DRIVERS WANTED

SONY DSCThe driver shortage has impacted every sector of trucking in every geographic region in the United States. The severity of the situation is showcased by the ubiquity of truck driver want ads on major internet bulletin boards and by the constant stream of commentary in trade publications.

We have engaged in countless conversations with colleagues, customers and industry experts bemoaning the myriad reasons for the driver shortage.   We blame onerous regulatory issues that didn’t exist a decade ago, or road and port congestion, or a diluted work ethic or, of course, the millennial generation seeking immediate satisfaction and gratification.

All of those reasons play into it…but it really boils down to wages.  As has been the case across the American economy, the trucking industry has been plagued with deep-rooted and long-term wage stagnation, but that scenario is changing.

We often hear trucking is a barometer of the American economy since it experiences supply and demand market forces in advance of everyone else.  So, fasten your seat belts.  Driver wages are advancing, and rapidly.  The entire logistics industry needs to be prepared to modify their business models and strategies.   A paradigm shift in trucking wages is underway, and those who are slow to recognize it and react to it will be left behind.

 

DRIVER SHORTAGE LEADING TO PAY HIKES

 

Devine Driver

Here are just a few recent headlines from industry publications on the topic:

Conway Freight Plans $60M LTL Driver Pay Hike

JOC, September 30, 2014

Pay Hike, Rate Increases Help Swift Keep Drivers

JOC, September 30, 2014

Drivers gain from Wage Race as Truckers Turn Away Cargo

Bloomberg, September 29, 2014

What Do Drivers Want? Money, Respect Key Factors in Attracting and Keeping Drivers

CCJ, September 11, 2014

Drayage Driver Shortage Could Threaten Intermodal Growth

JOC, September 9, 2014

Pace of Driver Pay Increases Quickens in Reaction to Tight Capacity, Demand

Transport Topics, September 1, 2014

The Massive Trucker Shortage Could Hit Your Wallet Soon

Fox Business, August 25, 2014

More US Motor Carriers Raise Truck Driver Pay, Bonuses, Incentives

JOC, August 29, 2014

 

 

FEELING THE PINCH?

SONY DSCThe driver exodus brought on by months of terminal inefficiencies in conjunction with the January 2014 California Air Resources Board (CARB) drayage truck retirement deadline has resulted in tight truck capacity on the West Coast.

Add to the fray the advancement of shipments into May and June in an effort to get cargo through West Coast ports prior to the anticipated slowdowns brought about by the labor negotiations, and everyone is feeling the pinch.

More containers have to be moved with fewer drivers. It is increasingly imperative to improve the velocity at marine terminals. The system exists in a delicate balance with everyone doing their part. One hitch, and the whole house of cards tumbles.

Vessels need to arrive on time. Longshore labor needs to be available and productive. Containers and chassis need to be available. Terminal operations need to be efficient. Drivers need to be productive and able to turn multiple times.

THE NAKED TRUTH ABOUT THE DRIVER SHORTAGE

Mike Rowe Help WantedWe have been saying for years there is a severe driver shortage. We certainly feel it in intermodal trucking where drivers are being lured away to fill vacant slots in regional truckload, over-the-road or flatbed work. Terminal operations certainly are not making our driver retention efforts any easier.

No one has made a clearer point of the necessity of truck drivers and qualified diesel mechanics than Mike Rowe. Check out the video here.

THE STATE OF THE NORTHERN CALIFORNIA DRAYAGE MARKET

Fwy w Rolling Hills 016Yesterday, three drivers walked into our office, laid their keys on the desk and quit. They cite the lack of productivity at the marine terminals in Oakland as the reason. They can no longer make a living.

A driver used to be able to consistently make two turns between the Central Valley and Oakland. That is no longer the case. Terminal turn times coupled with abbreviated operating hours have significantly cut into driver productivity and, therefore, earnings.

There was a time in the not-so-distant past when there were eight smaller marine terminals in Oakland and volumes were dispersed more evenly among those terminals. If one terminal experienced congestion, motor carriers could more easily adjust their operations to avoid that terminal on that day. Now there are five terminals, with two taking the lion’s share of the volume. There is no way to avoid the congestion…the lines…the loss of income…the frustration.

We understand the rationale for the recent terminal mergers and closures. Small operations lack the density required to be profitable. However, the result is the financial burden has now shifted to the driver. Such a shift is neither sustainable nor acceptable.

Drivers’ incomes are a factor of their base pay and the number of transactions they conduct in a day. In order to make a living, if the number of transactions decrease, the pay per transaction needs to increase.

With the nationwide shortage of truck drivers, these guys and gals have options. National and regional truckload/LTL/flatbed carriers are more than eager to snap up discontented drayage drivers. Why not? These drivers have experience, good driving records and know their way around the geography. It’s a slam-dunk for them. But, a major setback for the logistics community in Northern California.

We cannot afford to lose more drivers. As a result of the California Air Resources Board (CARB) truck retirement schedules, we experienced a reduction in drayage truck capacity in Oakland of 20-25% in January 2013 and another 20-25% in January 2014. Terminal inefficiencies and reduced hours of operation do not allow for the proverbial “doing more with less.” Quite the contrary, we are doing considerably less with less. Drivers are making considerably less and, as we witnessed yesterday, leaving the industry as a result.

Drivers can no longer be expected to shoulder the costs of inefficiencies and inelasticity in the supply chain. The system, as it currently stands, is broken. Clearly, throwing more drivers into the mix is not going to solve the problem. Paying the drivers more is not going to solve the problem. Improving operations with more gates, more hours, more yard equipment, more grey chassis pools, more man-hours and more money is what is needed to solve the problem.