The economy and freight may be sluggish right now, but by 2012, the industry will be looking at shortage of 400,000 drivers, according to Eric Starks, president of FTR Associates.

Speaking Friday in a conference call hosted by investor advisory firm Stifel Nicolaus, Starks explained that there are several issues that will contribute to the shortage, including a limit to how fast fleets can actually recruit and hire drivers; regulatory issues that will take some drivers out of the pool; and changes in state laws that will keep drivers of questionable immigration status from getting commercial driver's licenses.

With the economy in what Starks calls a "growth recession" - it's growing, but so sluggishly it still feels like recession for many people -freight growth is sluggish as well. This leads to a lot of uncertainty. But one thing is certain, he said: Trucking companies better be preparing for the worst driver shortage the industry has ever seen.

"We know there's going to be a looming driver shortage," Starks said. "It keeps getting delayed, but we are starting to see some shortages. It's not a matter of if it's going to happen, it's a matter of when it's going to happen, and we think it's going to be mid 2011 and into 2012."

The Pipeline

When the Great Recession severely cut the need to hire drivers, most fleets slashed their recruiting, human resources and training departments. Driving schools closed down. As a result, Starks said, "we expect the industry can hire only about 100,000 drivers into the market each quarter. But what we're going to be looking at is demand for drivers is going to be going up over the next several quarters and is going to outpace that supply line."

"Look at it like a funnel," he explained. "Even if you have a million people that want to come into the industry, you can only physically get 100,000 a quarter. These guys are playing catch-up now. We don't think they can do that in a timely enough fashion to help the industry substantially."

Regulations

On top of the pipeline problem, there is the regulatory issue. The Federal Motor Carrier Safety Administration's new enforcement system, CSA 2010, will result in drivers who appear to be unsafe getting pushed out of the system as carriers refuse to hire them.

Another likely issue is changes to driver hours of service regulations. The FMCSA is expected to release a new hours of service proposal late this month. It is widely expected that the proposal will cut driving time from 11 hours per day down to 10 hours, and implement a longer "reset" period than the current 34. "We believe it's going to affect productivity by 6 percent," Starks said. "Overnight you'll be looking at having to add 150,000 trucks on the road to move the same amount of fright we did the day before."

Starks believes that both these regulatory issues will lead to more drop-and-hook operations, which could mean fleets buying more trailers.

Immigration

The issue of illegal immigrants has led to crackdowns in documentation required to get a commercial driver's license. This will pull a significant number of drivers out of the available labor pool, Starks believes, especially in some areas of the country. This could even have a bigger impact than changes in hours of service rules, Starks said.