How many drivers do we really need?
August 1, 2012
Do we really have a shortage of truck drivers in this country or are we simply adding up the empty seats across the land and calling that under-utilized capacity a driver short-age?
The very first indicator of a shortage -- any shortage -- is a cost increase. Hay is currently in high demand across much of the Midwest because of drought conditions, and prices are going through the roof. Several years ago, when a good portion of the world's wheat production was diverted to biofuel feedstock, the cost of pasta, beer, and other grain-based products skyrocketed. Kraft Dinner jumped in my grocery store from five boxes for a buck to four boxes for three dollars.
In early 2007, Mexican consumers faced a tortilla crisis; prices tripled and riots ensued. A beer panic hit Germany later that year as prices of the golden brew soared -- partly due to biofuel diversion.
That's what happens when you have a shortage, or the threat of a genuine and pending shortage. One could hardly call what's happening in trucking a crisis.
Shippers are watching
the situation. Analysts are warning
of potentially higher prices at the grocery stores. Truckload fleets are upping driver pay by a penny a mile here and a dollar a day there. Rates are more or less stagnant, store shelves re-main fully stocked, and only the worst paying freight is slow to move. By any of the usual economic indicators, we are in no imminent danger of a driver shortage or a capacity crisis.
I think the problem is actually too many trucks, not too few drivers. Phantom Capacity
I believe the problem is actually just a numbers game. Fleets have unseated trucks, they can't hire drivers to fill those trucks, therefore there's a shortage. That however, contradicts established economic wisdom -- as outline above.
Here's what I think is actually happening.
Let's say carrier with 1000 trucks has 100 of them parked against the fence. That carrier believes that if those 100 trucks had drivers it could move that much more freight.
Across town, there's another 1000-truck fleet with 100 unseated power units. Across the state, there are six more such carriers, and across the country, we find hundreds of fleets all with, say, 10 percent unused capacity. Every one of those fleets has its eye on those phantom 100 loads they are unable to move because they do not have the driv-ers. Add it all up and we have a perceived shortage of a few thousand drivers. In reality, those fleets might actually be able to put only 10 drivers to work, not 100.
As each fleet reports unseated rolling stock, the tally of missing drivers become cumulative, leading to much larger and more alarming figures than is probably really the case.
Transportation demand and supply are presently close to equilibrium, though I still believe supply exceeds demand by a measurable margin. Were it otherwise, trucking would be calling the shots, not the shippers and the load brokers.
When you get right down to it, the perceived labor shortage exists primarily in the truck-load sector -- particularly among larger fleets. That crowd has a harder time filling empty seats than other sectors, such as drayage, LTL, private carriers and others. Maybe that says more about the business model than the labor supply. Or maybe there are just too many trucks.
Author: Jim Park | Posted @ Wednesday, August 1, 2012 1:54 PM