The industry driver shortage narrative is helping to destroy the truckload market’s economics by attracting more drivers and fleets to our industry. It plays well in truck driving schools and recruiting ads, but it creates more danger than good. By attracting more drivers and fleets into our industry, we are creating more capacity at a time when the market needs less of it.
Trucking companies can have unseated trucks (i.e. not enough drivers to drive the trucks that the carrier owns), which is a driver shortage. But that is the carrier’s problem, not the market’s. There are plenty of carriers that have unseated trucks and it can bankrupt them if it becomes perpetual.
A market can have a capacity shortage, in which the market doesn’t have enough trucks available for dispatch at a moment in time. That is a market problem.
Capacity shortages are good for carriers and drivers alike. Rates go up when there is a shortage of capacity. Carriers, in turn, gain more volume, which encourages them to add trucks. Once the available pool of drivers is dried up for the new trucks, carriers increase wages and incentives to attract drivers to drive for their fleet.
A capacity shortage is what happened in 2018. Driver wages and incentives shot up, as carriers fought aggressively for new drivers. As wages increased, new drivers joined the industry and a number of new fleets also began operations. They were told the shortage is perpetual and they should join the industry. Some new entrants decided to bypass joining a fleet altogether and joined the industry as an owner-operator. The thinking was that if there is a perpetual driver shortage, then carriers will always have pricing power.
Fast forward a year later and the situation is quite different. There is a glut of capacity on the road. Carriers have lost their pricing power. The market is oversupplied. The primary reason – there are too many drivers sitting in trucks available for dispatch. Further, the fact that there are many carriers supportive of efforts to reduce standards for new drivers is counter-intuitive from a supply/demand perspective. It may not be popular to say, but stronger regulations and standards can ultimately result in increased margins and driver pay for incumbent carriers.
The only way to correct the capacity situation is either more freight volume or fewer drivers. Volumes are a function of economic demand, which is largely out of the industry’s control. The only thing the industry can control is the amount of capacity it adds or subtracts, and since drivers are truly the capacity constraint, the industry needs fewer drivers right now.
Certainly, the recent bankruptcies may lower the number of fleets, but it doesn’t mean that drivers end up leaving the industry. They very well may start their own trucking company with a truck bought at their former employer’s bankruptcy auction, or they may go join another fleet that is still in operation.
Total count of tractors from fleets authorized for hire (SONAR:TCFH.USA)
Registered FreightWaves SONAR users can play with this interactive chart by clicking here.
According to the new for-hire tractor count ticker inside of FreightWaves SONAR (TCFH.USA), the for-hire trucking industry has added 26,500 more trucks available for dispatch since November 2018. This works out to a growth of 1.8 percent.
The industry would be better served with fewer drivers. And who could make this happen?
The Federal government.
Safety regulations like hair testing and the drug and alcohol clearinghouse might clean out a large percent of the driver population, which would create a massive capacity shortage. According to the Trucking Alliance, as many as 300,000 of all truck drivers on the road would currently fail a hair test.
Truck drivers that would fail these tests are hired by fleets that don’t have stringent background and underwriting requirements. In an effort to prevent a driver shortage in their fleet, the owners put these drivers behind the wheel, without regard to anyone’s safety, reputation, or risk of criminal negligence if the owner had knowledge that an addict was behind the wheel.
With opioid addiction on the rise around the country, the opportunity to purge it from our industry – while gaining pricing power – is something anyone who operates cleanly should support.
For fleets that have a history of hiring drivers with a drug addiction or alcohol incidents while on duty, a driver shortage would be the least of their concerns.
For everyone else, when carriers, drivers, safety advocates and the general public are aligned, there shouldn’t be a shortage of support.
Brett
Not NOW! Since Trump put taxes on internet sales,trucking fell off 46 0/0! Oct 2018! ELD Mandate ELOG ,THINNED 36 0/0 of the OLD TRUCKERS tho! That was our seasoned professional drivers,no longer driving! Had JUST filled those spots with rookies,when Trump delivered the 5finger death Punch to the industry!(see above). THEY,needed to thin it as robot drivers are HERE NOW! THE FUTURE! NO HAIR TEST NEEDED! IVE GROWN MY HAIR FOR 6 YEARS NOW,WEED IS NOT ILLEGAL! I SMOKED SOME! FAILED JBHUNT TEST!RECENTLY! NOT THIER BUSINESS WHAT I DID WHEN I WASNT APPLYING FOR THIER JOB OVER 90 DAYS AGO! GOT NOTHING TO DO WITH ADDICTION ASSWIPE,WHAT IS THIS? GOVERNMENT TELLING ME WHAT I CAN(T) DO W MY OWN BODY? YES, I INHALED,DOESNT MEAN IM STILL HIGH 5 MONTHS LATER
Phillip
I think the government should mandate a hair folical test to rid the trucking industry of some of these crazy drivers out here that has not respect for the rules of the road. I been driving for 10yrs the the drivers i see drive these trucks like cars, shooting in and out of traffic, unsafe lane changing, speeding in bad weather condition, and so on. Yes a i welcome more stringent drug testing..Maybe that will make drivers more aware of the need to drive safe..
Noble1
Unfortunately most of these “crazy drivers” as you call them , are not on drugs . Those “crazy drivers” are a perfect reflection of the mentality of the masses in society . AND THEY VOTE ! The way they drive is a reflection of how they think . Now you know why the world is so screwed up .
If the masses were smarter they wouldn’t be duped into accepting to be exploited by the 1% .
Do you think drug testing will make a difference in politics ? Those clowns are the one’s to blame for dumbing down the masses . The masses are constantly deceived and the 1%’s cash cow . They don’t want you to be smarter , they want to keep you dumb . That’s why they aren’t really changing nor improving the publics curriculum . Example : They rather replace your vehicles with autonomous self thinking one’s ! They don’t want YOU to think , they want YOU TO OBEY !
In my humble opinion …………..
Michael Sheppard
Craig, you’re going to catch some heat on this article. You know as well as I that our government wants the transportation sector to stay flooded with drivers and trucks to keep the competition up and rates down for the fortune 500+ companies who pay for the political re-elections. It all started back in ’92 when the government started importing foreign drivers and escalated to what we have to deal with now…ugh. Thank goodness for retirement in a couple of years…LOL
Joe McFly
There are most definitely far too many of this “new breed” of drivers on the road! That being said I’m making the best money I’ve made in 20 years of driving, we have EXCELLENT benefits and home time, and extremely safe equipment ! Yet they are constantly looking for more drivers. We mostly haul our own freight. The company is extremely safety oriented, yet they still can’t seem to find enough drivers. I see so many of hear immigrants who are driving clapped out old trucks who are owner operators that more than likely have no business on the road, I’ve seen YouTube videos of kids who are barely 21 years old and can barely speak the language encouraging people to go to the same 3 week trucking school he went to because he’s making what he thinks is great money, the reason you get into this business should never be the money in my opinion! As others have said it’s never been a shortage of drivers it’s always been a shortage of QUALITY DRIVERS
Doug B
Just raise standards and wages. Been driving since 91. Millions of miles accident free. I love OTR, LOVE it BUT… Drive loval for a grocery company per hour (27$) because with my knoledge and experience if I cant be guaranteed 80k plus per year and health insurance I cant justify being gone 300 days plus per year. Do like JB Hunt did in 1996? and raise the per mile rate from .40- .50 per mile to .75 per mile with medical insurance with 5 years experience minimum and guarenteed you will have a bunch of us sidelined drivers that just dont due to compensation. Til then enjoy the throngs of student drivers and 2 year wonders that put your trucks on youtube… Cheap labor doesn’t equal good labor
Steven
Definitely a big pay shortage…
Paul
What’s good for the goose is good for the gander. Should also hair test office personnel.
Alfred
Some of the information is spot on however the issue
Isn’t driver shortage, the issue is shortage of qualified
driver’s, that are professional and have common sense.