Fleets execs that whine about the driver shortage are wrong
Commentary
The “driver shortage” is the best thing to happen to trucking.
Most of the executives in the space lament the challenges of finding and recruiting drivers on analyst conference calls and at industry conferences- but you can bet they are celebrating behind closed doors.
First off, we have argued that the driver shortage does not exist. It’s all comes down to economics.
Some have attacked this view as incomplete. Most notably by John Larkin in an op-ed submission on FreightWaves.
John argues that pay is only half the story and there are other fundamental problems (driver abuse at the hands of shippers; voice brokers that take advantage of drivers by screwing them out of detention- even when they collect it; carriers that fail to maintain equipment and not honor driver home-time; truck stop chains that fail to keep clean restrooms; a lack of parking- etc).
There is no driver shortage in Australia, but drivers there make over six figures.
If you think American drivers have it tough, talk to a driver that has had to deal with Kangaroos, dirt roads in the outback, or 7 of the most poisonous spiders or snakes in the world. The rest stops and truck stops on the outback are rarely clean and maintained. It makes the conditions at a former truckstop known as Carl’s Corner (before Petro took over) in central Texas seem like the Four Seasons.
But the driver shortage is a blessing because it means: Pricing power.
Without it, rates would be a race to the bottom. The cheapest carrier would win. I hate to say this- but trucking is a commodity and to argue otherwise, is to miss out on the most important decision that a carrier, broker, and shipper deal with and that is pricing/rates (otherwise why do the RFP or get quotes)?
The driver shortage gives carriers pricing power and the fewer drivers there are, the more power a carrier has in the market. With would-be drivers seeking employment in other sectors of our economy (retail, food-service, construction, oil field work, Amazon), it keeps a natural governor on how much capacity can enter the market. There are few barriers to entry already. Anyone can buy a truck (used or new) and getting an operating authority.
Without a driver shortage, large enterprise fleets would expand faster. Anyone that has ever talked to a successful trucker knows that the number of trucks they have is their favorite stat and a way of keeping score. It’s very “kindergarten-playground-esque”, but still a favorite among the most successful truckers.
The ELD mandate will do two things- take supplemental capacity out of the market, due to drivers themselves not wanting to adhere to the rules and eliminate the carriers that are not operating under the HOS rules. Drivers that operate with ELDs and compliant, shouldn’t complain. they will become enormous victors in the end.
Rates are going up and will continue to do so as long as we have a strong labor market, GDP expands more than 2% per anum, and we fail to get immigration reform that allows for unskilled workers to gain proper employment.
If you are a fleet with unseated trucks- let me suggest this- while it is incredibly painful to have an underutilized asset on your books- invest some of the rate increase in recruiting, pay, and driver incentive programs that make your fleet the premier choice. Also, I am sure that drivers would appreciate a nicer truck with more comfortable seats. Too bad Bose Ride did not survive.
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