Trucking Industry Faces Driver Shortage
BY Matt Quinn
What threatens holiday sales.
A shortage of truck drivers threatens to disrupt freight shipments this holiday season -- and experts predict that small businesses will be hit especially hard. The industry could use 80,000 new drivers right away, says analyst Donald Broughton of A.G. Edwards & Sons in St. Louis, and the shortfall could grow to at least 200,000 if the economy continues to expand over the next few years.
Record demand for trucking services exacerbates the problem. Truckers will move 9.8 billion tons of freight this year, up from 9.1 billion in 2003, Broughton says. The volume of shipments hit historic highs during the summer and is forecast to rise by an additional 5% in the fourth quarter.
And yet, carriers aren't expanding their fleets, largely because they don't have enough drivers to fill their open positions -- let alone any new ones they create. Employee turnover of 100% or more is common in the industry. Many blame the lifestyle: hours spent in traffic and weeks spent away from home. On average, truckers make $43,000 a year.
Already the capacity shortage has driven rates up between 3% and 8%, and that comes on top of fuel surcharges. "Because there are so many shippers going after the carriers," says Chris Brady, president of Commercial Motor Vehicle Consulting, a market analysis firm in Manhasset, N.Y., "carriers won't do any favors for one- or two-time loads. They will turn away business." Firms like just-in-time manufacturers should lock up capacity guarantees now.
MATT QUINN contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.