Ten years ago, trucking was hit especially hard by the Great Recession and thousands of drivers lost their jobs. Growth in subsequent years was slow, but consistent, and there was a large pool of potential drivers for trucking companies to hire. However, the general economy has now largely recovered and, with more and more goods being produced and in need of transportation (and with Amazon and Walmart disrupting the market in a breakneck competition to rush-deliver products), a trucking workforce that is still relatively small cannot keep up with demand.
There are many factors contributing to the stagnant trucker workforce. A healthy economy has dramatically lowered unemployment, leading to a much smaller pool of potential workers. An aging driver population is retiring. Federal regulations are restricting hours of service. And younger generations are reluctant to become truckers, due to perceptions (some accurate, some not) about low pay, poor working conditions, and an isolated and unhealthy lifestyle associated with trucking. If you think none of that sounds good, you’re right!
With competition for drivers at an all time high, CNN Money reports that shipping costs are spiking and putting a strain on some of the nation’s major manufacturers. According to the Labor Department, companies paying for transportation in April of this year had to pay almost 6% more than they did in April of 2017. As an example of how those increases add up, extra shipping expenses this year for Tyson Foods are expected to reach upwards of $250 million. In fact, financial research platform Sentieo found that 148 companies in the S&P 500 have mentioned “freight,” “shipping,” or “trucking” as concerns during earnings calls over the past four months — double the number from 2017.
As the movement of goods becomes more expensive, manufacturers paying for those shipping increases will have to find ways to make up for the additional costs, which may mean that those costs are passed on to consumers through higher prices for goods. Already this year, companies like Hasbro, Kellogg, and Coke have told investors that higher freight and shipping expenses are likely to cause them to raise retail prices. And now, if trucking companies want to convince the small pool of potential drivers to join the trucking workforce, they’ll have to offer higher pay and more benefits, which will push shipping costs even higher, further raising retail prices.
The driver shortage is a wildly complicated situation in an already complex industry, so thanks for sticking with us through a pretty dense analysis!! The good news is that trucking continues to have huge growth potential and there are innovative solutions to our problems. We’ve previously discussed a wide range of topics related to the driver shortage, from hiring trucking couples and giving ex-cons a second chance, to exploring self-driving automation and improving driver retention.
We’ll continue to discuss the ongoing driver shortage here on the blog, including an upcoming example of a carrier thriving by attracting drivers through a positive company culture. So stay tuned, and leave us a comment — how do you think we can solve the driver shortage?? Is there a solution that won’t spike retail prices for the goods truckers transport??