While the truck driver shortage has been an ongoing problem for the better part of a decade, it is still having a large impact on all aspects of the transportation industry and was only accelerated by the COVID-19 pandemic. The ensuing downturn in the economy caused a number of smaller fleets to lay off drivers during the early days of the pandemic. According to data from the Federal Motor Carrier Safety Administration (FMCSA) and Tucker Company Worldwide, small carriers lost 150,172 drivers during the first half of 2020, when US freight shipments dropped by 25%. Additionally, with extended unemployment benefits, some drivers found that they could stay home and stay safe without losing significant income, all while a number of retirement-age drivers decided to hang up their keys to avoid exposure to COVID-19 on the road. Also, the CDL Drug & Alcohol Clearinghouse cut loose 40,000 drivers due to failed drug test results, which accounted for about 1% of the truck-driving workforce.
Historically, the less-than-truckload (LTL) sector fared better amid the driver shortage because of the seemingly more favorable routes – LTL drivers don’t typically do the over-the-road, long-haul trucking like full truckload drivers are asked to incur on a regular basis, and the typical truck-driver lifestyle of spending a week or more on the road is not attractive to younger generations. Additionally, private and LTL fleets often have higher salary rates than full truckload, over-the-road and the for-hire sector.
However, as the shortage worsens each year and with the pandemic causing a recession, it is affecting LTL too.
What is the Effect on LTL?
Rate increases: With capacity tight – because of the driver shortage among other issues – LTL is a desirable shipping model. LTL companies are seeing a boost in freight, resulting in tight capacity. Couple that with the driver shortage, which is causing companies to increase salary rates, and rates are increasing across the industry. However, there is some hope that the salary increases and the need for LTL drivers will draw people to the industry, especially as other industries are slower to recover from the pandemic-caused recession.
A renewed emphasis on metrics and relationships. To meet demand with less than the desired driver workforce, LTL carriers have to rely more heavily on data. They need to utilize advanced routing and scheduling systems to ensure they have drivers where they are needed when they are needed. The data will also help companies forecast demand, providing some predictability on freight for shippers and carriers.
Consumer demand. With more LTL carriers answering the call to deliver for ecommerce retailers, that means they must also meet consumers’ demands for lightning-fast shipping. The proliferation of two-day shipping as the norm is forcing some LTL carriers to expand delivery services to typically off hours – including nights and weekends, meaning drivers will be expected to work overtime.
While the trucking industry is looking at ways to end the driver shortage, experts expect it to continue for the foreseeable future. By building relationships with LTL carriers and using data to gain an advantage, shippers can prepare for the future and manage their expected freight costs.