Shippers and forwarders affected by the lack of long-haul truck drivers in the US must move to other transport modes, as the shortage is long-term rather than a cyclical shift, say industry experts.
John Roberts, president and CEO of JB Hunt Transport, speaking at the Council for Supply Chain Management Professionals annual conference in Atlanta last week, called on shippers to reduce their demand for long-haul truckers.
“The driver dynamic is very real,” he said. “No one is raising their kids to become truck drivers, and the average age now is about 53. It’s a deeper problem than a cyclical one, and shippers are deferring to intermodal for longer lengths.”
Tom Sanderson, CEO of Transplace, a 3PL, added: “No one wants to be a long-haul truck driver. And it’s unlikely that there will be an immigration solution. It is a long-term trend – but there are other ways to reduce demand. Shippers will have to be creative here as nothing will increase the supply of drivers.” He pointed to intermodal transport as well as the use of less packaging to free some capacity.
Trucking in the US has become an increasingly high turnover business. According to the American Trucking Association, there is a shortage of between 20,000 and 30,000 truckers currently, and turnover rates for large linehaul truckload fleets broke the 100% barrier for the first time in four years in the second quarter of 2012, at 106% employment turnover. Smaller fleets posted an 86% turnover in the same period.
“Shippers need to reduce demand by going intermodal,” said Mr Sanderson. “A collaboration would help – there is plenty of capacity for less-than-container-loads.”
One expedited freight trucking company, speaking on the sidelines of the CSCMP event, told The Loadstar that it had increased its use of domestic air freight as a result of the driver shortage. “The railroads are too slow for our deliveries and the domestic air freight network is reliable and fast,” he said.
Meanwhile, the railroads, which have seen average speeds increase to 32 mph from 31 in 2011, have enjoyed a buoyant year. Domestic intermodal volume rose 12.5% in the second quarter, year on year, in the third straight quarter of double-digit growth. According to the Intermodal Association of North America, intermodal rail volume accounts for about 10 to 15% of all US surface transport and the sector is seeing steady volume growth, rather than peaks.
There had been hope in some sections of the industry that the easing of restrictions on Mexican trucking companies would lessen the shortage of drivers. But that is unlikely to happen, said Mr Sanderson. “There’s not much likelihood that restrictions will ease on foreign trucking into the US, and we don’t see that opening up. There is a lot of opposition to allowing Mexican trucking companies into the US, which is mainly from the Teamsters and owner-operators trying to keep competition down.”
A year ago, the US began a pilot programme to permit Mexico’s trucking companies to operate long haul in the US, while Mexico agreed to lift retaliatory tariffs worth $2 billion on 99 US-made products in exchange. But despite the burgeoning trade between Mexico and the US, as the near-shoring trend accelerates, so far only six companies, most with just one truck, have signed up. In the first ten months Mexican trucks had made fewer than 100 long-haul trips in the US.
“There are a number of challenges,” said Mr Sanderson. “One is that they need to get the truck back to Mexico and there is more northbound freight than southbound. But we should honour the Nafta agreement and allow trucks into the US.”
The express trucking company agreed. “We have no problem at all with Mexican companies working in the US. We need more drivers. The problem is with the unions who are scared of competition.”
He added: “There is also an issue of security – there are fears of people trafficking and drugs entering the US.”
The lobbying power of the US unions is said to be one reason why Mexican companies have failed to apply for the pilot programme, along with the backhaul issue. The Teamsters have lobbied successfully against the programme before, and observers claim that Mexican companies don’t want to invest in international transport if the US government eventually backs away from the plan.
A further challenge for the future of trucking is the issue of emissions, which has triggered a rise in equipment prices, making it harder for owner/ operators. However, an alternative to traditional fuel could raise the barrier still further. “We are very hopeful for the future of natural gas,” said Mr Roberts. “But it’s not there yet.
“We see a large financial gap in the purchase price, and we don’t know much abut the maintenance of equipment, and there is also a weight and range limitation. There’s a lot to ask of equipment manufacturers. Also the fuelling is time-consuming, and not abundant. Shippers are asking us to pilot with them, but it’s a question of how we get and purchase the fuel.”
The transport dynamic of the US is likely to be shaken further by the expansion of the Panama Canal, say observers.
“We are trying to make sense of the new dynamic,” said Mr Sanderson. “California and the railroads are not planning on sitting back.”