The Ongoing Truck Driver Shortage in the US: Impacts and Adaptations

Introduction: The Roots of the Truck Driver Shortage

The United States has been grappling with a truck driver shortage for decades. However, this issue was significantly exacerbated in December 2017 with the introduction of the Electronic Logging Device (ELD) mandate. This regulation, which required drivers to electronically record their activities, resulted in a reduction in productivity, affecting the availability of already scarce resources.

Prior to its implementation, the ELD mandate had already caused apprehension within the industry. While proponents argued that it would enhance road safety, opponents believed that the cons would outweigh the pros. One of the primary concerns was the impact it would have on transportation and logistics. The question wasn't whether there would be damages, but rather the extent of the damage to these sectors.

As many predicted, the US trucking industry faced a severe shortage of drivers in early 2018 as a result of this mandate. The shortage became so acute that some transportation companies had to turn down bookings. Now, more than a year since the mandate became mandatory, we're left wondering: How has the industry coped with this situation?

The Ripple Effect: How the Driver Shortage Impacted the Entire Industry

In early 2018, immediately after the ELD became mandatory, the capacity for ground transportation in the United States plummeted. By mid-year, transport rates had escalated to record highs. Meanwhile, the industry was experiencing a turbulent period, filled with abrupt price changes, delays, congestions, and other complications.

Even as the major players in the industry began to adjust to the ELD regulations, the strain on supply chains did not dissipate. As a consequence of this change, the sector appeared to have become vulnerable to changes and unable to recover from them.

Jeffrey L. Meyer, head of transportation for the Nestle Purina Petcare group, noted, "We have lost some of our ability to recover from unforeseen events, such as delays, technical breakdowns, or congestions, especially in East Coast ports, where the latter are happening very often."

While the situation may have improved since then, we are still far from where the industry would like to be. Congestions, delays, and higher overall transport costs continue to cause problems. For last-minute shipments or those experiencing last-minute changes, the challenges are even more pronounced.

The New Normal: Adapting to Limited Flexibility

In a scenario where most carriers have their schedules filled with bookings made several days in advance, unforeseen changes translate into delays or additional costs, typically for two reasons:

• Shipments end up accumulating storage charges or extra occupancy and demurrage costs.
• Shippers find themselves obligated to pay higher rates to ensure that the carrier will handle the shipment under these conditions.

Jose de la Roche, Sales Director at Ship with GLT, advises, "It's necessary to check rates and transit times multiple times before committing to a shipment, add extra days to transit, and plan accordingly. It's also important not to send documentation on the same day or the day before the cut-off. If you want to ensure that equipment is available, you must allow for extra time."

Rail Transport: A Viable Alternative?

Amidst this shortage of ground transportation, some companies have considered rail transport as an alternative that could reduce costs. However, this decision is not viable for all shippers.

Rail rates have increased as a result of the new situation. Recently, the rail transport company Union Pacific announced changes to its free storage days policy and charges as a result of the truck driver shortage and longer dwell times at terminals. These changes, which took effect on April 1, 2019, also include Sundays as a billable day.

While rail transport costs may remain lower for now, there's no way to predict how long they will stay that way. Moreover, this mode of transport lacks the flexibility provided by point-to-point ground transportation.

Klaus Lysdal, VP of operations at iContainers, points out, "Rail transport is only an option for large shippers. The scale at which railway companies operate makes it only possible to work with them if you move a high volume of goods."

The Economic Burden Reaches the End Consumer

Considering that the trucking industry is responsible for 70% of transport, the ongoing shortage crisis is bound to produce a chain reaction throughout the logistics and maritime transport industries. And finally, it has reached the consumer.

The lack of drivers means that, at any given time, less cargo is being transported. For exporters, this translates into blocked orders and an added difficulty that prevents them from selling more.

As things stand, a huge number of US companies - from Amazon to Coca-Cola and including Nestlé - have reported logistical bottlenecks resulting from the shortage of carriers and higher transport costs.

As a result, manufacturers such as General Mills, Tyson Foods, and Procter & Gamble have indicated that they will pass on this increase in costs to consumers through price hikes.

Tom Hayes, CEO of Tyson Foods, stated, "Product prices must reflect the true costs because we cannot subsidize ever-increasing transportation costs."

Incentives Fall Short

2018 saw increases in average trucker salaries, as the crisis hit when they were at their lowest point. According to the National Transportation Institute, on average, truck driver wages have increased by about 10%.

Following this trend, trucking companies have begun offering more attractive benefits packages to their drivers. But these measures are not the only incentives that the trucking industry has implemented in a desperate attempt to attract new drivers.

There was even consideration of reducing the minimum legal age to drive commercial vehicles from 21 to 18.

Jose de la Roche, sales director at Ship with GLT, explains, "Trucking companies are going through very difficult times. It's very complicated for them to hire new drivers due to industry conditions. Long-distance truckers can spend two or three weeks away from home. And regulations are also making it tough. Companies can't just put a driver on the road; they need to have experience before insurance companies approve them."

Despite all these efforts, the results are not as positive as one might hope. And this is undoubtedly a cause for concern.

According to recent data from the American Trucking Associations, there is currently a shortage of more than 50,000 drivers. This figure is expected to double to 100,000 in three years and reach 175,000 by 2026.

Taking into account drivers who will retire from the profession, due to retirement and other reasons, the ATA estimates that no less than 900,000 drivers will need to be hired over the next decade to alleviate the shortage situation.

More Adaptation Than Solution

With no clear solution on the horizon, both trucking companies and drivers have had to adjust to the limitations and make the most of them.

So far, their pace of adaptation to new challenges is much faster than the speed at which the problem seems to be resolving itself.

Klaus Lysdal notes, "Drivers have improved their ability to manage and work according to new regulations. Shippers have also realized that more advance planning is needed to ensure everything happens smoothly. Now, there's simply very little room for last-minute solutions."

But the situation is causing real headaches for US exporters. And it's worth noting that shipping companies, rail companies, and terminals haven't changed their way of working to manage the shortage.

In this situation, there is an increasingly urgent need for them to better understand the time slots they have to work with and to plan and adapt as necessary. Otherwise, these added difficulties to their supply chains could affect their competitiveness in international markets.

How FreightAmigo Can Help Navigate These Challenges

At FreightAmigo, we understand the complexities that the ongoing truck driver shortage brings to the logistics industry. Our Digital Logistics Platform is designed to help freight forwarders and businesses adapt to these challenging market conditions. Here's how we can support you:

1. Optimized Route Planning

Our AI-powered platform can help you plan the most efficient routes, taking into account the current limitations in trucking capacity. This can help minimize delays and optimize the use of available drivers.

2. Real-Time Tracking

With our advanced tracking capabilities, you can monitor your shipments in real-time. This transparency allows for better planning and the ability to quickly adapt to any unforeseen circumstances.

3. Multi-Modal Transportation Options

We offer a variety of transportation modes, including sea, air, and rail. This flexibility allows you to choose the most cost-effective and efficient option for your specific needs, especially when trucking capacity is limited.

4. Data-Driven Insights

Our platform provides valuable insights based on big data analytics. These insights can help you make informed decisions about shipping times, routes, and modes of transportation to navigate the challenges posed by the driver shortage.

5. Streamlined Documentation

With our automated document management system, you can reduce paperwork and streamline processes. This efficiency is crucial in an environment where every minute counts due to limited trucking capacity.

6. Network of Reliable Partners

We have cultivated a network of reliable logistics partners. This network can provide alternative solutions when trucking options are limited, ensuring your goods reach their destination on time.

7. Cost Management

Our platform allows for easy comparison of different shipping options, helping you manage costs effectively in a market where trucking rates have increased due to the driver shortage.

8. Customs Clearance Support

We offer customs clearance services to help expedite your shipments, which is particularly valuable when dealing with potential delays caused by the trucking shortage.

9. 24/7 Expert Support

Our team of logistics experts is available round the clock to assist you with any challenges or questions you may have, providing personalized solutions to navigate the complex logistics landscape.

By leveraging FreightAmigo's Digital Logistics Platform, businesses can better adapt to the challenges posed by the truck driver shortage. Our comprehensive suite of tools and services is designed to provide flexibility, efficiency, and cost-effectiveness in your logistics operations, even in these challenging times.

Conclusion: Adapting to a New Reality

The truck driver shortage in the United States continues to pose significant challenges for the logistics industry. From increased costs and delays to the need for more advanced planning, businesses across the supply chain are feeling the impact. While various incentives and alternatives have been proposed, a comprehensive solution remains elusive.

In this new reality, adaptation has become key. Companies are learning to work within the constraints, improving their planning processes, and exploring alternative transportation methods. However, the ripple effects of this shortage are far-reaching, affecting not just the logistics industry but also manufacturers and ultimately, consumers.

As we move forward, it's clear that the industry needs to continue evolving. This may involve embracing new technologies, rethinking traditional models of operation, and perhaps most importantly, finding ways to make truck driving a more attractive career option for the next generation of workers.

In these challenging times, leveraging Digital Logistics Platforms like FreightAmigo can provide the flexibility and efficiency needed to navigate the complexities of the current logistics landscape. By offering comprehensive solutions that address the multifaceted challenges posed by the driver shortage, we aim to support businesses in maintaining their competitiveness and ensuring smooth operations despite the ongoing challenges.

The truck driver shortage is not a problem that will be solved overnight, but with continued adaptation, innovation, and collaboration across the industry, we can work towards more sustainable solutions for the future of logistics.