Every industry faces problems. In the trucking industry, such problems run the gamut from government regulation to a driver shortage to taxation and fuel charges. But the industry’s latest problem is different. It is actually a good problem to have.
According to the Washington Post’s Gene Marks, a persistent theme of the 2018 version of the annual State of the North American Supply Chain study is one of capacity. In other words, freight volumes are increasing faster than the industry’s capacity to absorb them. Trucking companies are simply running out of room to transport goods.
From large, national carriers like C.R. England to the smallest independent contractors, the race is on to find ways to increase capacity. What’s more, all signs point to an even higher demand through 2018. Marks wrote in his January 23 piece that companies are already looking to shift some of their freight to rail and air in lieu of being able to get more trucks on the road.
A Growth Inequality Problem
So why is a lack of capacity a good problem to have? Because of the fundamental reason the problem exists. There is a growth inequality problem between volume and capacity. Volume is increasing thanks to a massive upswing in economic growth over the last 12 to 14 months. Capacity, while also expanding somewhat, is not growing at nearly the same rate.
The Washington Post reports that some 76% of freight companies anticipate growing volumes through 2018 yet know they will struggle to meet the demand. Carriers will have to shift freight to other means of transport when possible, and they will have to charge shippers more to pay for the increased costs of meeting the higher demand.
Making things worse is the persistent driver shortage that has plagued the industry for more than a decade. Until carriers can get more trucks on the road, they will continue to struggle with capacity issues. Surprisingly enough, Marks reports that trucking companies are not actively looking at the potential of semi-automated trucks that could increase capacity.
The Ongoing Driver Shortage
It’s nearly impossible to talk about volume and capacity without also exploring the driver shortage. There are a few things to consider here. First, truckers make substantially less today than they did during the trucking heyday of the 1970s and 80s when adjusted for inflation. Lower compensation is bound to hurt any industry. Still, today’s truckers do earn paychecks right in line with the national average, and higher paychecks compared to many other blue-collar workers.
Some industry experts say that compensation is just one of the issues contributing to the driver shortage. They say government regulation is another, specifically citing the ELD mandate that went into effect back in December.
Industry representatives warned that the ELD mandate would drive truckers out of the industry when it was first introduced. But unlike similar threats in the past that never came to fruition, the predictions this time around are actually coming to pass.
Former actress turned truck driver Brita Nowak exemplifies the frustration many smaller carriers have with the ELD mandate. She recently shut the doors on her 14-year-old company because the constraints of the mandate were too much. She is not alone.
The mandate is making it more difficult for carriers and drivers to operate efficiently within the number of hours allowed by federal law. There providers such as TBS DOT compliance services that help independent truckers and fleets to stay compliant but it can still be a huge task to stay compliant.
Yes, America’s trucking companies have a new problem in a lack of capacity. It’s a good problem to have, but one that requires a solution if trucking is to move forward in a profitable and productive way.
