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Driver Shortage A 'Primary Concern' to 3PLs & Shippers

September 28, 2015

By David Cullen

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Image via: 3plstudy.com
Image via: 3plstudy.com

Even as the entire logistics industry must deal with an “unprecedented” labor deficit, “the driver shortage remains a primary concern” for third-party logistics providers and the shippers they serve, per the 2016 Third-Party Logistics (3PL) Study.

The results were released in San Diego on Sept. 28 at  a conference of the Council of Supply Chain Management Professionals..

Sponsored by Penske Logistics, the 22th annual report is based on responses from more than 260 shippers and logistics-service providers based in North America, Europe, the Asia-Pacific region and Latin America as well as a survey of the CEOs of 30 of the world's largest 3PLs.

It found that over 80 percent of the firms surveyed were profitable in 2014. North America and Asia-Pacific CEOs forecasted three-year revenue growth averages for their companies of 7.86 percent and 11.50 percent, respectively, while European CEOs forecasted 5.33 percent growth over the same period.

The report extensively details numerous challenge facing 3PLs, including tightening capacity as well as the impact of mergers and acquisitions, increasing regulations and “industry innovations” that are “altering competition, 3PL service offerings and shipper-3PL relationships.”

But it is the truck driver shortage that is clearly seen as the key factor driving the freight capacity crunch in the U.S.

“Within the U.S., 70% of freight tonnage is moved on a truck, and without drivers, that freight is likely to stand still,” they state. “The American Trucking Associations estimates a driver shortage of 35,000 to 40,000 in 2015, and that number jumps to 240,000 in 2020. Traditional driver recruiting became obsolete almost overnight with the trucking industry scrambling to find solutions or perhaps pursue the best recruiting method: a retainer strategy."

What’s more, tightened capacity is seen as “altering shippers’ ability to move loads as well as how these shippers interact with their third-party logistics providers.” The authors contend that “the need for shippers to find alternate methods and providers is apparent.”

The report points out that “almost 37% of the demand for drivers is to substitute the aging drivers, and the average age of a truck driver today is 55 years old or more. Even those now entering the industry are older than those entering in the past.”

As for solutions to the driver and overall logistics labor shortage, the authors suggest a number of strategies that could be deployed.

“To meet the growing labor needs, companies will likely develop built-in succession or talent pipeline programs, identifying opportunities for high-potential workers and creating structured paths for advancement. Training programs will help employers develop their existing talent pool, and there may be an increased number of partnerships between providers and driver schools or other industry groups. In Europe, the supply chain industry has focused on high school graduates as potential ‘captains of country roads,’ and launched employment campaigns to reach younger workers.”

The report also expects that cross-training will “play a greater role within the workforce as will workforce agility in which employers focus on hiring employees who are able to learn and adapt to shifting needs. Agility— a mindset and a behavior in which businesses and employees embrace unfamiliar situations—will allow companies to address the labor shortage and drive growth in new situations.”

 The upshot of both tightened capacity and the increased consolidation of logistics-service providers is “fewer partners for 3PLs and increased prices,” according to the report. “As a result, 44 percent of survey respondents reported that they have enhanced relationships to guarantee shipping lanes and on-time shipments and 40 percent have increased rates. Among shippers, 29 percent said assets have not been available to move shipments when needed. Similarly, 29 percent have engaged with a larger number of 3PLs to get access to capacity.”

In addition, 3PLs are using technology and data to aid shippers in selecting the right shipment modes to maximize efficiency and reduce costs. Per the report, 60 percent of the respondents are using technology to increase visibility within orders, shipments and inventory; 40 percent are using technology for planning within transportation management; and 48 percent are using it for scheduling within transportation management.

“Last year, the logistics industry experienced one if its best years in many years and 2015 is on track to be a good year as well,” said Marc Althen, President of Penske Logistics, in a statement on the report’s release.

“The 3PL industry continues to deliver value, savings and efficiencies by collaborating closely with customers and adjusting to rapidly changing economic conditions, business challenges such as capacity and talent shortages, as well as consumer online shopping needs that demand new and agile supply chain and fulfillment models,” he added.

Check out HDT's Ongoing Driver Shortage Coverage

HDT's Driver Shortage page includes up-to-date, in-depth articles, analysis and news about how the trucking industry is handling this difficult crisis. 

Comments

  1. 1. Cliff Downing [ September 29, 2015 @ 04:18AM ]

    The logistics folks shouldn't get too worried. There really is no driver shortage, and no appreciable evidence of one coming. As with any other market, speculators would have driven up the price demand for drivers if they were seeing a potential shortfall in availability of drivers. Not happening. A lot of noise about driver shortage from folks, but with no appreciable evidence that it will materialize. Based on existing driver compensation which has not kept up with inflation and no significant change in delays at shipper/receivers, and other factors, one would be hard pressed to show that any driver shortage is close to a reality. Until we start to see something more substantive during annual "driver appreciation" weeks than just a two for one candy bar special at a truck stop, there is little cause for alarm.

  2. 2. Kenny [ September 29, 2015 @ 04:21AM ]

    Again there is a pay shortage not a driver shortage. I see large logistics companies in Columbus Oh offering $18 an hr with no paid benifets. That is cheap don't do it. A truck driver is an operator with many hassles in doing his or her job, plus throw in manual labor. My friend is a backhoe operator and makes $28 an hr and has a lot less responsibility. As I tell all my friends kids run as fast as you can from this industry unless you go can with the absolute best. Companies who pay low wages are losers and that will never change.

  3. 3. GG [ September 29, 2015 @ 05:14AM ]

    The truck driving world is so difficult as it is, to those politicians that sit behind a desk and think of what other rule or law to impose on the trucking industry, keep on doing what your doing and the results will get werst!!!! We deal with enough BS so people will just walk away and find some thing else to do!!!

  4. 4. Sherri Garner Brumbaugh [ September 29, 2015 @ 06:38AM ]

    I find it almost verbose that shippers and 3PL's continue to talk about this problem but are unwilling to help do anything to solve the problem. I challenge anyone of them to spend one week in truck with a driver and see what is like to show up for a scheduled appointment only to be told to "get in line, we will get to you when we get to you". Then hours later, get a driver unloaded and his log hours expired to be told to get off their property! My drivers experience no restroom facilities at shipping and receiving sites, dogs are treated better! This is a 3 prong problem and one prong, the carriers, are doing their best to pay a driver for the hours and days away from their families. Until our shipping community and 3PL's step up and provide the other 2 prongs needed, we will not fix the problem!

  5. 5. JL [ September 29, 2015 @ 07:32AM ]

    Based on the rates being offered by 3PL companies, I'd day they aren't that concerned about a driver shortage. Rates on full flatbed loads at $.90 per mile? even $1.10 per mile? the rates were higher than tnat in the 90's. I've also had two 3PL companies tell me they aren't accepting new carriers -one didn't have time to deal with a set up packet, the other stated that we were an "outside carrier" and they weren't accepting outside carriers for the lane I called about. So when they start crying about capacity - I start thinking my husband is right. They're telling their customers that capacity is tight, so they can charge more, while telling carriers they aren't taking new trucks. In other words, 3PL's were so profitable in 2014 in spite of the "shortage" because they were working both ends of the system - taking advantage of us both!

  6. 6. oana cotor [ September 29, 2015 @ 07:34AM ]

    I offer 50 cents a mile for loads out of Chicago to California/ Washington and I cannot find drivers. 60 cents for team. Anybody interested ?

  7. 7. AP [ September 29, 2015 @ 12:08PM ]

    JL you are right on point, 3PL were still profitable and just like you said they're charging shippers more but paying us carrier same or less, of course they are profitable. They are ripping off small carriers and that's a fact. Then they come with lame excuses like oh fuel prices are down and they shave off our rates in half compared to last year. Yes I would even tell my enemy to run from this industry and yes they will have real driver shortage, it's just gonna take couple more years. If they cared so much about drivers they would show more respect if and not treat them like nothing. I know not all drivers are great but come on, I've been places where they look at you as if you were less of a human being just because you're a driver.

  8. 8. Linwood Windsor [ September 29, 2015 @ 05:34PM ]

    If the local paper is a clue. The sunday ads were 3 - 4 columns long, local and national firms for driver jobs. today I may count 3- 4 ads with the 2-5 year experience. So are the schools producing licensed drivers with no place to go to get the experience

  9. 9. Bronco [ October 03, 2015 @ 06:44PM ]

    Well i would like to add that 3Pl people are making the fortune of of the drivers and small carriers by paying enormously low rates and making them compete which one is going to get the load by being cheapest,so when i hear that there is shortage of the drivers in trucking industry,i am personally taking it at as bad joke,because you cant say you are missing the drivers in one hand and on
    the other there is always more carriers/drivers vs loads.So only way i'm thinking they need more drivers is to pay as even less by making as fight for each cheap freight,one more thing those stories about paying truckers less because of the low fuel prices ha ha just shows how their ignorance or stupidity do not have any boundaries ,cause if it does they would know that it takes whole lot more to run a truck or trucking company then just fuel.(for example; skills,safety,enormous effort,permitting,licensing,maintenance,dot compliance,weather,traffic,and i could go on and on.

  10. 10. ken [ October 19, 2015 @ 10:10AM ]

    What about the lease-puchase programs the companies are offering. Are they fair to the operator? I think more people would be satisfied, "driving" If they could have the opportunity to make a living and control their future.

 

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