Trucking Faces Driver Shortages - Higher Wages Projected
If truck driving jobs remain unfilled and freight volume increases continue at their current levels, by this time next year the shortage of full-time driving positions is forecast to reach 300000, equaling the shortage experienced in 2004. Noel Perry, managing director of transport consulting firm FTR Associates in Nashville, IN, says that several new factors are compounding these shortages; recent legislation limiting the number of hours drivers are permitted to work, along with improvements in driver background screening, the results of which are that more drivers are required while the number of eligible drivers is reduced. His prediction is for wages to increase by 30% by 2014 as a consequence of increasing freight volume and a continuing lack of driving positions being filled. This increase will also make up for the reduction in wage costs seen during the recession.
Despite the revenue per mile for dry van shipments (excluding fuel surcharges) up 13% to $1.55 from the low point seen in 2009, the Standard & Poor’s Midcap Trucking Index has so far fallen by 11 percent in 2011. Compare this with Standard & Poor’s S&P 500 Railroads Index which has only seen a fall of 1.6%.
Truckloadrate.com figures put railroad cargo at 39% of the domestic total measured in revenue ton-miles, ahead of truck freight at 29%. With railroads already being cheaper and more efficient than truck freight, increasing diesel costs already have trucking companies at a competitive disadvantage, even before any wage and workforce increases are considered. Jeff Kauffman, analyst at Sterne Agee & Leach Inc. of New York says that the greater speed of truck freight can still give it the edge over rail freight when factors other than pure cost are taken into consideration.
Truck freight volume, seen by many as an indicator of the state of the broader economy, saw an increase in July of 11% compared to the same period during 2010 in data published by Cass Information Systems.
Earlier this week, the American Trucking Associations trade group confirmed that the gains in cargo tonnage so far in 2011 are consistent with a slow economic recovery. That the trucking industry is recovering from the recession is further evidenced by the gap between driver supply and cargo demand.
Truck freight volume is growing at around 4% per year, while the number of truck drivers is growing more slowly; less than 1% per year according to Kauffman.
Figures from the Owner-Operator Independent Driver Association’s spokeswoman, Norita Taylor, indicate that drivers employed by companies and who don’t own their own truck typically earn salaries in the $40k range. Noel Perry from FTR pegs the typical tenure of such drivers at around one year. To properly solve the driver shortage, Perry believes that $40k-$70k wages for novice to experiences OTR drivers need to be adjusted to as much as $60k for novices and $90k for experiences drivers, figures in excess of his 30% prediction. Such increases he deems necessary to make the long periods away from home worth it to new and existing drivers, a major factor influencing the uptake of available truck driving jobs.
Of course, the cost of raising drivers’ rates will correspond to trucking companies raising rates for their customers, and, according to VA-based National Industrial Transportation League, which includes in its membership such large shippers as DuPont Co. and Exxon Mobil Corporation, consumers may be affected by higher prices if increases are substantial.