Supply & Demand: The Need for Driver Centrism

The year 2020 has brought into sharp focus the unsolved and often revisited challenge of finding, hiring, and keeping professional truck drivers.  It has revitalized debates over driver pay, working hours, and the impact of shippers and receivers amid a year-over-year shortage of trucking employees. It’s time to recognize that yesterday’s solutions will no longer be effective.

The year 2020 saw an annualized shortage of truck drivers, based on data from the US Bureau of Labor Statistics (BLS). Truck transportation employment did increase through years end by 68,300 jobs from its April low point.  The number of for-hire trucking employees was still 38,400 lower than the previous year.

The year 2020 became the first year since the 2008–09 recession when the number of truck drivers dropped year over year, though by a much more modest figure than the nearly 100,000 lost at that time.

Is it the pay?

Most Transportation professionals will tell you that payment can only fix things for the short term.  Carriers have always tackled driver shortage challenges first by “throwing money” at them.

Many carriers utilized this tactic over the last two decades.   As an example, in the late 1990s, J.B Hunt increased pay for a one-year driver from 25 cents to 37 cents per mile, a resounding 48% increase, and offered more time at home in an effort to reduce high driver turnover. It positively impacted the short-term issue greatly, but 20 plus years later, the driver problem remains.

Many carriers started raising wages again in late 2020.  Solving the shortage this time will take more than pay and additional time at home. It will take a more efficient approach to trucking that makes the job of driving easier and maximizes driver earnings and time on the road.

Can the Industry add the thousands of drivers it needs to sustain the growth likely to occur over the next decade?  Probably not.  Can it become more efficient, effective, at recruitment, and retention?  It truly must.  

Things can always be “patched up” to protect the Industry against volatile change.  But, to heal and create real long-term change, a paradigm shift must emerge.  Thinking differently always precedes method and process.  Redefining what it really means to be a driver is necessary.  How our Industry adopts a Driver Centric Supply Chain philosophy will lead the way.

This means innovative recruitment and retention protocols.  It will take connectivity.  Not just from automated and Autonomous implementations, but also from managing, understanding, and using the vast stores of historical and predictive data available in ways not yet envisioned.

Is it the Drive Time?

Drivers want to Drive.   The need to increase Drive time, or more specifically efficient use of available driver hours has an important impact on the number of drivers available to the Industry.

Research conducted by MIT Freight Lab shows truck drivers are on the road an average of 6.5 hours a day out of 11 available hours. “The average has moved closer to 7 hours in recent studies, so there’s been some improvement.  Considering the potential efficiency gains, this is still a woeful number.

Productivity competes with and can be impeded by circumstances and processes entirely outside a driver’s control.  Shipper and Receiver operational systems greatly impact the potential to improve this area.   

Appointment windows set and required by receivers, such as big-box retailers, are tendered to truckers and are increasingly specific, yet receivers often detain drivers beyond the generally accepted two-hour limit. That means drivers must arrive at receivers at exact times but then, often wait hours to be unloaded.  More flexibility in this process alone could create a double-digit impact on the percentage of hours of actual drive time.

This kind of flexibility must be a “two-way street” of course.  Those allowing for more flexibility must benefit in some way, otherwise, they would simply be negatively impacting their own efficiencies in deference to the carrier’s needs.  

There is a specific need to strike a balance.  Efficiencies designed to increase “drive time” are like creating more drivers out of thin air, reducing the need to hire, and supporting a significantly more engaged workforce.   Additionally, there is a measurable positive impact to the shipper or receiver that helped to create this efficiency through available driver and truck capacity and potentially lower unit pricing.

Gaining just minutes for truck drivers makes a difference, as lost time over the course of a week adds up quickly in driver duty status ELDs. In 2019, MIT estimated an additional 12 minutes per day on the road per driver would end the driver shortage.  Hours of Service restrictions, Bridge Laws, road speed averages, quality Infrastructure, as well as better planned routes, and synchronized Pickups and deliveries are all important to the process.  Each provides a significant impact and need to be managed against the vital need for Safety and Security for both professional driver and the public at large.

Is it the Economics?

Supply and Demand.  Simple economics really.  If Supply cannot meet demand, then the prices will climb.  That increase may be as simple as the cost of a shipping transaction between two parties.  It may mean cost increases in recruiting, training and retaining a new generation of drivers.  It may mean the rise of expensive new technologies into an industry prematurely.  It could also mean the predictable deterioration of a few links in a complicated and elongated Supply Chain that undergirds our national way of life.

There are many things that affect the Supply & Demand curve for professional drivers. Transportation is an Industry that both benefits and is harmed by trickle-down, infrastructural, and institutional economic effects.  There are considerable ramifications for domestic transportation from International tariff arrangements, state and federal regulations, enforcement agencies, governmental oversight, and publicly shared transit spaces. 

Transportation is also impacted by mercurial elements.  Opposing industry labor needs, pay and benefits alterations, technological advancements, career fatigue, federal stimulus, and general industry complexity have all contributed to the shortage challenges we see today.

From an economic perspective, we must overcome real and perceived obstacles to increase supply.  As long as favorable alternatives exist for professional drivers, shortages will continue to occur.  Unless, of course, the alternative isn’t as attractive.  Drivers make these calculations all the time.  The Transportation Industry needs to help them make their calculations and decide that driving is the best opportunity available. 

Conclusion

There is plenty of data today that avocates a more nuanced view of Transportation segments to truly understand where the real and perceived labor shortages occur in the market. Long Haul Truckload segments for instance, have huge turn-over challenges as compared to Less Than Truckload providers and local cartage entities. (ATA surveys between 1995 and 2017 of Trucking companies described large firm long haul TL turn-over rates at 94% on average as compared to 12% for LTL firms). This is an incredible gap and deserves further scrutiny.

The occupation of truck driving is often portrayed by the industry and in the popular press as beset with persistent “labor shortages.  Some economists believe that this labor market as compared to other workforces with similar human capital requirements, has been consistently “tight”, not short, since about 2003.  Others argue that it’s more about “unseated” trucks then the ratio of drivers to shipments available.

No matter the nature, or the gradation of analysis, it seems clear that old solutions have not altered the challenges significantly or lessened the debate.  Change is needed.  

A shift in thinking and valuing a driving career is the answer.  As illustrated earlier, throwing money at the problem is a short-term solution.  Evaluating the career of being a professional driver in a new way by pulling some of the complexities away and simplifying the transactional nature of shipping and receiving would be a good start.  

Ultimately, a paradigm shift toward Driver-centric thinking is the next step to be taken.   It will move us toward fortifying an important and often under-valued part of the Transportation Industry.  Autonomy will eventually step into the breach in some fashion.  The questions remain on how, when and to what degree that will occur.  But, until then, the professional transportation driver is a key element to maintaining a healthy supply chain.