Is the driver shortage real or perceived?
The driver shortage is something that has been discussed in this industry for as long as I can remember. When I joined the industry as a driver 26 years ago, this discussion was top of mind then. It was discussed in trucking industry publications, on radio shows, at truck stops, by drivers on the CB – in short, in pretty much every circle of the industry you could think of.
Current stats indicate the shortage is not going away, but that it is in fact worsening and will continue to worsen in the future. A recent report by the Conference Board of Canada indicates that the shortage of Class 1 drivers in Canada will reach 33,000 by 2020. The average age of the Canadian driver was 47 years old in 2014, up from 44 years old in 2006. In the US the stats indicate the problem is even worse. An American Trucking Associations report in 2015 indicated a shortage at that time of 38,000 drivers, with an expected shortage of 175,000 drivers by 2024. The average age of the commercial driver in the US was 49 in 2014.
In light of such statistics, how can I even ask if the shortage is real or perceived? Well, lets look at things from a general point of view.
Whenever an industry has a shortage of qualified labor, wages generally skyrocket as the fight for the limited talent pool strengthens. While wages for drivers are good, and progressive carriers have increased pay over recent years, most studies indicate that drivers are making comparable wages to what they made in the 1980s when you take inflation into account. The reason cited for the lack of a steady increase in pay is generally blamed on the increased costs placed on the industry due to, among other things, government regulations.
Also, rates for hauling freight have not increased enough to cover these extra costs, keeping wages depressed. If we truly had a shortage of equipment and manpower to move available freight, would rates not skyrocket?
Not to oversimplify, but if we have 10 loads available and 15 trucks available to move them, shippers will price shop and if they only care about price and not service, they will go with the lowest bidder, which keeps rates down.
If we have 10 loads available and only five trucks available to move them, shippers will not be able to price shop, as demand has now outpaced supply, meaning rates would increase as carriers would be able to name their prices.
Since this does not happen today, and rates are still far too low, the simple logic would suggest we do not have a shortage of drivers, rather we have an excess supply of trucks out there that are bidding on the same freight, keeping prices low.
The driver turnover rate is also a stat that is used to indicate a shortage of drivers. The turnover rate in the long-haul for-hire industry has hovered around 100% for as far back as I can remember. One of the reasons cited is that a driver has his or her pick of jobs, as they are in high demand. An unhappy driver can simply shop for another job and move.
While it’s true a highly skilled and qualified driver is and always will be in demand, these types of drivers are generally attracted to the carriers that are progressive and are considered the cream of the crop. Quality drivers are attracted to quality fleets, and the turnover rates at these companies are generally lower.
The private fleet segment of the industry has always been sheltered from the perceived driver shortage and turnover issue. Private fleets have, for the most part, always had a waiting list of qualified candidates to fill vacancies. The turnover rate among private fleets is generally less than 10%, which means they do not have to recruit to replace the constant churn of drivers.
Why does this portion of the industry see a much lower turnover rate and have little problem filling seats? Some reasons are: easier to understand pay rates; more home time; better benefits; company pension plans; predictable routes; access to employee wellness programs, etc. Among private fleets, drivers are generally treated as a valued part of the brand and sales team.
Since drivers are often valued more and paid accordingly, there has never been a shortage in this sector. I do not want to paint the entire for-hire segment with the same brush, so I want to be clear there are also many progressive for-hire fleets out there who provide this type of environment as well. These types of fleets can generally always fill their seats.
So is the driver shortage real or perceived? In my personal view, we have a shortage of qualified drivers to fill the seats of all the trucks that are out there, however I believe we have an excess of trucks available to move the freight we have – not a shortage of drivers. Do I believe this will continue to be the case?
Absolutely not. The aging workforce is going to lead to a real shortage in the years to come. The amount of drivers who will be retiring over the next five to 10 years is not going to be replaced by the younger generation. The driver shortage is going to be real going forward for the entire industry, and an issue we must address – and soon. We need to figure out how to engage the next generation of drivers and introduce them to this industry and get them excited. If we do not do this, the driver shortage will rear its ugly head in the future, and that future is not far away.
Mike Millian is president of the Private Motor Truck Council of Canada, the only national association that represents the views and interests of the private fleet industry. He can be reached at email@example.com.
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Why would anybody after 65 years of age want to hold a class1 when you have to pay $100.00 to get your medcial done every year.It should be done every three years not every year.Till age 70 then do it every year.This is our gov. people always take money away from us. tk u