The truck driver shortage has been widely publicized lately as the domestic supply chain still grapples with the post-COVID fallout. As demand for freight services continues to mount, the supply side is having difficulty meeting the needs of shippers. This imbalance has left CPG brands feeling the pinch as more volume enters the freight market than can be reasonably transported.
However, a driver shortage is nothing new to the freight market. Industry experts claim that the issue has been persistent in trucking for decades. But the impact of the global pandemic brought the topic directly into the public consciousness as consumers have begun to face out-of-stocks and other supply chain challenges more regularly.
As the pandemic winds down, will the truck driver shortage continue to affect the industry? Let’s explore some of the reasons for the demand imbalance and how it is impacting CPG shippers.
Truck Driver Shortage Exacerbated by COVID-19 Demand
Trucking is a massive industry responsible for hauling the vast majority of goods that make it to the end consumer. Nearly every consumer good rides truck at some point in its journey from manufacturer to destination.
According to the American Trucking Associations (ATA), 72.5% of all freight in the US was transported by the trucking industry. That equates to close to 12 billion tons of goods. As a result, the industry is valued at a little over $790 billion.
Despite its size, the industry runs notoriously lean. Very few carriers employ excess drivers, and resultantly, disruption can drastically impact the market. With the increased volume brought on by COVID-19, industry forces struggled to keep up.
Demand far exceeded supply during the second half of 2020, and we continue to see similar issues. Basic economics dictates that this misalignment will have an upward price pressure, primarily the reason for rate increases that hit freight in 2020. Currently, trucking is over 50,000 drivers short of demand.
Recently, the ATA reported that the industry would need to hire approximately 1.1 million new drivers in the next decade to offset strain. That equates to 110,000 drivers per year. And as the current workforce continues to age, the median age for a trucker continues to climb.
Why Is There a Truck Driver Shortage?
Labor shortages have been a hot-button issue as of late, but this has been looming for quite some time in trucking. Fewer drivers are entering the profession, which is mainly responsible for the shortage. There are several principal reasons for the issue. Let’s explore a few further in-depth.
An Aging Demographic
The industry is reliant on an increasingly aging segment of the workforce. According to the Bureau of Labor Statistics, the average age of a commercial truck driver in the US is 55 years old, suggesting that retiring drivers are not replenished quickly enough. Many believe that because the federal government requires all truck drivers to be 21 or older, the industry fails to attract younger drivers who graduate high school and begin other professions, never giving trucking a second thought. This age requirement makes it difficult to accommodate an increasingly greater demand for freight services from a growing population.
Work/Life Balance for Long-Haul Drivers
The lifestyle of a truck driver is not as appealing to new generations as previous ones. Rookie drivers often receive difficult long-haul routes that keep them on the road for days and even weeks at a time. The job commands long hours away from home, which can be difficult, dangerous, and stressful. These factors have contributed to fewer participants in the labor force choosing trucking as a profession.
Dangerous Occupation
Extended hours are not the only cause of driver stress. The job is inherently a dangerous one. According to The Journal of Commerce, truck driving is the eighth most dangerous job in the US. The fatality rate is six times greater than the country’s average, which can narrow its appeal to new applicants.
Compensation Struggles
Despite its danger and required hours, pay for truck drivers is lagging. The recent boom has raised wages, but not enough to compete with warehousing or other general labor positions. The annual turnover rate for drivers is near 95%, according to recent reports. Almost all drivers leave their job after a year, making it difficult and costly for carriers to fill their seats.
Regulatory Environment
Regulations in recent years have made trucking less appealing to the workforce. Things like hours of service and drug-testing programs have cleared out their fair shares of drivers. Roughly 55,000 drivers have been barred from the industry since new substance-use laws went into effect in 2020.
What the Truck Driver Shortage Means for CPG Shippers
There are current efforts underway to decrease the driver shortage; however, because it is a complex situation with many causes, there are no one-size-fits-all solutions. As demand for trucking services continues to grow, companies will need to address the issue. Autonomous solutions may one day resolve some of the challenges, but those are more aspirational than practical at this time.
Current conditions may persist for quite some time, and as CPG industry experts forecast more of the same on the demand side, shippers can expect to deal with higher rates. Brands may eventually see some capacity relief to close the year. Currently, demand for driver school has increased substantially, as has truck production, which will allow carriers to hire and seat more drivers.
Until then, it will benefit shippers to work with a dedicated logistics partner to ensure conditions do not jeopardize profitability. A true freight partner can help your organization accurately forecast costs and find more favorable pricing through consolidation or mode optimization practices.
To see the difference a true logistics partner can make, reach out to Zipline Logistics today.
