Driver Shortage Solved?

How did I manage to cram all three subjects into one article? I attended the monthly meeting of The Transportation Club of Jacksonville on the 13th of July, that’s how. Well that, and it rained a lot the following Sunday so writing was a reasonable indoor activity. I found The Transportation Club of Jacksonville to be a great group and I am glad I went. If you are in North Florida and are in the transportation field in some way, you should consider joining The Transportation Club of Jacksonville. It isn’t often the one gets the opportunity to hear from people in related, but different, fields than our own. The Transportation Club of Jacksonville offers just that opportunity as they have a broad member list including asset based transporters, 3PL’s, various service providers, and transportation buyers.

I was invited by a member I know who thought I would enjoy the subject matter and may be able to contribute to the conversation. The subject was related to the upcoming harbor deepening in Jacksonville to enable JAXPORT to service larger vessels. More specific to the meeting purpose was what infrastructure improvements were needed off port property. The folks at JAXPORT understand with East Coast ports of Miami, Norfolk, Baltimore, and Newark/Elizabeth already having deep water, (deep being 47’ draft or deeper), along with Savannah and Charleston working on their own dredging projects to get there, that Jacksonville can’t afford not to deepen their harbor. To not do so would insure the larger vessels being used will bypass Jacksonville on their way to a port that does possess the needed draft. That would cost Jacksonville and JAXPORT money, and plenty of it. Not only would JAXPORT lose, or eventually lose, its coveted Asian container business, they would also spend a fortune changing all their letterhead and signage from JAXPORT to Port Afterthought. JAXPORT is determined to not let that happen.

Most of the attendees were supporters of the dredging of the harbor to keep, and enhance, JAXPORT’s position as an East Coast port. There was one person with an opposing view who made things interesting for a minute. They passionately questioned the accepted economic impact study and suggested alternative deep water ports and using smaller feedering vessels for freight bound for JAXPORT. I immediately felt the urge to chip in to the conversation and suggest JAXPORT freight could likewise possibly come into the country through The Port Long Beach and have all of JAXPORT’s shipments broken down and sent UPS to JAXPORT. That ought to keep JAXPORT competitive, right? I stifled the urge as I learned long ago to not poke at particularly zealous people with differing views. It tends to make them more passionate and the conversation invariably grows legs and walks somewhere no one wants to go. With the mentioned exception this was a group of well-informed like-minded people.

There was little I could contribute to the conversation. Since Jacksonville already has the best major highway and rail connectivity any port location could ever want, everyone in the room already knew drayage capacity, trucking capacity, low dwell times, warehouse capacity, and port flexibility were the focus. Moreover, since JAXPORT is a ‘landlord port’ they won’t be competing with the private sector on providing services. In essence, regarding needed services it’s ‘dredge it and they will come’. It’s what the private sector does, it fills needs for profit. Of course the city of Jacksonville has to spend some money and create a friendly environment for the effort, but if they want to be a port city there’s no alternative. There were quite a few very smart people saying just those things. My contribution to the conversation would have boiled down to saying the same things using different words. I don’t like it when other people do it and feel it wouldn’t be any more attractive coming from me.

Although there was one portion of the conversation that did peak my interest that came and went, and I hoped would have lasted longer, the driver shortage. Since there were intelligent people from trucking companies and 3PL’s, they were the ‘go to’ people on the subject. In truckload and container drayage driver recruitment is a hyper focus for every company. The driver turnover rate is huge and the work force is aging. I have always known the trucker workforce was aging, but one factoid I learned from the conversation is the median age of truck drivers is 49 years old. Even more stunning the average age for retirement is 54 years old. Those are scary numbers. For whatever reason (some say lazy some say smart) Millennials don’t want to make trucking a career.  Of course driver pay came up as one of the fixes… but l don’t recall any topics of depth other than the pay and the shortage itself. Soon the monthly meeting of The Transportation Club of Jacksonville moved onto the other things as time was limited and the meeting ended shortly afterward. I will again compliment the group. It is very in tune with the industry, the area, and is well represented.

I thought more about the driver shortage issue later that day as it seems to me it will be the true obstacle to moving large amounts of freight out of not just JAXPORT, but most all major container ports.  I even went as far as Googling ‘why is there a truck driver shortage?’ to expand on what I already knew. Like the meeting talk, the overwhelming number of posts and blogs came back with the answer of ‘money’, but everyone knows that. There were also many people who cited increasing regulation. Although increasing regulation and tighter regulatory controls ultimately circle around back to be about money. In the meeting it was cited truck drivers averaged a yearly income of $47,000USD a year. That sounds like fair money, right? Now consider many over the road truckload drivers may work 14 hours a day 6 days a week with dray drivers being not far behind; now it sounds a lot like $11 bucks an hour. For long haul drivers who may make a little more it’s even more complicated. Away from home weeks at a time drivers are faced with expenses many of us don’t face. Everything from meals and drinks, laundry, to taking a shower costs money. Even if a company offers a small per diem addition to earnings per mile, it won’t cover everything a driver personally needs for living on the road. Getting a feeling why Millennials aren’t too keen on a trucker’s life?

Strangely enough not all truck drivers are victimized by low pay and a horrible lifestyle. LTL drivers, parcel drivers, both local and line haul drivers, and company drivers from major retailers like Walmart, Coca-Cola, and Frito-Lay all make better money, have better working conditions, and have less time away from home. The aforementioned drivers often work running from distribution centers to regional retail locations or terminal to terminal enabling them to spend much more time at home. One meeting member pointed out his company drivers are often more professional than their drayage and truckload counter parts. I can’t argue that point as I saw the difference myself when I still routed freight. It makes sense that better pay and better working conditions would attract better candidates.

This brings the question why do container haulers and truckload drivers, especially hour for hour, make much less than LTL drivers and private fleet drivers? The obvious answer is LTL companies, parcel carriers, and private fleets have more money to spend on driver pay. This is where it gets tricky. Why do these organizations have more folding money to do pay better and have better working conditions where trucking companies don’t? The only answer I can offer, and it’s hardly a new idea, is supply chain management’s perception is that LTL, parcel, and private fleets are a valued service and they view the truckload and drayage service as a commodity. Commodities are most often purchased on a lowest bid system and only gain value when demand exceeds supply. This is our first hint on what happened to trucking.

Transportation began a deregulating in the 1970’s and completed the deregulation process in the 1980’s. For trucking it was the Motor Carrier Act signed into law by President Carter in 1980. This made the ‘lowest quote wins’ possible in the trucking industry. This in itself was not ‘the last straw’ that created the ‘commodity’ problem, but combined with the trucking industry losing its ability to be viewed as a valued service provider; it puts downward pressure on rates. Truckers no longer ‘know’ their shippers as well as they used to. Not too many years ago shippers would maintain relationships with a number of trucking companies to haul their freight and keep a relationship with one good broker. Regular shippers and consignees often saw the same drivers picking up and delivering their freight. Trucker dispatch was typically on a first name basis with the shipping coordinator or manager, and shippers knew what level of service their specific trucking companies provided.

Not so in the 21st century. Mega freight forwarders and 3PL’s have stepped in front of a good number of asset based carriers. In many cases shipping managers no longer manage carriers, they manage third parties. In today’s market forwarders, 3PL’s and 4PL’s are taking the credit, and the blame, for what level of service a customer experiences. Unlike their LTL counterparts who have managed to keep ‘a face’ with supply chain executives, drayage and truckload companies have become invisible as a valued service provider for shippers. While shippers interact over and over with the same LTL, courier, and distribution drivers who drive brand identifiable trucks, it is most often different for truckload and container hauling. Driver’s faces in non-descript trucks can change almost every shipment. ‘This trucker anonymity’ not only helped make trucking to be viewed as a commodity, it enables thieves to steal millions and millions of dollars in freight by picking up shipments pretending to be another trucking company. Shippers often don’t know who is picking up their freight as they identify with the broker/3PL. The undercover thief just has to ask for the freight using information they fraudulently collected from a broker/3PL while quoting or booking the shipment for load posted on a load board.

Freight theft aside, now that trucking is more broadly perceived as a commodity price counts higher, if not first, in the decision making process of selecting carriers. Every penny a forwarder or 3PL does not pay a trucker to haul a shipment, they get to add to their own, or their customer’s, profit margin. That’s a good motivation for the 3PL’s to chase the lowest quote and negotiate hard. Making things overly simple, trucking has three numbers to work with when budgeting for truck expenses, the truck itself including maintenance and road taxes, fuel consumption, and driver pay.  Even though all the numbers are variable to a degree, the driver pay is the number most in control by the trucking company. Even owner operators rob themselves first to remain competitive to book loads in a commodity driven market.

Trucking is in dire need of an image upgrade. First and foremost asset based trucking and the 3PL industry must partner in a way trucking can share in the service identity with the customer. I know that’s easier said than done in trucking’s decentralized capacity business model, but 3PL’s are already beginning to be more serious about their relationships with core carriers. The effort just has to go a little further so the partnership shows in the light of day in front of the end customer. Creating shared relationships can help trucking companies show themselves as bringing service value to the table and create customer preferences for underlying carrier selection.

While in no way a certainty, byproducts of carriers being able to create and maintain a positive service image with shippers may include higher rates for preferred carriers, thus more money to pay high preforming drivers. The customer service identity effort must extend and be practiced by the drivers who are the face of the carrier to the shipper. Higher pay would attract candidates who can better present the valued service identity. It would certainly be easier to deliver efficiently with a smile if a driver isn’t broke and exhausted.

Maybe money is not the end all be all for reducing the driver shortage, but more money for drivers would certainly help produce more seated truck capacity. Of course not every carrier or driver would benefit from image sharing. There will always be carriers and drivers who provide bad service and would be viewed as undesirable by shippers thus not worth a higher rate. Unfortunately, until trucking and drayage can be known for their service and have a ‘face’ as a service provider, shippers can’t tell the difference.   Is Cargo Insurance necessary?