck drivers. According to the
Bureau of Labor Statistics, just 6.2 percent of truck drivers in America are women. With the driver shortage causing issues for just about every company that ships freight, it’s crucial that the industry attract more female drivers to keep up with the demand as Baby Boomers age out of the workforce.

As wages continue to rise on average for truck drivers, there is perhaps only one prominent reason women haven’t flocked to become truck drivers, and that’s the unearned social stigma of driving a truck. Unlike some industries where women may find themselves paid unfairly in comparison with male counterparts, women and men are paid the same as truckers. Many carriers set their drivers’ wages based on mileage or hours driven. This should be a draw for women in the workforce.

Companies with fleets and carriers alike can expand their recruitment efforts to attract more women to overcome this gap. According to the American Trucking Associations, some companies are now paying truckload drivers roughly $53,000 each year and some private fleet drivers make up to $86,000 annually. Many companies are also offering increasingly competitive benefit options including flexible schedules and 401k options.

Women in the Supply Chain

While there is still a ways to go before women are equally represented in the supply chain industry, there are many encouraging signs. Trade show floors are more diverse than ever and women are increasingly enrolling in supply chain educational programs. According to SCM World’s poll of global universities, “women accounted for 37% of students enrolled in university supply chain courses.” Over time, it’s expected that women will have a proportional amount of positions in the supply chain industry.

Trucking in America *Infographic*

The job of a truck driver in America is crucial. Trucking is the backbone of our economy and just about every industry would collapse without it. In fact, 71% of all freight tonnage moves on trucks in the USA. That means everything from food to medicine to building materials at one point probably rode on a truck.

There are 3.5 million professional truck drivers in the US right now and there are another 5.2 million people who hold positions in the industry that support drivers. These positions include logistics managers, routers, schedulers and various other office or warehouse positions. Together, all of these people work to get products onto trucks and delivered to the end customer.

There’s a major problem, however. There aren’t enough truck drivers and this driver shortage is only expected to worsen. The average age of a truck driver in the states is 55 years old. That means there are many who are swiftly approaching retirement age and leaving the workforce. This wouldn’t be a problem if younger generations were taking up the mantle and backfilling vacant positions left by Baby Boomers as they retire. Millennials and Gen Xers aren’t filling these newly vacant positions, however.

In just 7 short years, the American Trucking Associations estimates that we will be short more than 175,000 drivers. This will put renewed pressure on an industry that is already strapped for drivers. It will be up to carriers to entice new labor out of the workforce by offering training programs and opportunities for advancement. Other technological advancements like truck platooning and autonomous vehicles could help to alleviate some of the pressure.

The trucking industry faces many challenges over the next decade. Without enough trucks to deliver all the goods produced in our economy, other industries would stagnate and everyday life would come to a halt. That makes it almost a certainty that the industry will rise to the challenge of the driver shortage and find new and inventive ways to mitigate the negative impacts. It will be interesting to see how the driver shortage progresses!

Trucker Infographic Kuebix

Driver Shortage

O Truck Driver, Where Art Thou?

The driver shortage is real, and getting worse. The American Transportation Association says that the US needs to hire about 900,000 drivers to keep up with demand. According to an industry analysis by DAT Solutions, just one truck (and driver) was available for every 12 loads to be shipped at the start of 2018. If there isn’t a driver for a truck, the truck won’t be going anywhere.

The strong growth of the economy and rise in e-commerce orders means more deliveries need to be made, so more drivers are needed. To make the shortage even worse, the average age of a truck driver is 55, which means many are retiring. Young people don’t want to pursue a truck driving career because they fear the quality of life of always being away from family, long hours of solitude on the road and low pay.

At the 2018 National Industrial Transportation League Annual Summit, the CEO of a large trucking firm said that, “of the 113K applications they received last year, only 3% were qualified drivers that they could safely put on the road. This challenge has led trucking companies to increase driver pay in order to attract qualified drivers, which in turn means higher rates.”

One problem is that drivers have to be 21 to drive a truck on the interstate, although drivers can obtain a commercial driver’s license at 18. So even if young drivers are recruited, they have to be 21 years old to drive trucks across states. The DRIVE-Safe Act will hopefully ease the situation by helping to qualify more drivers for the trucking profession by allowing 18 year-olds to take the wheel, yet require them to perform more rigorous training.

The reality is that the truck driver shortage is here today and causing deliveries to be missed and transportation costs to increase. According to USA Today, “Trucking companies have increased rates 6% to 10% in the contracts they’ve signed with shippers over the past year to offset higher wages and take advantage of the strong demand and limited supplies.”

What is the solution?

Truck drivers want better work/life balance. They want to be paid well, receive benefits and have time at home with their families. Some carriers are rewarding drivers for good driving behavior, others are offering a guaranteed minimum number of miles/week so that pay is more predictable. Drivers want to be treated with respect and offered training programs for continuous improvement. Many carriers are offering programs to improve driver health with access to exercise equipment, both at the office or in the truck. Most importantly, drivers want to get home more often, so they want shorter routes and fewer overnights.

All of this costs money, but having happier drivers will be the result.

Shippers can address the truck driver shortage by leveraging technology in the form of a transportation management system to help them work smarter and gain access to a much larger community of carriers. Kuebix TMS allows shippers to compare all carrier rates side-by-side, then book the best carrier for a particular job. After scheduling a shipment, Kuebix creates and prints required paperwork, tracks shipments, audits invoices, manages claims and more.

Using Kuebix TMS, shippers gain control of their transport operations, allowing them to work strategically with their carriers of choice to build long-term relationships. This can lead to improved services, more capacity and available drivers.