Carriers are hitting the brakes on the capacity crunch

Peter Tulisaari

By Peter Tulisaari Director of Business Development at King Solutions

king carriers

One of the most incredible things about the logistics industry is the interconnectedness of all its moving parts. It’s called the supply chain for that very reason. Every link in the chain, from carriers to shippers, warehouses, manufacturers and even the third party logistics providers (3PLs), is reliant upon the others to keep products moving.

When something impacts one link it affects the others, which is why driver shortages and the capacity crunch have stormed to the forefront of the industry. Driver recruitment and retention may be an issue that carriers must confront, but these issues influence every other supply chain entity as well. The sheer fact of the matter is that shippers, 3PLs and retailers are impacted by the shortage of drivers – from shipping rates and times to carriers’ routes.

At King, we’re monitoring the capacity crunch in great detail, noting that rising shipping rates are actually the result of capacity issues. It’s important for shippers to know that although capacity is tightening, we’re not in any sort of crisis. While 3PLs like King are currently helping shippers navigate capacity issues, carriers are working hard to put more drivers on the road.

Recent reports estimate the driver shortage will reach 175,000 by 2026. Let’s take a look at how carriers are helping hit the brakes on the capacity crunch.

Pushing new legislation to put drivers behind the wheel sooner
The Bureau of Labor Statistics (BLS) estimates the average age of truck drivers to be 55. The trucking community is aging, and many drivers are retiring and dropping out of the workforce altogether. To remedy this, some carriers are pushing for new legislation that should create a boost in the number of drivers in the workforce.

The H.R. 5358: Drive-Safe Act, which was introduced to the U.S. House of Representatives in March and to the Senate in August, seeks to lower the required age of commercial drivers to 18 on a national level. Federal law currently prohibits people from becoming professional truck drivers until they are 21 years old. Under the proposed law, new drivers would also have to complete 240 hours of on-the-road experience with a licensed truck driver. Though the bill does have some bipartisan support, it has not advanced through the legislative process. This is due to the November election and the introduction of the new Congress, which is set to take their seats in January, 2019.

The Fixing America’s Surface Transportation (FAST) Act, which was passed in 2015, also required the Department of Transportation (DOT) to implement pilot programs allowing certain drivers who were under the age of 21 and met very specific criteria to begin training for operating commercial motor vehicles. Scheduled to launch in 2019, the program is forecasted to begin with about 200 people. Although this is a very small start, the program’s aim is to collect data on the effects of allowing younger drivers behind the wheel, which could help push bills like H.R. 5358 through Congress more quickly.

Paving the way for higher pay
Driver salaries haven’t always kept pace with inflation, but by offering current and prospective drivers a boost in pay, bonuses and other financial incentives, many carriers are working to turn that around.

Since 2017, driver pay has increased by 12%, and according to the National Transportation Institute’s quarterly survey, almost 50% of drivers have reported pay increases in 2018 alone.

Rises in pay are also helping carriers retain drivers longer. As carrier turnover rates are reaching as high as 88%, with compensation being the number one reason drivers leave their employers, carriers are stepping up with significant incentives for their best drivers to continue hauling loads for their clients.

Looking to the future
Each month, the BLS data shows that truck driver employment is increasing, with heavy and tractor-trailer drivers leading the way in numbers. Carrier efforts to hire and keep drivers are working, just perhaps not as quickly as shippers may like. Tightening capacity has led to increases in shipping prices, and the capacity crunch has shown no signs of letting up in the short run. For shippers, this means having to endure rising shipping prices, at least for the time being.

Thankfully, there are ways shippers can mitigate these costs, and working with the right 3PL partner is undoubtedly the most valuable. At King, we work to find the best shipping methods and carriers for businesses, helping them move freight by managing carrier relations, planning routes and negotiating shipping rates. Even in the face of a capacity crunch, we make it easy to optimize your supply chain.

Ready to talk solutions? So are we! Contact King to start planning your 2019 shipping initiatives.