LAS VEGAS, Nev. — A looming driver shortage, which could prove the “worst we’ve seen” is already manifesting in a significant drop of applicants for driving jobs and enrolments for driving schools, according to executives from three large US fleets.
“We think a lot of drivers have left the industry to go into construction and other sectors and that is going to intensify,” Max Fuller, chairman and CEO of U.S. Express Enterprises said during a panel entitled Repaving Truckload’s Road to Success at the Truckload Carriers Association’s annual conference. Fuller said he has seen a 25% drop in job applications over the past month.
Fuller was joined on the panel by Derek Leathers, president and CEO, Werner Enterprises, and Dan England, chairman of C.R. England. The session was moderated by Lana Batts, co-president of Driver iQ.
Leathers confirmed he has also seen a double digit decrease in applications since last year and noted enrolment in driving schools is also on the decline.
“I think the driver shortage is upon us,” Leathers told the large crowd in attendance adding that he is seeing million-mile drivers throwing up their hands and throwing way the keys.
Leathers said it’s critical for carriers to keep raising with shippers the issue of the driver shortage, and the higher wages necessary to attract newcomers to the industry. The fact that some private fleets are paying 20-30% more than for-hire carriers is a signal that shippers understand the need for better pay, he said.
But England, who has been a member of TCA for 35 years, wondered if there is really anything new about these developments.
“We’ve been having these exact same discussions for all these years. We’ve talked about getting more money to our drivers and I think we’ve largely failed,” he said pointing out that when inflation is taken into account, drivers today may actually be making less than they did in the 1980s.
Fuller countered that unless shippers are willing to accept higher rates, it’s difficult for carriers to raise salary levels.
The impact of pending new Hours of Service regulations will further damage the situation all three agreed. Fuller said older drivers may decide to retire early because they feel the new hours of service, which require more rest and allow less driving time, amount to “harassment” and less pay.
Moderator Batts wondered how carriers plan and manage their operations during times of uncertainty over how hours of service will be dealt with in the future.
“We have a Plan A, Plan B and Plan C,” acknowledged Fuller. “You don’t know which contingency it’s going to be but you have to be ready for it,” Fuller said.
Leathers said he is planning based on the new hours of service legislationbeing ready as of July 1. He believes there is as high as a 70% chance this will happen. All three executives considered as ridiculous the government’s refusal to postpone hours of service legislation until the current court challenge of that legislation has been decided .
“It’s so unreasonable to take that sort of direction,” England said.
Leathers argued it’s illogical to change hours of service without first doing a better job at enforcing the current rules.
Last month we reported that the Federal Motor Carrier Safety Administration (FMCSA) rejected a request from the American Trucking Associations to postpone implementation of the new US hours-of-service rules.
As a result, significant changes will go into effect as scheduled July 1, barring a court ruling to the contrary before then. A US Court will hear arguments against the new rules in March. Annette Sandberg, a former FMCSA administrator and now principal of TransSafe Consulting, said carriers shouldn’t count on a delay or the courts overturning the new rules. Sandberg said carriers should begin training drivers on the implications of the new rules now, so that they’re prepared for the roll-out in July.
If the new law goes into effect, come July 1 drivers in the US will only be able to use the 34-hour reset provision once in a seven-day period, they will have to take off two overnight periods between 1 and 5 a.m. during that reset. In addition drivers will require a 30-minute, off-duty rest break within their first eight hours on-duty, limiting their total on-duty time to 13.5 hours.
Fuller believes the new legislation could cause an 8-10% loss in productivity.
“The more efficient that you are, the more of a hit that you are going to take,” Fuller said.
Leathers’ estimate was about the same but he said he hoped that could be worked down to a 4-5% loss through fine tuning. He explained that it’s somewhat of an unknown at this point whether there is driving time in the system not being properly utilized because drivers do have more time.
Is an hours of service surcharge to cover potential losses an option?
“Clearly the cost has to be passed along,” England argued. “I don’t think it will be as an hours of service surcharge though. It will be another one of those things we will have to be constantly fighting about.”
If there is one positive to the new hours of service legislation it’s that it will be “the final nail in the coffin” for excess capacity, according to Leathers.
“If these (loss of efficiency) numbers are anywhere close to accurate, it will lock up capacity in a hurry,” Leathers said.