Driver Shortage Key Issue as Economy and Freight Continue to Improve

August 14, 2014

By Deborah Lockridge

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Starks said it's less important to actually read this graph from FTR's Noel Perry than to absorb the potential driver shortage impact of impending regulations.
Starks said it's less important to actually read this graph from FTR's Noel Perry than to absorb the potential driver shortage impact of impending regulations.

The need to find new truck drivers, find ways to keep them moving and even revamping driver pay structures were a major focus of Thursday's "State of Freight" webinar update from FTR Associates President Eric Starks.

In introducing the webinar, FTR intermodal and rail expert Larry Gross noted that although he's been in this industry for 30 years, "Rarely have I experienced a period quite as interesting" as the current one.

In general, Starks said, things continue to look relatively healthy for the freight markets. The U.S. gross domestic product grew 4% in the second quarter after an abysmal 2.1% drop in GDP in the first quarter. Starks pointed out that in this recovery, even though GDP overall has grown at a sluggish average rate of 2.3%, there's been a 5.8% growth in the goods-producing sector. If you look back at the 1993-2007 period, GDP averaged 3.5% but goods-producing growth was only 5%. However, Starks noted, the goods-producing sector saw a deep cut during the Great Recession.

Starks noted that looking at spot versus contract rates can be a leading indicator of the freight environment. Usually when the economy starts to expand rapidly, he said, you see a rapid runup in the spot market. Then the spot market stabilizes and you start seeing the increase in contract rates.

"I think we're at that point," he said, pointing to the hot spot market in the first half of the year. It has slowed, but contract rates, he said, are starting to move higher.

As the economy and freight growth create a higher demand for freight, demographic changes and increasing regulations are making it harder for fleets to find drivers and cutting the productivity of the ones they have.

"The industry is going to have to figure out … how do they pay drivers going forward?" Starks said. "Do they finally start paying drivers in a different way? I think they do."

"We probably need to see driver pay in that $75,000 to $80,000 range. Will the carriers get there? We've seen pay going up. I think they will have to restructure pay, will have to come up with some base pay, because drivers aren't seeing the miles they've seen."

Fleets finally have begin to expand, Starks said. Looking at North American Class 8 truck sales, he said, "we see sales around 290,000 to 300,000 this year. Replacement demand is typically around 220,000 to 230,000 pieces of equipment. So clearly the overall fleet size is starting to grow this year. That was somewhat expected, but we also knew fleets would be cautious about this because you have to have drivers" to put behind the wheel of those additional trucks. "Our thought is you probably need to be growing the fleet a little bit more, but you just don't have the drivers."

In addition, Starks said, "we've been hearing a lot about collaboration between shippers, railroads, truck carriers, and intermodal. What we've seen over the last decade or two is motor carriers and railroads have done a better job of collaborating. Where the focus is really going to shift because of productivity issues is collaboration between shippers and truck carriers, to figure out how to free up drivers and equipment and create more capacity."


  1. 1. Alan Lodwick [ August 15, 2014 @ 05:39AM ]

    I don't disagree with anytining in this article and I appreciate you sharing this information. What I don't see preople talking about is the impact of drivers sitting at docks loading, unloading or waiting for appointments. Overall I think there a a lot of efficiencies to be gained if shippers and receivers allow drop and hook or at a minimum don't delay drivers more than an hour or two loading and unloading. While this is not possible in every situation, we need to all work together to find ways to allow drivers to spend most of their on duty time driving, where they add the most value to all. Holding drivers while shipments are unloaded, broken down by SKU. counted and in some cases out away in the warehouse for a shipment that the driver received as shipper load and count in non value addded time delay.

  2. 2. John Mullen [ August 15, 2014 @ 07:11AM ]

    The pending Obama bill to compensate drivers for waiting time, loading and unloading, with at least minimum wage is another half assed solution to the problem. Ms Ferro's parting comment to compensate drivers for on duty time is welcome with limited enthusiasm. We would have cheered if it had occured when she began her rule rather than as an exit remark. No word yet on a possible follow up by her successor.
    Years ago the owner of a Chicago based refrigerated carrier warned in an article carried in the Refrigerated Transporter, "We need to reform ourselves before the Government does it for us". His peer group ignored that advice and we entered the era of overregulation.
    That over regulation and the unethical, unsafe operation of entreprenuers who , following the demise of the ICC, brought the industry to it's present status of an undesireable workplace.
    Reform yourselves - Eliminate the mileage method of compensation. Adopt a uniform rate of pay for All on duty and driving time.
    On board logs then become no more than a time card.
    A system which has one rate for driving and another for on duty time opens the door to continued report falsification.
    This measure would not be a "cure all" but in practice it would weed out many of the pariahs now in play.

  3. 3. Matt Chase [ August 15, 2014 @ 10:38AM ]

    When speaking about what improvements the industry needs to make, then sites any figures, such as this article does regarding higher wages, who is it mainly directed to? Drivers? If so then lets see it happen. However there are companies who read this and say to themselves, "No way, we cant afford that increase!" I personally think that this so called driver shortage problem is what companies want. Because it allows for low wages that paid to entry level truckers. They get discouraged for a whole host of reasons and quit. Out the back door but a new driver entering the front door to resume this poultry pay package. Just an opinion I have, but an opinion that has seen how recruiters are drafting students from a private school level. What they promise, and what they deliver leads me to believe that a purposeful revolving door has been implemented on purpose. I follow and track my students who have been placed with the mega transportation companies. And the biggest unresolved issue are the lack of experienced and qualified trainers that the company uses for these new drivers. It is a sad commentary on all levels, quality trainers and a quality pay structure must be resolved quickly!


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