"We've Never Seen Anything Like This" - Freight Companies Scramble To Hike Wages As Trucker Shortage Intensifies

Millennials would apparently rather live in their mothers' basements for the rest of their lives than take a "blue collar" job like joining the ranks of America's long-haul truckers - and that's creating serious problems for the US economy that could prompt the Federal Reserve to hike interest rates even more quickly, as the central bank attempts to head off an "overheating" economy.

Trucker

In a report published Tuesday, the Washington Post became the latest US news organization to explore the factors driving up freight costs in the US. These include a shortage of drivers that is forcing trucking companies to hike wages at a seriously rapid clip. As we pointed out last year, the Trump administration's focus on restoring blue-collar jobs in the US has inadvertently helped create a "yuge" labor shortage. According to a study done by one industry group, freight companies could be facing a shortage of more than 175,000 drivers by 2024.

Trucker

The problem is that few young people are willing to dedicate their careers to long-haul trucking for fear that tech giants like Uber and Google will soon render them obsolete by introducing fleets of self-driving trucks.

The US has been struggling with a shortage of drivers for years. But in 2018, that shortage has reached a crisis level as a strong economy has caused demand for goods to soar across nearly every sector of he US. In addition, the federal government introduced a new rule in December that limits driving shifts to 11 hours before drivers must take a legally mandated break.

In response to these circumstances, Joyce Brenny, chief executive of Brenny Transportation in Minnesota, gave her drivers a 15% raise this year, but she still can't find enough workers for a job that now pays $80,000 a year - well above the national median income. Brenny added that she might be forced to hand out another 10% raise later this year.

"I've never seen it like this, ever," said Brenny, who has been in the trucking industry for 30 years. "It doesn't matter what the load even pays. There are just not drivers."

Trucking executives say their industry is experiencing a perfect storm: The economic upswing is creating heavy demand for trucks, but it's hard to find drivers with unemployment so low. Young Americans are ignoring the job openings because they fear self-driving trucks will soon dominate the industry. Waymo, the driverless car company owned by Alphabet, just launched a self-driving truck pilot program in Atlanta, although trucking industry veterans argue it will be a long time before drivers go away entirely.

Brenny anticipates she will have to raise pay another 10 percent before the end of the year to ensure that other companies don't steal her drivers.

"The drivers deserve the wages. They really do, but the raises are coming so fast that it's hard to handle," said Brenny, who is having to adjust contracts for drivers - and customers - rapidly.

[...]

"It's as bad as it's ever been" to find drivers, said Bob Costello, chief economist at the American Trucking Associations. "Companies are doing everything they can to make drivers happy: increasing pay and getting them home more often, but that means they aren't driving as many miles."

America had a shortage of 51,000 truck drivers at the end of last year, Costello found, up from a shortage of 36,000 in 2016. He says "without a doubt" it's going to be even higher this year, even though many companies are giving double-digit raises. He gets asked about the driver scarcity daily as companies try to figure out how to handle the growing backlog. His best advice is for companies to invest in technology like what Uber and Lyft have to cut down on the time a driver or truck sits idle between runs.

Trucking executives who spoke with WaPo said their industry is facing what they described as a "perfect storm". Low unemployment is making it hard to find drivers. And young Americans are wary of taking a job that could soon disappear thanks to intensifying automation and AI. Alphabet's Waymo just launched a self-driving truck pilot program in Atlanta - though industry veterans say it'll be years, or even decades, before the program is ready to expand.

Trucker

Meanwhile, rising wages and climbing energy prices are driving the trucking price per mile to its highest level since the financial crisis.

This rise is eating away at profit margins for everybody from grocers to manufacturers. Eventually, companies will have no choice but to pass on these expenses to their customers in the form of consumer price inflation.

And the situation will likely only get worse as the summer driving season jumps into full swing.

Logistics and transportation accounts for about 10 cents of every dollar in the U.S. economy, says Donald Broughton of Broughton Capital and author of the Cass Freight Index publication.

"I don't normally speak in hyperbole, but we're entering some uncharted territory," Broughton said. "If there is a 10 percent increase in transportation costs, that gives you a 1 percent increase in inflation for the broader economy. That's real."

It could mark a turning point for the U.S. economy. Inflation has stayed unusually low in the past decade, largely because costs have stayed low for food, clothes and other items Americans buy in store or online as companies got more efficient and worker wages barely increased. But rising shipping costs could change that dynamic in 2018, potentially forcing people to have to spend more and employers to hike pay as they try to compete for workers with the trucking industry.

There already aren't enough trucks on the road to keep up with demand this spring. It could get even worse when the holiday season hits.

Long-haul trucking doesn't require a college degree - but drivers must repeatedly pass drug tests, something that's becoming a major hindrance for younger male workers.

But perhaps as young people start to realize that they need to find a job that pays better than the $30,000 a year they're making as a social media guru, then the shortage of drivers will start to clear up.

Comments

JimmyJones Drater Wed, 05/23/2018 - 23:00 Permalink

This is the way to do it, graduate from HS, then trucking school, "live" at your parents for 4 years while you drive every legal minute. Buy a big ass house on the water and rent it. Then just marinate, do hobbies and work occasionally. Living in a modest place inland.

I bet if weed was legalized 90% of the drug testing issue would disappear.

In reply to by Drater

D503 JimmyJones Wed, 05/23/2018 - 23:10 Permalink

Yeah ok. Truckers are the biggest suckers in the game. No life, no roots, and no stability. The only way to "make it" is to own your own truck and hustle people. I've got a trucker friend with a lambo.

Oh wait, I had a trucker friend with a lambo, all his shit is impounded and he's looking at $600k in tax evasion.

In reply to by JimmyJones

King of Ruperts Land I hate cunton Thu, 05/24/2018 - 00:23 Permalink

"fear that tech giants like Uber and Google will soon render them obsolete by introducing fleets of self-driving trucks."

In other words they are pussies. Grow up and get a job. Once you become a man you don't fear such things. If robots are taking your jobs, sabotage the robots. Drive the off the road, jam their electronics and shine lasers in their sensors. Then arrange for their loads to be stolen. Assassinate the technocrat leaders.

Problem solved. Humans rule! Robots drool!

Lower taxes more and lay off some government workers. They can drive truck.

In reply to by I hate cunton

ed31337 King of Ruperts Land Thu, 05/24/2018 - 02:15 Permalink

Sabotaging the robots and stealing goods is just plain wrong. 

The sooner robots take over these boring-ass long haul trucking jobs, the better for humans who just want to be with their families. The robots aren't going to bored to death, falling asleep at the wheel, or charging high shipping fees. Without income, robots won't be paying taxes at all, which will force the laying off of worthless government workers.

 

In reply to by King of Ruperts Land

TxExPat HenryHall Thu, 05/24/2018 - 08:37 Permalink

Skipping the long haul down the (limited access) freeway is also the part that the AI is best at.  A lot of the initial plans I've heard about are talking about using AI on the long haul part.  A Human handles the pickup from the shipping customer, hauls to a nearby distribution center (Next to a freeway), where a AI controlled tractor picks up the trailer, and runs it down the freeway to some cross country distribution center.  (With some pre-planned AI friendly refueling stations along the way).  A human driven tractor then picks up the trailer, and runs the short haul to the destination receiving point.  Keeps the human in short haul, complex (high legal liability) pickup/drop off hops, and the AI in the time-consuming boring (and relatively safe) long haul route.  "Someday" you may see AI running everything Pickup to Drop off, but I think we'll ooze our way into that via the long haul segments first... 

In reply to by HenryHall

pliny the longer King of Ruperts Land Thu, 05/24/2018 - 07:18 Permalink

used to work at company with trucking division; didn't work in that part but the guy in charge of it would tell stories of how he'd send a guy to chicago or something, never hear from him again and get a call 2 weeks later from police saying the trailer was in arizona or something;  back then the trucks were tracked but not the trailers (90's).  the drivers would literally just drive someplace, park and walk away, or dump the trailer, drive some more and then walk away.  

In reply to by King of Ruperts Land

thisandthat pliny the longer Fri, 05/25/2018 - 01:22 Permalink

There's this trucking company here (quite large, with some thousands of trucks), and at a time when there was a large influx of ukrainian migrants here (tens of thousands), some ended up there. One day they lost contact with one of them, so they went after the truck's gps signal, and... they found it. I mean, they found the gps, connected to a battery in some eastern european forest; the truck, the cargo and the driver had vanished never be seen again...

In reply to by pliny the longer

bluecollartrader King of Ruperts Land Fri, 05/25/2018 - 15:37 Permalink

It's not the fear of self-driving trucks.

 

It's the long hours on the road with no home life. Check the want-ads for truckers. "Home Time" is as much a topic being advertised as pay and benefits.

Secondly, it takes a year, sometimes two years experience at some companies to earn the higher wages they're advertising. A new driver will make about $35,000 to $45,000 the first year. Yes, there are exceptions, but they are not the norm.

Thirdly, this reminds me of what happened in the real estate market in the mid-2000's. Real estate agents flooded into the business... it's like they appeared like roaches, there were so many of them. In 2010, they were unemployed. Also, consider what happened to the oil workers in the shale fields. Lots of unemployment and fast just a few years ago. We get a recession, which is quite likely, and a third of these new truckers are without jobs. 

In reply to by King of Ruperts Land

css1971 D503 Thu, 05/24/2018 - 02:53 Permalink

Young folks are right of course. When they are targeting you for automation then it's time to look elsewhere. Labour supply in that market is going to increase enormously and a human can't compete with 24x7 operation.

The trucking companies are paying the risk premium for that. Suck it up and pay. The drivers are living in an increasingly insecure environment.

In reply to by D503

D503 King of Ruperts Land Thu, 05/24/2018 - 00:59 Permalink

Right, because those are jobs engineers haven't worked around or get people out of basements.

All the truckers from the boomer era were complete drug addicts. It's a worthless lifestyle choice.

Of course, the response will be that they should evolve and compete and enter already overcapacity fields of work.

Humans today are the horses of the horseless carriage era. Their contribution is redundant and often substandard. That is increasingly including doctors, lawyers, and engineers.

In reply to by King of Ruperts Land

Faeriedust D503 Thu, 05/24/2018 - 09:19 Permalink

That assumes, of course, that humans are worthless except for the work they produce for their Masters.  What if humans had value in and of themselves?  What if -- just what if, mind you -- human society were to be organized around the principle of improving ALL human lives, not just those who already have nothing left to desire except immortality?  What if humans -- for that matter, what if horses, cows, and wolves and deer and coyotes -- were seen as worthy of respect, happiness, and a decent species-appropriate life WITHOUT REGARD for their usefulness to some Power That Be?

I know, I know.  That's so passe and medieval.  How could there possibly be any value in anything or anyone apart from Money?

 

In reply to by D503

Faeriedust SilverSavant Thu, 05/24/2018 - 09:21 Permalink

Well, not WHILE they're smoking.  It takes an accomplished pothead to exercise intelligent judgement while snockered.  But the problem with pot is that the effects are gone in 24 hours, while the test keeps showing positive for a minimum of 2 weeks. It's like requiring men in the military to be totally celibate because they can't shoot accurately while they're fucking.

In reply to by SilverSavant

Manipuflation autofixer Thu, 05/24/2018 - 02:21 Permalink

I have a class A CDL with HAZMAT and tanker endorsement.  Fuck that $15 an hour shit.  The license itself will set you back four figures after all of the testing.(drugs too)  Who wants to do that? 

Having driven an 18 wheeler, I have respect for most of those who do.  It's not easy.

What's wrong with trains and the track we have left?

In reply to by autofixer

Bluz autofixer Thu, 05/24/2018 - 02:45 Permalink

Here is the problem with the mandatory random drug tests. If I have a cocktail on my night off, I will easily pass any drug or alcohol test by morning. Lets skip over to that joint I smoked.  It's no one's god dam business if I smoked weed last Friday night on my weekend off but the random drug tests will show a positive on a drug test a week later. The drug enforcement policies are completely over the top and they aren't changing anytime soon. There couldn't be a worse unconstitutional set of reasoning skills to arrive at conclusions that are in the interest of public safety, Until this policy does change the shortage of drivers will only get larger.

In reply to by autofixer

Kidbuck Bluz Thu, 05/24/2018 - 06:54 Permalink

If you're so sure weed has no effect on your behavior or attitude then start your own trucking company, employ all the druggies you choose, and reap those huge profits. If your insurance rates don't go up because of a higher rate of accidents, then great. If your drivers don't all develop a don't give a shit attitude and make their deliveries on time, and take care of your equipment, then great, you win.

 

In reply to by Bluz

Ace006 Bluz Fri, 05/25/2018 - 08:18 Permalink

Here's an option:  Don't smoke week.  It's for losers.  Wherever there are drugs there you will find a second-rate life.  No one needs chemicals that alter perception or judgment. 

I watched a TV report on a turnout in Colorado after weed was legalized.  The crowd who showed up to celebrate were as I described.  Losers.  It was just sad.

In reply to by Bluz

Government nee… TBT or not TBT Wed, 05/23/2018 - 21:37 Permalink

The latest elog regulations, which went into effect in April, caused 10,000+ independent truckers to retire rather than deal with the new bullshit.  Steadily, the drivers have had to deal with incremental intrusive tech and regulations (cameras watching them, elogs, DOT nitpick inspections) which have raised the cost of operations for the indie driver who also farms during the growing months.  If you look at the state-by-state top careers, truck driving is #1 for men in >20 states.  We can somehow outsource truck driving but not shitty public school teachers (mostly women).  .Gov is backdooring the consumer with these trucking regulations.  All in the name of price inflation.

In reply to by TBT or not TBT

FluffyDog6 Stuck on Zero Wed, 05/23/2018 - 22:49 Permalink

Truckers start at .25 to .35 per mile and can legally run about 2500 miles per week.  Delays getting freight, breakdowns, weather, or other factors outside the driver's control all eat into that total. 

Do the math.  No one is legally grossing $80,000 in a truck. 

Then deduct taxes, eating out A LOT, being away from home weeks at a time, no life (no little league games, no family life, paying other people to do the chores around the house, complete loneliness, even paying $10 to take a shower.)

Oh, and the health insurance typically sucks, other benefits are usually pathetic, and you get to tour (and sometimes spend days) in some of the biggest shitholes in the country. 

There has been a long-distance driver shortage since 1991 when the CDL started, and it's not hard to figure out why:  it works out to about minimum wage, without the prestige.

Anyone who wants to shit on truckers or people who won't do that job, pull into your closest truck stop, and pick up one of several free magazines.  They're all loaded with want ads -- knock yourself out.

 

In reply to by Stuck on Zero

Ajax-1 Stuck on Zero Thu, 05/24/2018 - 01:01 Permalink

Ever since NAFTA, there has been an exponential increase in Mexican 18 wheelers operating in the USA. Most of these Mexican trucks/drivers have faulty equipment to include substandard air break systems, no fire extinguishers, bald tires, unregistered trailers, no log book, counterfeit drivers licenses, counterfeit health cards and the USDOT inspectors are told to look the other way and ignore the problem. It was all designed to destroy the US domestic trucking industry. Think about that the next time you and your family are out for a Sunday drive.

In reply to by Stuck on Zero

NoPension Government nee… Wed, 05/23/2018 - 22:15 Permalink

I voluntarily dropped the "CDL " from my license during the last renewal. The requirements are a ridiculous pain in the fucking ass....and getting worse. 

At 22 ( I'm 55 now ) I had a CDL class b ( all but tractor/ trailer) with all the endorsements. Hazmat. ( I occasionally drove an oil truck). It got worse and worse. First to go was hazmat. ( had to register with the Feds, fuck em )... to the point a few years ago...just fuck it. 

Then, I get pulled over the other day, pulling the trailer with my pick up. I fucked up...the trooper asked " are you working?" I said yes. Big mistake. Require a cdl and dot registration for any combo over 10,000 lbs...being used for work. 

So...I've retired..haha!  In the future...I'm heading to mom's house to help with landscaping. 

No wonder there aren't enough willing to go through the hoops.

In reply to by Government nee…