Trucking companies may have to hire as many as 60,000 additional drivers in the second half of 2013 to compensate for constraints on productivity from new hours-of-service rules that took effect July 1, according to transportation consultant Noël Perry.
“If you’re a carrier, this is the time to ramp up your recruiting efforts,” Perry, a senior consultant for FTR Associates, said during a July 11 FTR webinar on the state of the freight economy and the potential impact of the new HOS rules. “Second, you want to be particularly solicitous of your drivers. If you’re thinking about an increase in pay, this is probably the time. If you’re thinking about the changing the way you handle your drivers, their time at home, this is the time.”
The latest changes to the HOS rules are just one part of a wave of driver-oriented trucking regulations that will shrink the pool of eligible drivers, push up hiring costs, cut into motor carrier productivity and raise the cost of shipping costs by truck, he said.
“We think prices are going to stabilize and then go up,” Perry said. For shippers, “there’s major upward exposure. It may not happen, but you should prepare for it.” A big question is whether trucking companies will be able to hire, and keep, enough truck drivers.
In the first quarter, the annualized average driver turnover rate at large truckload carriers rose to 97 percent from 90 percent in the fourth quarter, according to the American Trucking Associations. For smaller fleets, the rate was 82 percent. That means a large truckload carrier would have to replace the equivalent of 97 percent of its driver pool in a year just to keep trucks “seated” with drivers with no net gain in employment. That could mean filling one seat several times in a year.
Recruiting a new truck driver is estimated to cost $3,000 to $8,000. That means a truckload carrier with 200 drivers and a 97 percent turnover rate could spend from $580,000 to more than $1.5 million a year just to keep its driver numbers steady.
The 97 percent rate in this year's first quarter is still lower than the average rate for 2012, 98 percent, and the third quarter last year, when the turnover rate at large truckload companies — carriers with more than $30 million in annual revenue — hit 104 percent.
The trucking industry already is having a hard time finding drivers. Low pay, long hours, tough working conditions and long periods away from home increasingly make it hard to attract new applicants or keep drivers, even with unemployment above 7 percent.
FTR estimates the industry is short about 100,000 drivers already, not a large number or percentage out of 2.6 million truckers, and not uncommon for a recovery. But that number is likely to keep rising, Perry warns, unless carriers and shippers change.
Shippers need to ensure they have “budget flexibility” needed to deal with potential rate increases. “You’d hate to lose shipments because you don’t have the budget,” Perry said.
Being flexible with motor carriers and with truck drivers may be even more important. "This is the time to be flexible about how you manage your docks to get truckers in and out quickly. This is a great time to begin thinking about cooperative programs with your core carriers to match beforehand the availability of equipment and loads,” he said.
This is also a good time to investigate other transportation options, such as intermodal rail, which will continue to make market share gains as the regulatory vise squeezes truck capacity, FTR senior consultant Larry Gross said.