After attending the annual TCA convention in Vegas last week, one very common theme could be wrapped up in one word — unavailability. The obvious unavailable resource would be our driver force. Many carriers are investing more in recruiting costs and higher training costs yet are still barely making a dent in their shortage of drivers.
While this phenomenon has been a huge focus for our carriers over the past two to three years, it has made its way into the mainstream press today. The federal government can aid in reducing these driver headwinds by eliminating the effort to install AB5 on the truckload for-hire carriers, and curtailing efforts to force vaccinations on truck drivers. A byproduct of the overall increase in driver compensation across most carriers we track has reduced the number of hours and days that a driver needs to work to earn a needed income. While this is a positive and needed benefit for our essential drivers, it will add to the capacity crunch we see today with less availability of driver hours to drive. The compounding effect of fewer drivers and less available time to drive has reduced the amount of driving supply we have in the market today.
The unavailability of workers through the economy, and especially in the supply chain, is becoming chronic. The American economy depends on the supply chain remaining strong and, when store shelves become bare, it is obvious that the lack of driver availability is having a negative impact. The unavailability of workers has also impacted the equipment section of a carrier’s balance sheet. Shortage of trucks and trailers, and parts for trucks and trailers, have added costs in downtime and excessive repairs for the older trucks that they are keeping past their strategic trade-out period.
Worker shortages at manufacturers, warehouses, and service facilities have added to the challenge of keeping these drivers on the road. The lead indicators from the business of trucking are showing a marked trend toward inflation. As noted before in my columns, inflation started to show up months ago, and has just recently caught the eye of our economic pundits. The result for the carriers I follow will be unavailability of cash flow. While it is obvious that the carrier top lines are rising, the variable operating costs and the sunk underlying costs of cashflow will add constraints to the carriers’ costs going forward. Shippers need to consider not extending payment terms during this period, but instead tightening them up to be closer matched to the carrier needs. At last check, 80% of the carrier’s bills are due and payable in eight days, so payment terms exceeding that period will have to be addressed as inflation and interest rates start becoming part of the norm.
The one overwhelming challenge of unavailability will also show up in our non-driver associates supporting the drivers on the road. It seems obvious that the 88 million millennials are not flocking to the transportation industry. This industry operates basically 365 days a year and 24 hours a day. Obviously, that is in direct conflict with a person’s work-life balance challenges and other opportunities in this economy. Once again, I wish the federal government would focus upon the millions of jobs we need filled today versus the constant rhetoric about developing new high-paying jobs. The trucking industry already has great paying jobs, training available, job security, excellent benefits, and career path growth, we need these young people to think about trucking as a very beneficial career.
The challenge of unavailability is here now and will remain a challenge for the foreseeable. The market will have to modulate the revenue swings, and the carriers will have to adapt and address these many cost increases to the durability of their business.