Feb 03
Industry Research
Supply Chain
Last week while driving through snowy New York, I hopped onto a mostly empty interstate. With no traffic ahead of me, I cranked up the music (the Zac Brown Band, of course) and enjoyed an open road. It wasn’t until my wife mentioned that she had bought a new side table online that I asked myself: where were all the truck drivers?
Driver Shortages
The American Trucking Association (ATA) has announced that we’re currently experiencing a shortage of more than 80,000 truck drivers. Although the pandemic accelerated this shortage, it was always in the cards. In 2018, the ATA reported to be down 60,800 drivers. I don’t need to tell you that this is bad. All I’ll say is that 72% of America’s freight transport moves by trucks.
What Happened
During the pandemic, the trucking industry faced a recruitment problem. Turnover rates for truck drivers has always been an issue for the industry. This story from 2018 puts churn rates in the mid-90%! But to make matters worse, trucker training centers were forced to close during the pandemic lockdown, making it harder to obtain the class of driver’s license needed and replenish the normal turnover. This raised the pressure on the drivers currently on the job during an already stressful time for the entire supply chain. Increased online orders and low inventories in stores made a perfect storm for a trucking crisis.
On top of this, trucking conditions were not great during the thick of the pandemic. Rest stops closed and normal wait times at warehouses and ports more than doubled as congestion formed. Truck harbor drivers (who get paid by the load) told Business Insider that they’ve seen lines five miles long and waited for eight hours to get into terminals. Today, trucking conditions haven’t seen meaningful improvements to both draw in new truckers and retain current drivers. The problems of working conditions, not the continuing pandemic, are at the heart of the truck driver shortage.
Finding Solutions
In December, the Biden Administration announced a “Trucking Action Plan” outlining strategies to strengthen the trucking industry’s employee retention. Reducing barriers to special licenses, increasing veteran recruitment, and studying working conditions are all action items. Not to mention improving the roads and moving more freight to the rail-lines. Only time will tell if these long-term solutions prove fruitful, but I’m an optimist.
The global supply chain will need to innovate in many respects to recover from its current state. We’ll need to get a lot smarter about purchasing and predicting demand. But we’ll also need more wheels on the road (and rails). And while I don’t especially enjoy inhaling diesel fumes on the interstate, I’ll breathe easier knowing that all that furniture my wife ordered from Overstock will arrive on time.
