There’s going to be a massive truck driver shortage in the United States over the next few years as a largely aging workforce prepares to turn in their hats. According to some estimates, up to 25 percent of today’s working truck drivers will be retiring in the next five years. And that’s a huge problem for the logistics industry because there aren’t enough people to replace them.
Some companies are already planning for the worst. Ohio-based Kenan Advantage Group (KAG) says that it is planning a guaranteed pay increase program over the next three years to incentivize new entrants to the profession. KAG operates terminals and satellite locations across 40 states in the U.S., and delivers to all 48 continuous states, as well as Mexico and Canada. It would cause an immense disruption of operations if the issue can’t be resolved.
The pay increase program requires additional funding, so KAG is in the process of contacting its customers to secure that funding. They already provide their employees with new equipment, advanced technology, safety support and other tools to enhance their work experience, as well as intangibles like appreciation from management. But, as KAG CEO Dennis Nash says:
“But ultimately, we have to provide a compensation package that can compete effectively with other industries for what is a shrinking pool of available candidates.”
For a long time, truck driver pay has been lagging behind the nation’s inflation rate, which could be one of the root causes of the current problem, which has actually been around for several years but is expanding at an alarming rate in recent years.
According to Driver Solutions, data from the American Trucking Association ATA) shows that there’s a need for about 100,000 new drivers in 2017, and the shortfall is already at 50,000. And it’s only going to get worse.
Against this backdrop is the growth of e-commerce, which puts even more pressure on the bulk transport and logistics industry. Amazon may have been the first major mover in this space, but now, nearly every brick and mortar retailer worth naming is getting into the e-comm game. As a result, there’s mounting pressure on parcel delivery companies as well as long and short haul freight carriers.
The ATA estimated more than a year ago that truck driver shortage could hit 175,000 by 2024.
One cause of the problem was inadequate pay rises, as we noted earlier. The other problem is the average age of truckers, which is 49 years, with 55% of the workforce being over the age of 45.
Yet another problem is that the young and eager of the nation can’t apply to drive trailer trucks and other larger forms of commercial transportation until they’re 21 years old, further exacerbating the problem. Some states do allow in-state CDLs (commercial driver’s licenses) for those age 18 to 20, which automatically converts to a 50-state CDL at the age of 21. But that doesn’t solve the problem for long-haul freight deliveries, which accounts for a large portion of overall freight tonnage. Moreover, over 70% of all freight tonnage moved within the United States goes on trucks so we’re talking about massive volumes being moved across state borders.
That’s a big trucking problem, by any measure. The only way this can be resolved is by companies like KAG incentivizing young candidates to join their workforce with money, career development and other benefits. It puts more pressure on their bottomline profitability, but that’s what they need to do if they want to keep serving an ever-increasing customer base.