NASHVILLE -- For truckload carriers, the number one problem is the driver shortage, and there may be a number of factors behind this according to John Larkin, managing director and head of transportation capital markets research at Stilfel, Nicolaus & Co.
Speaking at session on the subject at TMW Systems’ annual user conference here Sept. 22, Larkin said Increasing pay is seen as one way to attract drivers, but Larkin thinks the problem fleets have recruiting and retaining drivers goes beyond pay. Besides, fleets that offer generous pay packages are having just as much trouble keeping drivers as other fleets.
The numbers are staggering: While the driver supply has grown somewhat over recent years, the demand has far outpaced that supply, with the shortage projected to hit 240,000 by 2020. As for pay, Larkin said that for drivers, “the demand is not as price elastic as people think.”
Other factors contributing to the shortage include an aging population, micro management and regulation, and the lifestyle long haul drivers must lead.
Demographics and an aging population is a problem for all industries, not just trucking. The U.S. population is projected to grow at less than half of the current rate of 1.1% in coming years and the size of the core workforce is a declining portion of the population. The “younger generation is not large enough to backfill an aging population,” Larkin said.
And today, “younger people are less likely to be truck drivers” he said, so the core working population is not well suited for trucking. He noted that about two-thirds of Americans now enroll in college as opposed to a much smaller percentage in earlier decades, and the likelihood of someone with a college degree joining the driver ranks is far less than someone with a GED. “We may send too many to college,” he said, and not enough into the blue-collar ranks.
Another demographic problem is that people just out of high school have not developed enough maturity wise to be given the keys to a large truck – their decision-making skills are still lacking. Most trucking companies don’t want drivers younger than 25 years old, but by that age, the motivated, high-quality workers will have already taken more desirable blue-collar jobs.
“There’s a disconnect within that five years from when they graduate high school to when they are ready to drive a truck,” Larkin said.
And then, there are the regulations. In addition to the current crop of regulations covering truck drivers, there are several more in the works. For instance, a rule mandating electronic data recorders is expected to be finalized soon. Other proposed rules would require new forms of drug testing and testing for sleep apnea.
“All of the regulations do one of two things,” Larkin said. “Either reduce the driver pool or reduce the productivity of the drivers currently in the pool.”
The lifestyle long-haul truckers must lead discourages many from entering the profession. Working in the industry is a more “defined process” now, and drivers feel they have a lack of freedom to make their own decisions. Their routes are dictated, resting periods dictated, they are told where to fuel, their speed is controlled and there is constant monitoring. The so-called level of job fulfillment has declined, Larkin said, and there is almost no decision-making left for the driver.
Other lifestyle factors make the job less desirable: drivers endure poor sleeping conditions and are at an increased risk of sleep disorders. The average trucker is more obese than the average American, with more than 50% of drivers obese. There are other health problems; unhealthy diets also mean that 50% or more of drivers have diabetes. The end result: on average, drivers live 16 years less than the average American with a life expectancy of 61 years compared to 77 years for the average American, Larkin said.
And there is a wage gap which had widened over time to about 12% between truck drivers and the average American.
It’s well documented that turnover in the TL segment is close to 100% for most companies while only around 10% for LTL carriers. And of that turnover, only 16% is non-voluntary, with industry growth and retirements accounting for three-fourths of the turnover at 36% and 37% respectively.
What to do?
Are there solutions? Larkin said there probably isn’t one thing companies can do, but suggested that a revised pay scheme might help. The current pay scheme, with drivers being paid by the loaded miles they drive, is good for the more productive drivers, but there are too many factors affecting the hours driers actually drive that are beyond their control.
A fixed salary means the driver knows he is guaranteed a certain amount, but on the negative side is the fact that some drivers won’t perform as well as others.
Other pay schemes have their positives and negatives as well. Hourly pay, for instance, encourages drivers to work more hours but not necessarily work more efficiently.
Perhaps a modified mileage scheme could help, but it is a complex problem, Larkin said.
Fixing the lifestyle would help as well. For instance, provide drivers with some nights in a motel to improve their sleep. Offer a social environment for drivers, a sense of community. Promote healthy lifestyles by encouraging exercise, healthy eating habits and help them quit smoking.
And get drivers home on a regular basis. Larkin said some companies are using relays successfully to get drivers home more regularly, but that can’t work in all instances due to the irregular-route nature of the truckload business.
Better roads and less congestion would relieve some of the frustrations driver face each day. Intermodal can help. But the ultimate solution to the driver problem, Larkin said, may be driverless trucks. Initially, the trucks would still have drivers in the cab, but in a more hands-off capacity.
In conclusion, Larkin noted the problem is complex and will require a number initiatives to solve.