The trucking industry is booming, but can they keep up with current demand?
According to the American Trucking Associations, over the course of a year, 3.4 million heavy-duty trucks move over 10.5 billion tons of freight across the nation, consuming over 38 billion gallons of diesel fuel. Without a doubt, the trucking industry is vital to the U.S. economy.
This January, truck makers got an unexpected surge in Class 8 orders which soon grew to be the second-highest total in recent history. A report from NPR claims that “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.” With preliminary estimates of truck orders of almost 50,000, many are left questioning the origins of this trucking explosion and what they can do meet consumers growing demands.
Several factors have come together in recent months to cause this surge in demand.
Trump Passed Tax Cuts and Jobs Act
Industry experts are claiming recent legislative changes have paved the way for the rise in demand. Specifically, experts believe that the Tax Cuts and Jobs Act, which was signed into law in December of 2017, is the major force allowing for companies to reduce their tax rate. It also permits full expensing of most types of equipment placed into service between September 2017 through December 2022. These legislative changes have caused a surge in the market, leaving more products available for transport than the industry is currently able to meet.
Driver Shortage…or Turnover?
Another huge cause of the trucking shortage is the apparent lack of willing and qualified drivers. With the need so dire, it is now commonplace to see advertisements on the backs and sides of these large vehicles asking for qualified drivers to join their company on the roads. However, an article from USA Today claims that the shortage in drivers during this massive increase in demand for trucking services is due to the poor pay and conditions of the job – equating the issue to driver turnover rather than an actual shortage of drivers.
Driver retainment is low due to long hours away from home, undesirable conditions, lack of privacy, and poor pay. The American Trucking Associations claims that 50,000 freight drivers are needed immediately to alleviate the problems, but who is willing to pay out and improve their conditions?
Electronic Logging Devices (ELD)
The Tax Cuts and Jobs Act was not the only new legislation Trump recently passed that affects the trucking industry. December marked the industry with a new federal safety regulation to keep track of driver’s hours with electronic logging devices. According to a Wall Street Journal report, this caused regular one-day routes to shoot up in price and time due to drivers needing to meet the new regulation. Whereas before, drivers had more flexibility with their time on the road, they now feel monitored and pressured to meet the new requirements that subsequently make their job more difficult.
Surge in Diesel Prices Across the Country
Not even two months into 2018, and we have seen major increases in the price of diesel fuel. The Department of Energy reported the average price of diesel fuel has risen 52.8 cents compared to a year ago. A February article of Transport Topics related that, “The average price of diesel rose 1.6 cents to $3.089 …It marked the fourth consecutive week of average diesel prices above $3”. While this increase is affecting the entire country, it is especially hitting the New England and California areas the most. These increasing fuel prices are adding yet another strain to an industry that is just trying to keep up.
Potential Solutions
With over 70 percent of goods consumed in the United States being moved by trucks, as reported by the American Trucking Association, how can the industry meet demands and alleviate the shortages we are seeing today?
LTX, a freight solutions company, suggests multiple ways to combat the truck driver shortage while adding more diversity to the industry.
Aside from increasing pay for drivers, the company suggests improving driver lifestyle by decreasing time spent on the road. In order to broaden the typical driver demographics and to bring in more applicants, LTX suggests lowering the regulated driving age. This would allow individuals under the age of 21 to drive – a group that has the highest rate of unemployment across the board. Also, the company suggests shifting their focus to target minorities, women, and veterans as drivers. This would add much diversity to a predominately male-dominated industry.
CLP Systems is proactively combatting the effects of the trucking shortage in order to continually better serve our customers and their projects. As a company that is dedicated to providing top quality service, we have begun investing in expanded shipping capabilities in order to meet growing demands. With the start of 2018, CLP Systems has taken multiple steps in order to ensure your project is a success such as: hiring a second packing and shipping shift, hiring a new purchase manager, and hiring a new technology project manager. We believe these new changes will ensure the timeliness and quality of our shipments, thus keeping your project on track.
Sources
Evanoff, Ted. Trucking firms offer up to $8,000 bonus and other deals to lure drives”. USA Today. December 26, 2017. Web. https://www.usatoday.com/story/money/business/2017/12/26/trucking-firms-offer-up-8-000-drivers-ease-shortage/981522001/.
Gilroy, Roger. Class 8 Orders Leap to Second-Highest Level Ever. Transport Topics. February 5, 2018. Web. http://www.ttnews.com/articles/class-8-orders-leap-second-highest-level-ever
Gilroy, Roger. Diesel Rises 1.6 _ to $3.086 a Gallon. Transport Topics. February 5, 2018. Web. http://www.ttnews.com/articles/diesel-rises-16c-3086-gallon.
Raphelson, Samantha. Trucking Industry Struggles With Growing Driver Shortage. NPR. January 9, 2018. Web. https://www.npr.org/2018/01/09/576752327/trucking-industry-struggles-with-growing-driver-shortage.
Reports, Trends, & Statistics. American Trucking Associations. Web. http://www.trucking.org/News_and_Information_Reports_Driver_Shortage.aspx
Smith, Jennifer. A Shortage of Trucks Is Forcing Companies to Cut Shipments or Pay Up. The Wall Street Journal. January 25, 2018. Web. https://www.wsj.com/articles/a-shortage-of-trucks-is-forcing-companies-to-cut-shipments-or-pay-up-1516789800.
What is Causing the Truck Driver Shortage and How Can We Fix It. LTX. 2018. Web. http://ltxsolutions.com/truck-driver-shortage-causes-problems-solutions/.
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https://www.trucks.com/2015/10/30/drivers-ride-high-on-trucking-boom/.
