Surviving The Good Times
A driver shortage, escalating fuel costs, unaffordable insurance, upcoming emissions regs all point to more interesting times ahead.
Deborah Whistler
Editor
Happy days are here again. Freight is up. As a matter of fact, there is more freight than there are trucks available to haul it. That's a good thing, isn't it?
The industry is finally coming out of one of the worst economic downturns trucking has ever faced. As the general economy recovers, truckers have benefitted. Having more demand than supply is helping carriers stick to their guns on rates. It's also allowed fleets to charge for detention when drivers are left hanging at the shipper's dock waiting to load or unload.
The capacity crunch hasn't been caused by lack of trucks. It's qualified drivers that are in short supply. And that's a problem that's only going to get worse.
Speakers at a recent Freight Transportation Capacity Summit claim the trucking industry is banging its head against a ceiling - that the need for drivers is growing at about three times the rate of the labor pool. And driver pay hasn't kept up with other industries such as construction and manufacturing, where trucking competes for employees.
The driver shortage recently received national media attention. There are some 40,000 truck driver jobs going begging, according to a recent article in Time magazine that explored the driver drought with Bill Zollars, chairman and CEO of Yellow Roadway. Zollars pointed out that with driver salaries averaging $70,000 annually with benefits, union carriers such as Yellow Roadway have no problem finding drivers. The fact that they get drivers home most every night is also a plus for union fleets.
While union carriers may be at the top of the driver food chain, they employ only about 100,000, compared to several million drivers working for non-union companies.
It's clear the industry is going to have to come up with creative ways to woo employees from other industries to truck driving careers. The most likely carrot will be cash. Driver pay has been inching up recently, but non-union truckload pay packages will need to be comparable to those offered by union carriers to make truckload driving more attractive.
Truck rates will need to increase significantly. And that appears to be the strategy many carriers are employing through this capacity crunch. In the past, fleets were quick to add trucks to meet demand. This time, operators are holding back on growing their fleets, opting to improve profit margins through better pricing first.
Instead of asking shippers how much they'll pay, truckers are telling shippers how much they charge to haul a load profitably. It's about time.
But there are plenty of other challenges facing truckers in 2005 that make this upturn unique.
"The toolbox of the 1990s isn't going to be enough for the capacity challenge of the 2000s," said Schneider President and CEO Christopher Lofgren. "We can't achieve productivity enhancements fast enough to overcome higher costs."
Higher costs will come in the way of escalating fuel prices, unaffordable insurance, and the fast-approaching tightening of emissions regulations that will add additional costs to equipment.
Heavy Duty Trucking will examine all aspects of the capacity crunch in an ongoing series, "Surviving The Good Times," which begins in this issue (see story page 30).
A common practice in the past was to buy up another carrier to increase your driver ranks, but there can be fishhooks in that strategy. In February, we'll provide a guide to successful mergers and acquisitions.
Other features in this series will delve into driver turnover and recruiting issues - making fuel surcharges stick, dealing with toll roads, and other hot topics to help you do business better.
Also in 2005, HDT will offer readers a regular feature department, "Driver Compensation," which will explore various pay and benefit programs in depth.
We will also continue our monthly "Emissions Authority" department to help readers stay abreast of emissions-related issues.
It's our goal to help you survive the good times and make 2005 a Happy New Year for all of us in trucking.
E-mail Deb at dwhistler@truckinginfo.com
