At this year’s TIA 2018 conference—the only conference focused exclusively on transportation intermediaries, or 3PLs—one point of focus has become the center of attention: capacity. The industry is in a crunch some are calling “unprecedented.” At the same time, the transportation and logistics industry sees market cycles swinging back and forth pendulum-like historically. Sometimes it pulls toward driver retention, at others it pushes back to customer retention.
Damon Langley of TMW has observed these trends closely for a decade. He’s also as a 27-year veteran of transportation and logistics, working as an analyst for carriers, as well as having 3PL responsibilities returning value to customers. While things have been tightening for some time now, we’ve not seen a crunch such as what we’re seeing in 2018.
“The good news is we picked up 19,000 drivers last year,” says Langley, speaking at one of the conference’s Learning Centers. “The bad news is we’re still about 50,000 short.”
Often the pendulum swings one way or another depending on what we emphasize, Langley explains. Lately, there’s been a lot of talk about increasing driver pay. Langley seems to suggest that this is likely another pendulum swing. However, he then goes on to explain a few conditions of driver pay such as it currently stands.
“It should already be higher,” he says. “If driver pay had been going up over the past several years with inflation it would be much higher. Driving is a grueling, difficult job. $100,000 per year would not be an unrealistic number,” he says.
“60 cents per mile just might become the new normal. Expect a 15-20% rate increase in the next 18 months,” Langley says. “It wouldn’t be surprising.”
Naturally, the costs have to be absorbed somewhere, and the rise in rates could be felt across the supply chain and, in the end, at the consumer level.
“Most drivers stop after 90 days,” says Langley. “If you can get them past that, you can usually get them to six months. If you can get them to six months, you can usually get them to one year. If you can get them to one year, you can often get them to two years. If you can get them to two years, you can usually get them for the long haul. But the bottom line is about how we onboard truckers.”
While rates are expected to continue trending up in today’s market, the issue Langley seeks to tackle is how to stop the reactionary pendulum swing, if such a thing is possible. For him, the bottom line is about building a relationship with the drivers, which is all about the onboarding process.
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