Truck Driver Shortage Poses Major Threat to Industry

Phil Cohen

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The trucking industry has a very serious problem on their hands. In the past several years, finding and hiring young, new drivers has become increasingly difficult.

Over half of the truck drivers in the United States are 45 or older, as a vast majority of drivers represent the end of the baby boom generation in the work force. The rate at which the Baby Boomer generation is exiting the workforce largely outweighs the rate at which new drivers are entering. The American Trucking Associations has estimated a shortage of between 35,000 and 40,000 drivers in the industry, a staggering amount for any company.

A 2015 survey conducted by the Commercial Carrier Journal found that 57.3% of for-hire carriers marked driver availability as their main concern heading into the new year, an increase of 8% from the previous year. The rapidly changing trucking culture has left smaller trucking companies vulnerable. New drivers are often attracted to larger carriers due to sign-on bonuses and other benefits that smaller companies can’t afford to compete with. In the finals quarter of 2014, small trucking companies saw an increase in turnover rates from 90% to 95% as a result of drivers leaving to larger fleets. They are not alone in their struggles as a devastating 390 companies declared bankruptcy in the first quarter of 2014.

The trucking industry has struggled with the challenge of attracting young drivers. The obvious method to increase employment is to increase the salary that the drivers will make, however many companies cannot afford to do so. Trucking fleets across the country are experimenting with new ways to pay their employees using a variety of incentives, such as sign-on bonuses. Some larger fleets have even increased driver pay more than 10% to recruit and maintain drivers.

The decrease in truckers on the road has not only had a significant impact on the trucking industry, but has overflowed into several others, most prominently the railway industry. Intermodal volume per truck grew a record high 5.2% last year, as shippers sought to stuff each load with as much as they could due to the shortage. Unfortunately it was not enough, and the amount of goods needing to be shipped have not slowed down at all. Shippers have looked to the railway industry as another means of transportation, and rail traffic increased 4.5% as it also reached a record high 28.7 billion carloads and containers. As a result, the average cost for rail transportation increased 6.5% last year.

As our economy continues to get back on its feet and restore order, it is essential for the trucking industry to develop a solution to their driver scarcity. Particularly if they do not intend to decrease the amount of cargo they transport, it will be interesting to see how they manage their competition with the railway industry moving forward.

We understand that driving is no easy task, especially when owner-operators are stuck waiting on slow-paying clients and don’t have the cash flow necessary to accept new loads.Becoming an owner-operator can be a great alternative to working for a company, but being your own boss can be costly. Learn how factoring can help owner-operators succeed in the industry by giving us a call at 855.393.2286

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Phil Cohen

Phil is the owner of PRN Funding and sister company Factor Finders. He has been an authority in the factoring industry for over 20 years, serving on the board of directors for several factoring associations.

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