Brokers Feel Pinch of Labor Shortage

NASHVILLE -- Brokers and third-party logistics providers are feeling the labor squeeze along with the trucking industry, according to Robert Voltmann, president and CEO of the Transportation Intermediaries Association.

Speaking at a session on 3PL at TMW Systems’ annual Transforum user conference here Sept. 23, Voltman said the capacity crunch due to the driver shortage would make it more difficult for brokers and third-party logistics providers going forward. And, he said, these companies are also having trouble finding good employees. When he asked how many of the brokers in the audience were having difficulty finding workers, virtually every one raised their hand.

Noting that the 3PL industry had grown to a $160 billion per year industry, Voltmann said there were “tons of employment opportunities” within the 3PL segment but that, “it seems personnel is one of the big problems in the industry – finding people.”

He noted that the transportation industry has changed dramatically over recent years and that brokers and 3PLs “have turned what was a cost center for shippers into a profitable business.” Voltmann said that most shippers invest in their products and not in the technologies that move that product, while trucking companies, brokers and other logistics providers have made the investment in technology to drive cost out of the supply chain. He likened what transportation companies do to the back side of a dam – it does all the work but does so out of sight.

Recent trends that will help transportation grow, according to Voltmann, include the renaissance in gas and oil production due to the advent of fracking technologies. As a result, foreign firms are locating manufacturing facilities in the U.S. to take advantage of the relatively cheap energy this boom has provided, and the goods those manufacturers produce will need trucks to get to market.

In another trend, retailers and others are beginning to put distribution centers closer to their customers to meet the demands for same-day delivery.

Along with the driver shortage, infrastructure is also a problem with capacity – if trucks can’t travel at normal speeds because the highways are deteriorated or congested, that hurts capacity. “The only answer right now is you have to raise the gas tax,” he said. Voltmann said he believed that if the current gas tax had been indexed to inflation when passed in 1992, “we would be in better shape,” but that the current tax is “inadequate to meet the cost of pouring concrete.” He admitted it was unlikely a fuel tax could pass the current Congress.

Agreeing with others who had spoken at the conference, Voltmann said the regulatory burden was also constraining trucking capacity. New hours-of-service rules have had a much greater impact on the industry than anticipated, he said. And a number of proposed rules, such as the electronic logging device mandate and another possible rule to raise insurance requirements, could cause problems for the industry.

He also spoke about the changes for brokers that were included in the MAP 21 transportation bill passed two years ago. Voltmann said that bill changed rules back to the way they had been – simple rules that said brokers were brokers and carriers were carriers.

But he said the new rules were necessary because some carriers were taking loads and then flipping them to someone else without accepting the financial and other responsibilities required of brokers. “That’s OK if in that flipping, you are still responsible for it” and responsible for the guy delivering the load.

Those changes to the brokerage rules have been controversial, with small brokerage firms and some trucking companies saying the increased bonds MAP 21 required were forcing them out of business. But Voltmann argued that the lines between carrier and broker should be clear: “If you accept a load as a carrier, you have a responsibility,” he said. “If you want to put it on someone else’s truck and don’t pick it up first, you are a broker. If you put it on your own truck, you are a motor carrier.”