Lack of Drivers, Regulations, Impacting Shipping Costs
The trucking industry is a backbone of the economy, especially in a world where online orders are the norm. According to CBS, more than 70% of the goods we consume are carried on the nation's highways. With this type of demand, trucking companies would need to hire roughly 90,000 new truck drivers each year to keep up. However, newly passed federal regulations have further changed the trucking industry that is creating higher costs for shipping products.
Truckers protest that they work in one of the nations most regulated industries, yet earlier this year, the Federal Government passed more regulations with the goal of increasing safety on the roadways. One of the new regulations includes using an electronic logging device, or ELD. The purpose of this device is to electronically monitor how many hours drivers are driving and then sleeping. The federal hours of service rule limit truckers to drive for 11 hours within a 14-hour period, followed by 10 hours of rest. This ELD is supposed to make monitoring that easier and make falsifying the old written logs obsolete.
However, many truckers say these electronic tracking devices don’t provide flexibility in dealing with the realities of the road. Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, states that “Once your workday starts, then 14 hours later, it has to end. It doesn’t take into account delays that you may encounter at a shipper or receiver, or as a result of construction or congestion, or maybe a crash on the road”. Because most truckers are paid by the mile and not the hour, this regulation is hurting their bottom line since it further limits their time to drive. This time limit is also forcing trucking companies to raise their rates to ensure a profit on the loads they are carrying. Not to mention less drive time means longer delivery periods.
Additionally, these regulations are also impacting the number of new drivers coming into the industry. Just as there are issues in finding skilled labor in the trades, the trucking industry is also seeing a scarce amount of new workers. According to an industry analysis by DAT Solutions, just one truck was available for every 12 loads needing to be shipped at the start of 2018, which is the lowest ratio since 2005. Trucking companies are having to charge more for the resources they do have because simple economics tells us that as the demand rises and supply stays constant, the price rises.
Furthermore, over the road truck driving as a career is a tough job. Plain and simple, the trucking life isn’t for everyone. The time away from home, the long days behind the wheel; it’s not everyone’s cup of tea. As Greg Gedenberg, a truck driver states, “It’s a hard life. I mean, I’ve got a 36-inch box that I’m sleeping in, in the back of my truck most nights. In an effort to overcome these obstacles and attract new drivers, trucking companies are starting to focus on giving more home time, as well as higher salaries.
All of these factors have created a perfect storm of increased costs and longer lead times for companies looking to ship materials. Whether it’s steel or cotton, all products and goods are being affected. And the consumer will feel the real impact of these increases as the costs get accounted for and passed on down the supply chain.