Regulations, COVID-19 effects exacerbate existing driver shortage, making trucks as hard to find as steel.
Long before March 2020, the transportation industry was facing a serious shortfall in driver and truck capacity. The pandemic has only amplified that issue.
In the U.S. trucking world, worker shortages are growing at alarming rates. The shorftball of professional truck drivers is approximately more than 60,000, and the American Trucking Associations estimates that by 2028, the industry could be down as many as 160,000 drivers.
That’s the conclusion of Bob Elkins, senior vice president, industry vertical operations, Ruan Transportation Management Systems, Des Moines, Iowa.
The reasons behind the dwindling numbers of transportation professionals are varied and complex – and sobering.
The steel sector has witnessed its share of an ever-shrinking workforce, partly because workers are retiring in astronomical numbers, with few people replacing them. According to experts, not many workers want to transport steel in particular. “Steel haulers are a unique breed, as it involves plenty of physical and hard labor securing the material on our decks,” says Jan Richter, who, with his wife Kristin Richter, co-owns Michigan-based Dearborn Steel Express Inc. The company is a certified woman-owned, asset-based carrier that transports steel and other metals throughout the Midwest and into Ontario, Canada.
Jan Richter says steel haulers comprise “an aging workforce, and we don’t see too many younger guys filling the void of those that retire. Most younger truck drivers like dry vans, which involve little to nothing in terms of cargo securement and physical work.” Scott Cordin, president of Steel Express Logistics LLC, Chicago, Ill. agrees. “You don’t find a lot of young guys doing steel,” he says. “Just the physical labor of chaining it down correctly and tarping is hard work.” Steel Express transports coils and sheets, as well as structural steel throughout the Midwest.
Employee retirement is “draining the talent pool,” says Roberto Alvarez, CEO of Esmark Steel Group, Chicago Heights, Ill. Esmark processes and distributes value-added flat-rolled steel and produces tin plate steel. “The younger generations are pursuing careers with retailers and consumer/commercial shipping partners, which can offer more attractive working hours and less time on the road, notwithstanding the rising cost of fuel,” he says.
The type of cargo and avoidance of hard work, however, are just part of the story.
Many factors have caused employee shortages throughout the industry, one of which was the pandemic. While there remains a great demand for truck drivers, the supply of them has dwindled. “We had a very strong fourth quarter and then things just came to a halt in terms of hiring,” says Avery Vise, vice president, trucking at FTR Transportation Intelligence in Bloomington, Ind. “My guess is that we had low-hanging fruit, drivers who were ready to come back once the freight was there, and it was. And now we’re much more in the phase of trying to scrounge around for drivers.”
The COVID-19 crisis certainly worsened an already-challenging situation. “Many older drivers retired early in the pandemic, and others have had difficulty renewing or getting new commercial driver’s licenses due to closures of state motor vehicle offices,” says Elkins, adding that truck driving schools were also closed, preventing new drivers from taking the wheel. Another hurdle to filling these vacated spots is potential truck drivers cannot acquire a CDL before they turn 21 years old.
Congress is considering bills that would allow the minimum age for an interstate CDL to be 18 years, and the Federal Motor Carrier Safety Administration is considering a pilot program allowing drivers who are under 21 to operate heavy-duty trucks from state to state.
Still, a new problem faces a new generation of truck drivers: the Federal Motor Carrier Safety Administration’s Drug & Alcohol Clearinghouse, which began in January 2020. This clearinghouse “has already culled more than 45,000 commercial drivers from the industry who have either failed tests or quit before testing, knowing they would fail,” says Elkins. “Only a small portion of these drivers have completed the required return-to-work process.”
No doubt, the shortage of workers in the trucking industry is a major problem. But so are rising steel prices and insurance costs.Rates and Prices
The costs of metals have risen, and so have the costs involved with transporting goods. Dramatic changes in steel prices make it difficult for haulers to quote pricing for moving the commodity. According to broker Brent Brodie, owner of KCG Transportation, Inc., Clarksville, Tenn., steel prices have gone up, sometimes even as much as 10 percent a week, making shipping price forecasting difficult.
“By the time I quote that, it sometimes takes three to four weeks for that steel to make it all the way through the channels back to where it’s finally ready to transport out west,” Brodie says, adding that the price has substantially gone up during those weeks from a $5,500 truck to a $7,000 truck, for example. “Our gross is up 90 percent, but on the net side we’re up only 60 percent because our margins have decreased because of the forecast of trucks and insane rate changes.”
Flatbed has been negatively impacted, thanks to the pandemic. “One of the consequences of the pandemic has been that there is a shortage in capacity, and that seems to have hit the specialized segment of the industry in general and in the flatbed segment in particular quite hard,” says Vise. “There is some indication that has begun to loosen, but if you look at the spot market for truck freight over the past several months, it has been extraordinarily tight for flatbed.” In fact, recently “the flatbed segment set 11 volume records during a 12-week period.”
Elkins says, “We have specifically seen the high volumes in the metals sector with our customers as they address the pent-up demand coming out of the pandemic, coupled with higher metals pricing, especially as the auto manufacturers are ramping back up. That sector is addressing the need to replenish dealership inventories as well as fill the increased consumer order volume. The increased demand is positive, but with the capacity shortage as a backdrop, it has put pressure on the end-to-end supply chain.”
In addition to challenges to the supply chain, the costs of trucking insurance have jumped, adversely impacting the cost of shipping. Cordin says because the price of steel has tripled, insurance costs have followed suit. “Instead of carrying a $20,000 load, it’s now a $60,000 load, so that has affected us, absolutely, and insurance has gone up,” he says.
Not only do the value of goods on board increase the price of insurance, but litigation is also pushing costs higher. For example, nuclear verdicts, where jury awards exceed $10 million, are causing massive insurance rate hikes. As a result, carriers are exiting the market, according to Elkins.
It’s no wonder, then, why trucking professionals are calling for tort reform. “The American Trucking Associations is focusing its efforts on those reforms most important to the trucking industry, like elimination of joint and several liability, caps on punitive damages, the recognition of collateral sources, and the admissibility of non-use of seat belts – where defense lawyers are unable to present evidence a victim was not wearing a seatbelt, contributing to his or her injuries,” Elkins says.Caption:
Dearborn Steel Express Inc. is a certified woman-owned, asset-based carrier that transports steel and other metals throughout the Midwest and into Ontario, Canada. (Photo courtesy Dearborn Steel Express Inc.)[Sidebar:]
On the Rails
Dennis Wilmot, president and CEO of Iron Horse Logistics Group, a rail transport company in Aurora, Ohio, says even in the rail industry, labor shortages abound. He attributes some of the labor shortage to people who would rather be collecting unemployment. “No matter where you go, there are signs saying, ‘We’re hiring.’ And it’s hard to hire people when they can sit at home and make a good buck.” In addition, rail’s long training timeline – at least three to nine months – is unappealing to many potential employees.
Wilmot says a big issue in rail “is that equipment availability is extremely tight, so it can be a challenge getting the railcars you need.” This has caused the service from the carriers to be strained. In addition, rail depends on factors such as getting switches on time, getting consistency, and moving cars, as well as obtaining assistance from the railroads.
He adds that the COVID-19 crisis has left many administrative staff members still working from home, resulting in less of a team approach and leading to falling response times. Unfortunately, in some cases, this results in poor customer service, he says. “The railroads continue to push rates up, so the rates are not necessarily commensurate with the service they’re providing. That’s frustrating for most people as well.”
Wilmot says two-person crews operate most of the Class 1 trains, but technology may allow one person to operate a train, and “in many cases, there will be completely robot trains,” he says, adding that technology is available that can recognize safety and mechanical issues. For example, when train parts such as wheels need repair, they can be automatically tracked, measured and reported. “This is all in the works now and will help to improve the overall operations because it will reduce the down time.” Rather than depending on humans to inspect the railcars, computerization will allow for efficient planned maintenance, resulting in overall rail efficiency.
Technological advances will make accurate tracking of rail shipments possible, according to Wilmot. He likens this process to the way FedEx works where one can tell where a shipment is at all times. “The visibility and recording will increase to the point where it will all be much more accurate and much more detailed, particularly for the shipper,” he says. “And rail is working on automated trains.”