There was a bit of a reprieve in the ongoing trucker shortage in 2019. It won’t last.
James Burg, president of James Burg Trucking Company, and Jim Schauf, vice president, metals and construction for Norfolk Southern, addressed the challenges faced by the trucking and railroad industries, and how those challenges will affect the steel supply chain, at the August Steel Market Update conference.
In trucking, though the tight market eased this year, the factors that have been contributing to the constriction remain in play. The average age of a trucker is 49, seven years older than the average American worker. Women represent 40 percent of the U.S. workforce, but a mere 5-6 percent of the driver population. Industries such as construction and manufacturing, the two segments of the economy the trucking community competes with for talent, offer better pay and a more attractive lifestyle.
“And the ability to main drivers is worsening,” Burg said. “The cost to recruit and train a driver is $20,000. Five years ago it was $5,000.”
Despite this, the industry is expected to need to increase its pool of drivers by 6 percent from 2016 to 2026.
For drivers, in addition to the hours spent away from home, other factors that have contributed to the industry’s declining appeal is the electronic logging device mandate, which went into effect at the end of 2017. A close second is a surprising one: the lack of adequate parking. Truck stops can be expensive, and are rife with accidents given the close quarters. And rest areas lack basic amenities.
Additionally, the cost of a new unit has been moving up dramatically; up to $160,000 today. This despite, as Burg said, no improvement in reliability.
For owners, finding drivers is not the only personnel challenge. Qualified mechanics are becoming more difficult to locate, and the challenge will grow in coming years, as technicians will have to be increasingly computer savvy.
Insurance costs are also on the rise, particularly for new drivers.
There is at least one positive sign for the trucking industry. The Hours of Service regulations, which have been a key factor in the tight market, have been loosed somewhat in the last two years, with more flexibility on breaks and an expansion of the radius from 150 to 100 miles for ELD exemption.
Burg credits the administration for the change there, and for making conditions less troublesome for the industry. “Regulators are easier to work with now. It’s a lot easier to run a company than it has been in the past.”
One area that won’t provide any near-time solution to the industry’s issues is the implementation of autonomous vehicles. Burg estimates the industry is 20-25 years away from any kind of significant deployment of autonomous trucks.
Among the issues is the need to digitally map four million miles of roadway, as well as the conditions of those roads. Poor road conditions could conceivably knock out a sensor on an autonomous vehicle. “If we can’t fix our roads, how are we going to maintain them to support autonomous technology.”
Of course, fixing the roads is among the industry’s biggest wishes. Congestion results in 1.2 billion hours lost, costing an estimated $75.5 billion.
On the rail side, 2019 is also proving to be a much different year than 2018, though the reasons differ. A year ago, when Section 232 tariffs on steel and aluminum were enacted, the moves had a significant effect on the rail network.
“We had a very efficient supply chain, a well-oiled machine. Here comes 232 and now everything’s been thrown up in the air, and we have to figure out how to deal with it.”
Suddenly, Schauf explained, the expected tons coming in from offshore, tons the rail carriers had planned for with equipment and personnel, were being replaced by material from a different part of the country. “2018 was a very difficult year for my company and the railroad industry as a whole,” he explained.
But with the railroads more accustomed to the tariffs, and the supply chain beginning to normalize, the story is much different this year. Crew shortages, congestion, locomotive shortages, equipment deficits and service variability, all problems for the industry in 2018, have been reversed this year, he said.
Thus, the railroads are in a good position to expand their services to the metals industry. “There is capacity in the marketplace. We need to get the message out we’re open for growth,” Schauf said.
For both the railroads and the carriers, the advice to metals customers is similar. The better job the mill or service center can do of communicating their needs to the transportation network and the more convenient and efficient they can make loading and unloading of material at their plants, the better the entire transportation network will run, helping keep costs of moving metal down.