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Navigating the Driver Shortage ~ Simplified (Part 1)

Jun 17, 2018

There’s been a truck driver shortage since the 80’s. Unfortunately, it’s continued to worsen over the years. Economic growth of more than 3% annually since the last nine months of 2017, up from an average of 2.2% since 2009, is only aggravating the situation. There’s a shortage of 51,000 truck drivers nationwide, according to the ATA, up from 20,000 in 2013 and 36,500 in 2016. The ATA projects the driver gap to increase to nearly 100,000 by 2021. Let’s take a look at this problem, what’s causing it, its effects, the solution, and how you can work through it successfully.

Truck driver shortage-ShipAG.com.jpgWhat’s Causing the Shortage?

For starters, baby boomers are retiring and few Millennials are willing to endure hardships such as being away from home for weeks at a time on cross-country deliveries. Plus, it can be a difficult lifestyle, in general, with limited nutritional options on the road and often having to sleep in a truck while in transit. This all makes it difficult to replace drivers who are retiring.

Further aggravating the situation, the economy has strengthened over the past year, increasing demand for items ranging from oil and housing supplies to clothing and consumer electronics. Plus fast-growing e-commerce shipments, especially from Amazon and Walmart, add to the congestion. This makes demand strong and capacity restricted. 

Making it even more difficult, enforcement of the electronic logging device (ELD) requirement for all trucks started on April 1st. This compliance limits how long drivers can drive without a break and reduces the number of trucks available at any given time. ELD, along with other regulatory changes are causing some drivers to leave the business, further crimping capacity over the long term.

Many feel that the pay isn’t competitive for the time spent on the job, since drivers are often paid by the mile and not for hours worked. This can be a real problem when they encounter delays along their route or spend hours waiting to load or unload. 

Harsh weather, such as hurricanes, flooding, and snowstorms are causing delivery delays. Although not impacting the actual driver shortage, these environmental issues further aggravate the ability for on-time deliveries. Unfortunately, driver shortfalls are expected to only get worse over the next few years. 

What is it Affecting? 

The biggest impact is on freight costs. Trucking companies have increased rates 6% to 10% in the contracts they’ve signed with shippers over the past year to offset higher wages while taking advantage of the strong demand and limited supplies. Rates are also expected to continue to rise. 

In response to higher shipping costs, retailers raised shelf prices earlier this year. Although they’re absorbing as much of the shipping cost increases as possible, in an effort to remain competitive, retailers are expected to increase prices further, later this year. 

Spot rates, which cover immediate deliveries and change constantly, have soared 30% to 80% over the past year. Manufacturers are having to turn to the more expensive spot market more frequently due to the driver shortage. These rates are often 30% to 60% higher than contract rates. This, in turn, is impacting corporate profits.

Some shipments arrive late as manufacturers scramble for trucks. Goods are stuck at shipping ports an average four days, up from a typical two days. The share delivered on time has slipped from a range of 92%-96% to 85%-89%. In about 5% of cases, store shelves sit empty because of late deliveries.

Fortunately, it’s not all doom and gloom. Next time we’ll take a look at the solution to the truck driver shortage and how you can safely move your freight in a timely fashion. Are you challenged to navigate the truck driver shortage and meet your current freight shipping requirements? Contact American Group.

American Group is a 3PL with decades of experience guiding businesses through the selection, preparation, and shipping of their freight. Contact us for assistance with your next shipment by phone at 866-553-6608 or by email at Info@ShipAG.com. We’re here to make Shipping.Simplified®.

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