What driver shortage?
Scott Grenerth, director of regulatory affairs at the Owner-Operator Independent Drivers Association (OOIDA), can’t stand it when anyone says there’s a truck driver shortage in America.
“There is no driver shortage,” he told American Shipper at the association’s offices in Grain Valley, Mo. “It’s more the churn in the industry.”
What he means is that the long-haul and regional trucking industry is particularly challenged to hold onto its drivers. While young people are actively obtaining their commercial driver’s licenses and joining trucking companies, they’re often just as quick to exit the industry due to onerous federal regulations and day-to-day operational constraints.
“We want drivers who enter trucking to stay in trucking and become experienced drivers. This improves safety on the road and raises the level of industry professionalism all the way around,” he said.
Grenerth knows full well the pressures imposed upon today’s truckers. He worked as a long-haul truck driver in Northwest Ohio for 13 years before joining OOIDA in June 2014. (Most of the association’s staff have driven trucks for a living, which allows them to relate well to the plight of the nation’s truck drivers and provide professional improvement programs to OOIDA’s more than 155,000 members.)
On the regulatory front, the U.S. Transportation Department’s Federal Motor Carrier Safety Administration is “micro-managing drivers’ time, which pressures carriers and their operations, and in turn, puts shippers under pressure,” Grenerth said.
The federal regulations, to which he’s referring, include the FMCSA’s Compliance, Safety, Accountability (CSA) program, new hours-of-service rules, and medical examiner requirements for
a driver to obtain and retain his or her CDL.
While these regulations may be challenging, the bigger obstacles for retaining drivers in the trucking industry are more commercial-oriented. Those include sufficient pay for drivers’ work, even when stuck in detention scenarios not of their making, and just downright compassion and respect from their employers—the trucking companies—and customers—the shippers.
Grenerth shakes his head at some of the “gimmicks” that trucking companies use to try to entice drivers. “They don’t want or need shiny satellite TV or radio,” he said.
“It’s not so much that they don’t want or need those shinny objects, but the fact that they are not asking for them. Instead they are asking for adequate compensation and generally better treatment,” Grenerth explained.
That compensation, of course, varies by the type of trucking operation, such as long-haul, regional, less-than-truckload, flatbed, tanker, box truck, etc. It’s estimated that there are upwards of 3.5 million truck drivers in the United States.
Grenerth said the well-managed carriers are not complaining about driver shortages. “They’re doing things right, so you won’t hear that from them,” he said, although sometimes they will experience some seasonal tightness in their driver pools.
Shippers are also improving conditions at their factories and warehouses to make them more hospitable to truck drivers and to keep them coming back. This may include improved handling of inbound and outbound loads to get truckers in and out of their facilities faster, and offering waiting areas and restrooms to truckers who may have to occasionally wait for their loads.
Grenerth is glad that more shippers are taking these steps to improve conditions for truck drivers, but he said it’s only the beginning. “We’re not close to the light at the end of the tunnel. It’s more like a speck of light in the distance,” he said.
Online loadboards, from which shippers can match trucks with loads, can sometimes give the appearance of shortages, Grenerth said. But if there was a true shortage, he noted there would be news about empty store shelves. “I have not heard that said. It’s just not there,” he added. (Chris Gillis)
Transport CEOs are not plug-and-play
Brad Jacobs, XPO Logistics’ chairman, recently named transportation veteran Tony Brooks president of the company’s less-than-truckload operation, the main piece in the $3 billion purchase of Con-way Inc.
Brooks has experience running an LTL carrier having worked in management at the former Roadway Express. His logistics background includes leadership stints at food distributor Sysco, Dean Foods, Sears and PepsiCo/Frito-Lay.
Jacobs is still looking for an LTL chief executive, a turnaround specialist who can grind out new efficiencies by looking at the profit and loss for every cost item—customer by customer, terminal by terminal, and lane by lane—and who understands how to manage big process changes.
During a town hall session at the Council of Supply Chain Management Professionals annual conference in San Diego in late September, he said he wanted a “best athlete” from a great operating company like GE or Honeywell who has an old-school approach towards running a business “where you have a budget for every location, you have a monthly operating review and have a variance analysis for every line item, you’re held accountable and compensation is tied to performance, and KPIs and metrics.”
But Jacobs needed someone with good LTL experience to be the CEO’s right-hand man for day-to-day operations because the LTL industry has some unique characteristics that can escape an outsider who doesn’t speak the same language.
In fact, some of the operational and cultural differences are so profound that even someone with a pure logistics background can have difficulty making things work.
Greg Lehmkuhl, for example, was executive vice president of operations and then president of Con-way Freight until last June, when he left to become CEO of Lineage Logistics. He came over to Con-way from sister company Menlo Logistics, where he was vice president of automotive operations.
He and the rest of Con-way’s management were never able to cut costs and improve margins enough to satisfy shareholders. While operationally excellent, the company made some strategic mistakes that cost it business.
It’s even difficult to move from one network business to another within transportation.
Many analysts, for example, questioned whether Oscar Munoz would be able to replace Jeff Smisek as CEO of United Airlines. Munoz was chief operating officer of the mainline railroad CSX and a United board member when Smisek was abruptly forced to resign amid a federal investigation into influence peddling at the Port Authority of New York and New Jersey allegedly to gain improvements for United’s passenger terminal at Newark Airport.
Munoz is sidelined now after suffering a heart attack (United’s General Counsel Brett Hard is in charge on an interim basis now), but the point is that there is something to be said for industry knowledge. Running a freight railroad is very different from running a passenger airline. It can take an outsider half a year or more just to get up to speed with the complexity of a networked business like an airline or LTL carrier.
In fact, Smisek was the head of Continental Airlines when it merged with United. One would think an airline executive taking over another airline would be positive, but United has struggled for years with service and IT problems, and some analysts point out that Continental was a smaller and less complex company to run.
Speaking of United, the hasty changing of the guard from Smisek to Munoz underscores the need for corporations to have succession plans ironed out in advance. Having to find a new leader on the fly, when trouble hits, is not a good prescription for success. For one thing, management upheaval can raise questions about a company’s stability in the eyes of shareholders, customers, suppliers, and competitors. (Eric Kulisch)
This commentary was published in the December 2015 issue of American Shipper.