Expect the Shortage to Continue
The U.S. economy continues to make a slow but steady recovery following the recession of 2007-2009. The improving annualized GDP and consistent decline of the unemployment rate over the last several years are a positive sign that the economy is gaining momentum and traction. However, many analysts continue to question the strength of the labor market as wages are rising only slightly faster that the rate of inflation.
For transportation companies, fuel remains one of the largest expenses—and it is often difficult to budget due to volatility. In mid-January 2016, diesel had fallen further to $2.07 per gallon. The trucking industry shrank significantly during the recession due to decreased demand for freight services since consumers were not purchasing as many of the items trucks carry—but according to FTR Associates, capacity utilization is now at the breakpoint between manageable tightness and crisis.
According to ACT Research, 2015 and beyond look to be good years for transportation. The American Trucking Associations (ATA) reports that truck tonnage continues to increase, albeit gradually. In addition, trucking as a form of freight transportation continues to beat all other modes. The ATA expects total freight tonnage to grow 21 percent in the next eight years.
Increased demand for freight means increased demand for professional drivers, and the existing driver shortage will get worse, especially as the U.S. population is expected to grow by 100 million people by 2043—thus increasing the amount of goods needed to be shipped. The industry is currently short 48,000 professional drivers, and if freight demand grows as it is projected to, the driver shortage could balloon to nearly 175,000 drivers by 2024, according to data from the ATA.
Since more than one in six drivers is at least 55 years old and approaching retirement and few young people are entering the industry that often requires long hours away from home, trucking faces a significant challenge of attracting new drivers. Unfortunately, the industry cannot license drivers until they are 21 years old, so it is difficult to capture people who need to find a job out of high school—and are secure in other jobs by the time they are eligible for a commercial driver’s license (CDL). Consequently, the trucking industry is failing to capture new, young drivers as current drivers are aging out of the industry. The trucking industry also competes for workers with other industries like manufacturing, construction and petroleum. These competing industries continue to strengthen—just like the trucking industry—so there are plenty of jobs to go around. But not enough people.
The Federal Motor Carrier Safety Administration’s (FMCSA’s) safety initiative, Compliance Safety Accountability (CSA), is putting unfit drivers out of service, contributing to the driver shortage. Even some carriers with deficient CSA scores are exiting the industry, further tightening capacity. As carriers lose unfit drivers, drivers without CSA violations are in high demand—and for a high price. The limited driver capacity will force carriers to pay higher driver wages, and the increase will likely be passed on to shippers. In addition, the lack of drivers could tighten the supply end of trucking, costing carriers more to operate in general. Changes to the federal hours-of-service (HOS) rules are also increasing driver demand because drivers are unable to spend as many hours a day on the road due to required breaks.
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