Driver Shortage Getting Worse as Freight Grows, Officials Say

This story appears in the Nov. 7 print edition of Transport Topics.

Trucking’s driver shortage is getting worse, as freight demand grows modestly and the qualified driver corps dwindles, a trend that’s making drivers more desirable than equipment, industry officials said.

A broad range of fleets, freight brokers and driver training officials are seeing that recent trend, based on comments to Transport Topics last week and recent industry reports.

“Drivers are the thing these days,” said Tom Kretsinger Jr., president of American Central Transport, Liberty, Mo.

“The shortage has gotten worse in the last couple of months. We’re not short of drivers because companies are trying to grow. The driver population has shrunk.”

Celadon Group Inc., Indianapolis, helped its dwindling driver supply last month by adding 90 drivers who came along when it purchased more than 700 pieces of equipment from Frozen Food Express.

“Drivers now, no pun intended, are the driving force” in acquisitions, Celadon President Paul Will said on an Oct. 26 conference call. Obtaining drivers outranked potential new business from Frozen Food as that fleet exited the dry freight business, he said.

Celadon boosted its seated tractor count back to about 2,620, around the level reported in the quarter ending June 30, Will said. While keeping drivers, Celadon plans to sell the equipment for about what it paid, he said.

Other fleets also are likely to focus on adding drivers through asset purchases, said Bob Costello, chief economist at American Trucking Associations, saying

that approach was popular in 2005 at the peak of the last driver shortage cycle.

Costello also said the shortage is more acute because of recent freight volume growth and could tighten if demand increases further. ATA’s year-over-year tonnage rose about 5% in the third quarter.

“I expect the driver shortage to [get worse] in the fourth quarter,” said Noel Perry, managing director at consultant FTR Associates, Nashville, Ind., whose latest driver supply report gauged the shortage at 125,000 in the third quarter. “We are almost certainly going to see an increase.”

Perry cited two factors that could make the shortage worse, without estimating how much it could grow. One would be the economy strengthening beyond the recent 2.5% growth rate reported in third quarter gross domestic product. The other would occur if the Federal Motor Carrier Safety Administration reduces allowable driving hours, which would require more drivers to move the same amount of freight.

Robert Voltmann, president of the Transportation Intermediaries Association, told TT “if you call any member [of TIA], you’ll hear the shortage is getting worse. There is more competition for fewer drivers.”

It’s not just an issue of quantity.

“The driver shortage today is as much or more of a quality problem than a quantity problem,” Costello told TT.  “Fleets are getting applicants; it is just that they are not meeting their higher hiring standards.”

Kretsinger said it’s taking at least 20 applicants to hire a single driver. Last month, Maverick USA CEO Steve Williams said only about 2% of initial leads were hired when the flatbed carrier added 666 drivers.

Other carriers that have driver-related issues are Heartland Express, Knight Transportation and USA Truck.

The first two of these fleets, which were profitable, noted the scarcity of drivers. USA Truck, which reported a $4.3 million loss, said 10% of its fleet of more than 2,200 trucks don’t have drivers.

“The driver shortage has gotten worse this year,” said Jim Morse, CEO at brokerage RFX and carrier Refrigerated Food Express, Avon, Mass.

“We have downsized our trucking company because we don’t hire anyone with a questionable safety record,” Morse, saying the fleet has been cut from 100 to 50 tractors. “We have more business than we can handle.”

“The driving population is getting older and government regulations are getting stronger,” Morse told TT. “The average age of drivers is 50 or 51. As they are getting old and leaving the business, there are no young people getting in. Parents want their kids to be doctors and lawyers, not truck drivers.”

Extended unemployment payments that discourage drivers from re-entering the industry also are contributing to the shortage, Kretsinger and Celadon CEO Stephen Russell said.

Small carriers are especially at risk, Morse added, because they don’t have the assets to start driving schools like larger fleets do.

Driver demand is particularly acute as oil-field exploration surges, said Robert McClanahan, who heads an Oklahoma driver training program (see related article, p. 35).

“I’ve even heard that the driver shortage is threatening the future of some companies, even though freight is better,” Kretsinger added, without disclosing names. “Their fleets can only shrink so far. Some are doing substantial reductions in force because they lack drivers.”