Opinion: Driver Shortages — Influences, Solutions

By Joe White

Chief Executive Officer

CostDown Consulting

This Opinion piece appears in the Nov. 29 print edition of Transport Topics. Click here to subscribe today.

Most credible articles written about a looming driver shortage discuss three major influences for the upcoming labor crisis: aging driver demographics, CSA and an expected U.S. Department of Transportation-mandated reduction in driving hours. There are, however, three other major influences that are less frequently discussed but equally significant.

The first is just-in-time delivery. Over the previous two decades, manufacturers have adopted the Japanese concept of just-in-time inventories. As a result, pickup-and-delivery windows have been shrinking constantly as shippers dictate restrictive shipping/receiving schedules that complement their specific operations and cost structure.

The effect on driver productivity at trucking companies has been severe and can best be explained through an example:

Driver A has to make a delivery 60 miles north of Atlanta between 10 a.m. and 1 p.m., a three-hour window. His pickup point is south of Atlanta, so he is forced either to drive through congested metro traffic to make the assigned time or to arrive the previous night and wait until 10 a.m.

Meanwhile, another customer is awaiting a pickup that is 45 miles east of Atlanta and scheduled between 8 a.m. and 11 a.m. Because Driver A can’t accommodate both schedules, Driver B has to be sent in to handle the other load. Had the pickup-and-delivery windows been expanded to six hours each, Driver A could have handled both loads.

The second influence is congestion. As we saw in the case of Driver A, congestion forces truck drivers to lose productivity either through delays waiting in traffic or delays waiting for delivery because of an early arrival time designed to avoid congestion.

The negative effect of congestion on driver labor is best illustrated by a recent DOT study that calculated U.S. traffic congestion accounted for 226 million hours of trucking delays in 2006. That’s the equivalent of 104,000 full-time drivers — almost equal to the 111,000 drivers that Global Insight, a market intelligence firm, predicted would be lost by 2014 because of freight increases and an aging driver workforce.

Fuel cost is the third major influence. Many trucking companies have reduced speed-governor settings over the past five years to conserve fuel consumption and costs.

A typical example of reduction would be to 62 mph from 70 mph — an 11% reduction in top speed. There are no existing studies that calculate the hours of productivity lost from forced speed reductions, but with an estimated 3.5 million drivers on the road, 1.3 million of whom are longhaul drivers, the effect is definitely significant.

Regardless of the influence, the next driver shortage is going to be severe. According to Global Insight, during our last shortage (2005-2007), we were 20,000 drivers short, and driver turnover rates topped 130% for large truckload carriers. Industry analysts now predict driver shortages will reach at least 10 times that level in the near future. What effect a 200,000-plus driver shortage will have on turnover remains to be seen.

There are many reasons for driver turnover, but perhaps the biggest one is that driving job opportunities are virtually limitless during a shortage. Drivers literally can quit their current employer and start with a new trucking company the following week. Therefore, if any aspect of their current job is deemed unfavorable — such as too many delays, not enough home time and dislike of unloading freight — they can easily find a different opportunity.

Shippers generally understand that higher rates will be an outcome of the shortage. Perhaps what they don’t understand is that as capacity tightens, trucking executives will analyze new freight opportunities primarily on the basis of the effect those lanes will have on driver productivity and retention. Restricted pickup or delivery windows? Drivers have to unload freight? Frequent delays? One-way hauls with no backhaul potential? Sorry; but I don’t need that business.

So, what can we do about it? From a trucking company’s perspective, two major activities are required:

• Develop a comprehensive and effective driver retention program — an initiative that surprisingly few trucking companies have accomplished.

• Analyze freight and operations networks for all obstacles to driver productivity and retention.

The second activity, network analysis, includes both internal issues (dispatch procedures, terminal load exchanges, shop schedules, etc.) and external issues (customer obstacles). Resolve the internal issues and meet with your customers to remove external concerns.

From a shipper’s perspective, begin by embracing the fact that the driver shortage will be serious and unprecedented, and eventually switch your entire focus from transportation spending to transportation assurance.

Meet with your carriers to find out how you can modify your operations to accommodate increased capacity and become a “shipper of choice.” Be prepared to make significant changes, including, just to name a few:

• Expanding pickup-and-delivery windows.

• Adding staff to unload trailers.

• Adding trailers to accommodate drop-and-hook operations.

• Eliminating driver delays.

• Providing your carrier base the opportunity to meet with each other to discuss potential lane exchanges that improve their respective freight networks.

Becoming a shipper of choice will be the top critical success factor for logistics departments and third-party logistics providers. During this next driver shortage, trucking companies will have far more freight opportunities than capacity, and rates will be high across the board. That means the most important decisions made by trucking companies will be deciding on which lanes they contract for. Those decisions will favor traffic lanes and shippers that provide the most flexibility and support for driver productivity and retention.

CostDown Consulting, Grayson, Ga., provides driver retention, productivity and manager training services to trucking companies.