The Upside of COVID-19 Pandemic-Induced Truck Driver Shortages

  • The Upside of COVID-19 Pandemic-Induced Truck Driver Shortages

    The Upside of COVID-19 Pandemic-Induced Truck Driver Shortages

    Truck Driver Shortage

    The shortage of truck drivers is not a new problem. For example, over the last four years an annual member survey carried out by the American Transportation Research Institute has ranked truck driver shortages as the industry’s top concern.

    There are many reasons why a long-term solution to driver scarcities has yet to be found. However, in common with many long-standing national issues, the Covid-19 pandemic’s fallout could catalyze efforts to eradicate truck driver shortages. By making the problem worse, the pandemic has highlighted its broader impact as well as potential solutions.

    “Traditional” Reasons for Shortages

    Freight carriers, shippers, and various researchers have lamented the mismatch between truck driver supply and demand for decades. The underlying causes are well known and include the following:

    • Unfavorable demographics. America’s commercial driver workforce is aging. The US Bureau of Labor Statistics estimated the average age of a commercial truck driver in the US in 2019 was 55 years old.
    • Lifestyle a deterrent. Over-the-road truck drivers typically spend two to three weeks on the road followed by a couple of days at home before returning to their cabs. Furthermore, many drivers work long hours as documented by Dr. Michael Belzer of Wayne State University in his book Sweatshops on Wheels. Such long stretches away from family and friends are common for long-haul truckers, reducing the attractiveness of the profession. By many accounts, this drawback is the main factor in the industry’s churn of almost 100%.
    • Licensing laws another hurdle. The current minimum age for obtaining a commercial driver’s license is 21 years ol. At that age, many young people have already set their sights on other professions, thus reducing the number of people entering truck driver schools.
    • Anomalous drug tests. At the beginning of 2020, the Federal Motor Carrier Safety Administration launched a drug and alcohol national database as part of an effort to combat drug misuse. However, the program caused anomalies that make life more complicated for many drivers. For instance, a truck driver who fails a drug test in one state can find it difficult to get hired in another state. Half the database entries are for the use of marijuana, which is legal in many states but illicit at the Federal level.
    • Earning restrictions. My colleague Dr. David Correll, Co-Director of the MIT FreightLab, used actual data from electronic logging devices on trucks to estimate that drivers spend only 6.5 hours out of the legally available 11 hours actually driving. This severe restriction is typically caused by the time required to load and unload cargo and waiting for a slot at a destination. Limiting driving hours in this way reduces drivers’ income potential because a large component of their pay is mileage-based.
    • Lack of respect. On top of this disregard for their time, many drivers feel disrespected at freight pick-up and drop-off locations. They are frequently prohibited from entering shippers’ and consignees’ buildings and using the restrooms in these facilities. Drivers describe being treated at distribution centers with disdain rather than as important vendors. This disrespect reduces the stature of the profession.

    The Pandemic Effect

    The Covid-19 pandemic has made it even more difficult to recruit and retain truck drivers. Again, there are a number of factors at work. These factors derive from the closure of parts of the economy during the height of the pandemic and the recovery from it. The pandemic has accentuated the problem to a point where it appears that driver shortages will persist for years.

    Here are some examples of these pandemic-related causes.

    • Closed schools. Many truck-driving schools closed during the pandemic. Even as they began to open up during the recovery phase, distancing requirements kept the number of student drivers low. In addition, driving schools charge $3,000–$7,000, which is a barrier for many young learners. Given the time it takes to obtain a commercial driver’s license, and as more drivers retire from the industry’s aging workforce, the shortage of new entrants to the profession is exacerbating the driver deficit.
    • Decline in support infrastructure. Driving a long-haul rig during the pandemic is risky because drivers interact with multiple shippers and consignees. Moreover, many truck stops along America’s highways were shuttered by the pandemic, depriving drivers of amenities such as coffee shops, bathrooms, and shower facilities. These issues are visible to prospective recruits. Truck drivers are active on social media, and chatter about pandemic-related problems may have decreased the desire of new drivers to enter the profession.
    • Increased demand. Demand for trucking capacity increased during 2021, further stretching the supply of drivers. DAT Solutions (a company that operates load boards for the spot market, where shipper post loads they need moved and truckers post trucks available to move the cargo) analyzed the demand for truck space from April 2020 to April 2021. It found that shippers’ requests for moving loads increased by 577 percent, while postings of trucks available to move loads were down 17 percent. The huge increase pertains to the rapid increase in economic activity at the end of the pandemic. Another telling statistic is that the average spot market rate for standard tractor-trailer (“van”) moves increased from April 2020 to April 2021 by 65 percent.
    • E-commerce exacerbates imbalances. The pandemic introduced many new consumers to e-commerce, accelerating the growth of online shopping. Increased order volumes pushed up the demand for trucking services, which is the only mode of transportation that can support the higher service levels offered by e-retailers. Rising demand from online commerce widened the gap between driver supply and demand.
    • Construction a magnet for recruits. Many of the people who are attracted to driving trucks are also attracted to jobs in the construction industry. Traditionally, pay rates in construction are comparable, but workers do not spend as much time away from home as they do when driving long-haul trucks. The building boom during the economic recovery of 2021 raised pay for construction workers, making the industry an even more attractive option for many would-be truck drivers. Moreover, this trend is likely to continue; the Biden administration’s push to invest in rebuilding America’s infrastructure is likely to give another boost to compensation rates in construction.

    Possible Solutions to the Driver Shortage

    The above factors suggest that the future of truck driver recruitment and retention is bleak. However, there are ways to reduce the worker supply/demand imbalance and put the industry’s driver workforce on a firmer footing.

    • Show some respect. Without truck drivers, supermarket shelves would be empty. This was painfully evident during the early days of the pandemic as consumers resorted to panic buying. Truckers are professionals who do a difficult job to keep the American economy stocked and running. During the pandemic, they were called upon to perform this role at significant peril to their health. Recognizing the critical role of truck drivers may go a long way towards raising the stature of the profession.
    • More equitable pay. One solution is to adjust the structure of driver payments to include the entire time they work. This includes hours driving, hours loading/unloading, hours waiting at a shipper location, etc. Such a change would likely remove a large part of the frustration associated with driving a truck and the need for long hours on the road. As a side benefit, fairer pay rate structures may enhance safety.
    • The power of pay. An increase in pay would likely dissuade many potential drivers from taking jobs in other industries. This is particularly relevant for fleet drivers who receive guaranteed minimum weekly pay. Many companies have recognized the importance of paying rates commensurate with the demands of the job and are increasing drivers’ pay. Note, however, that many drivers still prefer more time at home over more pay, and once they make “enough”, stop driving for the month.
    • More revenue-earning hours. Even without a pay increase, shippers and carriers can make a concerted effort to increase the efficiency of truck drivers by increasing the number of hours they actually drive rather than waiting to perform other tasks for which they are not paid. In fact, my colleague Dr. David Correll, mentioned above, estimates that increasing the available productive time for drivers by 12 minutes a day can solve the driver shortage problem.
    • Apprenticeship model. In order to get 18- to 20-year-olds interested in the driving profession before they make other career choices, the American Trucking Association is asking Congress to approve an apprenticeship model for this age group.
    • Automation could be the answer. In the long term, autonomous trucks may alleviate the shortage problem. However, estimates of when autonomous trucks will roam US highways vary. TuSimple, the leader in autonomous trucking technology, plans to ship self-driving trucks nationwide by 2024. Drivers will still be needed for the first and last mile, but the nature of the driving job will be very different.

    A Payoff from the Pandemic?

    While freight industry professionals are acutely aware of how truck driver shortages disrupt supply chains and the underlying reasons for this perennial problem, consumers are largely oblivious to these challenges. But as the pandemic has shown, consumers become much more curious about how supply chains work when products are in short supply.

    Perhaps the increased awareness of the importance of supply chains engendered by Covid-19 will, by default, finally bring truck drivers the recognition — and compensation — they deserve.

    By Yossi Sheffi at SupplyChain247

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