Shipping and Logistics
Industry Facing Significant Challenges with Unbalanced Truck to Cargo Availability
Our industry continues to face significant challenges relative to the growing shortage of qualified drivers available within the U.S. trucking portion of the supply chain. A report from the American Trucking Association says more than 70 percent of goods consumed in the U.S. are moved by truck, but the industry needs to hire almost 900,000 more drivers to meet rising demand.
Freight demand has mirrored the strengthening U.S. economy for months. According to an industry analysis by online freight marketplace DAT Solutions, just one truck was available for every 12 loads needing to be shipped at the start of 2018, which represents the most unbalanced market since 2005. However, only a week later, truckstop.com reports that the demand for trucks pushed load-to-truck ratios even higher, including an all-time record-high of 14.7 loads per truck for dry loads.
This uptick in demand has hit the trucking market simultaneously with new federal safety rules, further exacerbating the problem by eliminating some drivers from the availability pool.
Factors contributing to this market volatility include:
- Driver Shortages - This has been an ongoing issue. According to the American Trucking Association (ATA), while the driver shortfall is approaching 50,000 positions for this year, it’s on trend to grow to more than 174,000 by 2026. An aging fleet of drivers is also contributing. The Bureau of Labor Statistics estimates that the average age of a commercial truck driver in the U.S. is 55 years old - about 10 years older than the average age across other comparable industries. As those retirements are taking place, there is an unbalanced number of new entrants into the industry.
- Increased Government Regulations - The Dec. 18 implementation of the federal regulation requires truckers to use electronic logging devices (ELD) that monitor drivers’ hours behind the wheel. The rule is meant to reduce accidents stemming from driver fatigue by increasing compliance with existing limits on driving time. Despite the advanced deadline, as many as 1 million of the nation’s 3.5 million truckers have yet to prepare for the new rule, adversely impacting options for driver and carrier capacity.
- Increased Cost - Freight demand strengthened in recent months as manufacturing activity expanded. Retailers and manufacturers are paying the steepest prices in years to keep their goods moving. The cost to hire the most common type of big rig shot up to $2.40 per mile, climbing 9 cents a mile from November, according to Truckstop.com. That’s a 43-cent increase from December 2016 and the highest per-mile monthly average since August 2014.
Despite these industry-wide challenges, Crowley continues its commitment to partnership with our core carriers to mitigate further cost increases, while maintaining high levels of service and safety. We have completed the installation of Electronic Logging Devices with our fleet. We are adding other ELD units as drivers return to service from repairs, vacation, etc. Our inland transportation department has been working closely with our trucking agents and drivers to support the day to day operation and technical aspects of the ELD system. We are seeing daily improvement in the utilization as drivers become accustomed to the technology and ELD system. We also remain committed to increasing the velocity of your supply chain and are exploring additional options including expansion of our carrier capacity network to offset these ongoing challenges to our industry.Archive