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JOC Guide to Trucking, August 2019

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20 The Journal of Commerce | August 2019 www.joc.com 2019 JOC Guide to Trucking US truckload capacity will be hard to rein in aer last year's truck-buying spree. Shutterstock.com By Ari Ashe US TRUCKING OPERATORS and third- party logistics providers are unsure about when the freight market will recover after a disappointing first half of 2019, citing trade uncertainty and cooling manufacturing data. Truckload brokers acknowledge there is too much supply and not enough demand, which makes it Market malaise Operators and 3PLs face an uncertain US truckload outlook adding to excess capacity. Still, the ATA forecasts a shortage of 59,500 drivers in 2019. Sector-specific shortages How can a driver shortfall be reconciled with a truck glut? In part, by focusing on where the shortage is the most pronounced: over-the-road, long-haul truckload. "That sector is still struggling, and that's where the vast majority of this shortage lies," Costello said. "There are 3.5 million truck drivers in the United States, but only between 500,000 and 600,000 over- the-road truckload drivers. And that's where this shortage is," he said. The shortage also is most acute at large truckload carriers. Many drivers prefer to work for smaller companies where they're a name, not a number, Costello said. Last year's hot spot market, with rates up double digits, encouraged smaller carriers to add trucks and drivers. "When big fleets began giving out big pay increases last year, we did see some drivers at smaller fleets move up" to larger competitors, he said. The double-digit drop in spot market rates may encourage more truckers to sign on with larger carriers this year. But that's an example of churn within the existing truckload driver pool, which sees a fair amount of turnover. "Turnover and the driver shortage are not the same thing," Cos- tello stressed. Driver turnover rises during periods of high demand, but involves existing, working truckers. An aging workforce Whatever the size of the shortage today, what truckload carriers and the trucking industry need are new bodies to replace workers who will retire over the next decade. Carriers will need to hire 110,000 drivers a year over the next 10 years, Costello said, and more than half of those workers will be needed to replace truck drivers who will be retiring. The average age of a long-haul truckload driver is 46, the ATA report said, younger than the averages for less-than-truckload and private fleet drivers, which the ATA places in their 50s. The association is concerned that more drivers will exit the industry than enter it, leading to a widening gap between drivers needed and driv - ers at hand. "The industry is growing the driver population, it is just not growing fast enough," Costello said. Pay raises are a big part of the solution. Driver pay rose about 10 percent in 2018, according to the National Transportation Institute, with one-fifth of trucking companies raising pay more than once. "Pay has been going up and should be going up as long as there's a short- age," Costello said. The problem is, how do you raise pay when rate increases that underwrote pay hikes are being rolled back? Contract rates are nearly flat year over year, Costello said, and if they turn negative, they will make it nearly impossible for carriers to attract the drivers they need. "If those rates go south, I think you will see a fair number of trucking companies go out of business," he said. "It is very difficult — if not impossible — to walk back those pay increases." Shippers and third-party logistics providers, however, have a difficult time accepting a driver shortage when they're being bombarded by cold sales calls from truckers. "Overall, we still have a large amount of capacity in the market," said Sarah Ruffcorn, chief operating officer of 3PL Trinity Logistics in Delaware. "Are there lanes no one wants to take or areas where we wish we had more trucks? Absolutely. But overall, there's still excess capacity." The trucking industry may need more drivers, but until freight is left on the dock for want of a driver, shippers will remain suspicious of claims of an absolute shortage, espe - cially when coupled with requests for higher rates. l email: bill.cassidy@ihsmarkit.com twitter: @willbcassidy "The industry is growing the driver population, it is just not growing fast enough."

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