Regulations, Drivers, Truck Capacity Focus of Shipper Meeting
Panelists warn shippers to treat drivers with respect — or risk not having reliable truck service as capacity tightens.
May 2013, TruckingInfo.com - WebXclusive
Driver Pay and Respect
According to a BB&T driver survey, pay was the leading reason most leave their jobs, followed closely by the lack of recognition and respect, at more than 30%, Albrecht reported. He encouraged shippers to take steps to make drivers feel more welcomed.
“As an organization, you’ve got to get across to your people to treat these folks with respect,” Albrecht said.
With regard to driver retention, Albrecht suggested that tiered driver pay, based on meeting performance goals, will mean premium pay for premium drivers.
“Pay for performance is now back in vogue. Ten years ago it went out of vogue for pure pay raises,” he said. “But pay for performance is going to stick because of the regulatory climate, equipment is very expensive and fuel is way up. And EOBRs take some of the subjectivity out of the pay-for-performance programs from the late ‘90s.”
Still Sanderson, who spent several years in the trucking industry, including positions at J. B. Hunt Transport at Schneider National, recalled persistent worries of a driver shortage “Armageddon," a concern that loomed large in 2004 but otherwise has never substantially materialized.
“It’s because the industry has taken smart actions. We’re not sitting still waiting for the shortage to overrun us.”
Capacity Deja Vu?
Indeed, Albrecht posed the question: Is there another 2004 out there?
“By most accounts, 2004-2005 was nirvana for trucking companies, and the ultimate migraine for shippers,” Albrecht said. "Supply was tight, but not because the van sector was booming."
Capacity had been reduced through the confluence of substantial HOS changes, three years of carrier bankruptcies, Bush administration tax cuts and an economy that was doing fairly well. “But the actual trend underneath was that loads were shrinking,” Albrecht said. “These changes were coming on eight, nine, 10 years ago, and they’ve only accelerated as a result of the Great Recession.”
A recurrence of a truck shortage similar to 2004 is possible in 2014, but not likely, Albrecht explained, because most of those underlying factors are not present currently.
More importantly, shippers have taken steps to be prepared when truck capacity becomes extremely tight, with alternatives such as shifting more freight to intermodal or dedicated fleets, expanding the core carrier base and using more brokered loads and 3PL services.
“I’m not convinced it’s going to be as tight as ’04, but it is going to be tighter than what we’ve seen the last couple of years because of hours of service — that’s the one commonality with 2004,” Albrecht said.
Albrecht reported that van loads are 19% below their 2006 peak, the result of an economic downturn and the supply chain alternatives shippers have explored. This is in contrast to flatbed, tank and refrigerated loads, which have recovered ground since the recession while van loads continue to fall.
“Intermodal is having a real impact,” Albrecht said, noting that the truckload market for runs of more than 700 miles is worth about $40 billion. Currently, intermodal is a $14 billion market, but that is expected to grow to $20 billion by the end of decade, if not sooner.
And that gain is coming out of the truckload share, a 15% loss. While domestic intermodal loads have increased for 11 years in a row, van truckloads have contracted in eight of the past 11 years. Domestic container growth has averaged 9.1% annual growth since 2007, compared to GDP growth of about 1.5%, according to Albrecht’s figures.
“East of the Rockies, we think there is tremendous opportunity to convert truckload to intermodal,” Sanderson added.
Sanderson credits improved rail service, compared to the not-so-distant day when a rail load “would get there when it got there” — but the transportation cost savings were significant. Now, the schedules are tighter and the savings are less, though long-haul rail rates are still more than competitive with truckload.
“It’s no longer a big discount for poor service. It’s a smaller discount for truck-like service,” Sanderson said.