Shippers may have no trouble finding a truck this year, but trucking companies still say they have a hard time finding drivers.
The truck driver shortage has diminished in 2019, but not disappeared, and threatens to return with a vengeance when the United States economy and freight demand strengthen, American Trucking Associations' (ATA) chief economist Bob Costello said Wednesday.
“We do say that the shortage will improve slightly this year, and not get worse, but that’s for the wrong reasons,” Costello said at a press conference launching ATA’s Truck Driver Shortage Analysis 2019. “Most of it has to do with the slowdown of freight. We have a temporary reprieve.”
Last year, the shortage hit a peak of 60,800 drivers, as freight demand soared in the first half and the electronic logging device (ELD) mandate cut into trucking productivity. The gap between the number of drivers needed and supply grew nearly 20 percent, the ATA said.
That was then. This year, truck tonnage and shipment volumes have slipped, while truck registrations have risen double digits. New trucks carriers ordered last year are hitting the road, adding to excess capacity. Still, ATA forecasts a driver shortage of 59,500 in 2019.
Driver shortage vs capacity glut
How can a driver shortage be reconciled with a truck glut? In part, by focusing on where the shortage is strongest: in the over-the-road, long-haul truckload sector. “That sector is still struggling, and that’s where the vast majority of this shortage lies,” Costello said.
“There are 3.5 million truck drivers in the United States, but only between 500,000 and 600,000 over-the-road truckload drivers. And that’s where this shortage is,” he said.
The shortage also is most acute at large truckload carriers. Many drivers prefer to work for smaller companies where they’re a name, not a number, Costello said. Last year’s hot spot market, with rates up double digits, encouraged smaller carriers to add trucks and drivers.
“When big fleets began giving out big pay increases last year, we did see some drivers at smaller fleets move up” to larger competitors, he said. The double-digit drop in spot market rates may encourage more truckers to sign on with larger carriers this year.
But that’s an example of churn within the existing truckload driver pool, which sees a fair amount of turnover. “Turnover and the driver shortage are not the same thing,” Costello stressed. Driver turnover rises during periods of high demand, but involves existing, working truckers.
What truckload carriers and the trucking industry need are new bodies to replace retiring workers. Carriers will need to hire 110,000 drivers a year over the next 10 years, and more than half of those workers will be needed to replace truck drivers who will be retiring.
The average age of a long-haul truckload driver is 46, the ATA said in its report, and that’s younger than the averages for less-than-truckload and private fleet drivers, which the ATA places in their 50s. The association is concerned that more drivers will exit the industry than enter it, leading to a widening gap between drivers needed and drivers at hand.
“The industry is growing the driver population, it is just not growing fast enough,” said Costello.
Pay raises are a big part of the solution. Driver pay rose about 10 percent in 2018, according to the National Transportation Institute, with one-fifth of trucking companies raising pay more than once.
“Pay has been going up and should be going up as long as there’s a shortage,” Costello said.
The problem is, how do you raise pay when rate increases that underwrote pay hikes are being rolled back? Contract rates are nearly flat year over year, Costello said, and if they go negative, they will make it nearly impossible for carriers to attract the drivers they need.
“If those rates go south, I think you will see a fair number of trucking companies go out of business. It is very difficult, if not impossible, to walk back those pay increases,” he said.