Driver Shortage? It’s Worst at the Big Carriers

There’s a driver shortage, right? Maybe yes. Maybe no. It depends on who you ask.

The fact is, since early 2012, the number of for-hire drivers has increased by 409,286, representing a 21% increase, and bringing the total number of drivers to 2,354,547. This is a huge story that nobody’s talking or writing about.

Ask the largest carriers if there’s a driver shortage ─most will say “absolutely.”  And they’re right, from a certain limited point of view. The biggest carriers have a very hard time filling seats and keeping them filled. So yes, there’s a driver shortage if you’re a large carrier. No doubt.

Ask the largest shippers if there’s a driver shortage. Most will say “yes.”  And they’re right, too. The biggest shippers often deal with the biggest carriers, keeping a number of the nation’s largest 100 carriers on speed dial. So by definition, the biggest shippers, because they make heavy use of the biggest carriers, have a driver shortage.

So where are the 409,000+ new drivers? Since 2012, they’ve largely supercharged growth in the micro-, small and mid-sized fleets. For example, the number of micro-fleets (1-6 trucks) increased by 42%; the number of small fleets (7-9 trucks) increased by 29%; mid-size (20-100 trucks) increased by 22%. While during that time the number of larger fleets (101-500) grew 14% and the largest (501+) grew by 10%. Every fleet size grew since 2012, but the clear winners of the driver war are the smaller and mid-size fleets.

The takeaway: align yourself with smaller and mid-size fleets, and brokers who specialize in the thriving middle of the market. Establish strong partnerships and open lines of communication. Some words of caution regarding the big name brokers—they make prolific use of owner operators. You’ve got to ask yourself—is that the kind of capacity you need? Is that the kind of capacity a business can rely upon?

(Data source: FMCSA & QualifiedCarriers.com)

NEW HOURS OF SERVICE REGULATIONS TAKE EFFECT JULY 1, 2013—BIG CHANGES AHEAD

The FMCSA has told the public that it will not delay introduction of the new Hours of Service (“HOS”) rules past July 1, 2013. That may, or may not mean an imminent across-the-board capacity shortage, but it will mean that certain carriers will no longer be able to sustain serving certain customers, or lanes, once they understand what the new HOS rules mean to their operations. 

The 2004 HOS rules change saw widespread customer-carrier changes, as carriers shifted from less attractive freight to most attractive freight (low driver responsibility and delay = attractive freight).   

There is no way to sugar-coat it; 2013 HOS rules change will impact your operation.  It is expected to be among the top most significant challenges shippers faced in several years. The extent of the impact is up to the shipper. The smartest shippers and smartest brokers will proactively manage the process starting now. They’ll: 

1. “Double-down” on pre-existing great relationships and ensure strong brokerage component. 
2. Invest in those relationships, and build stronger bonds now. 
3. Seek to better understand their own operations, and ask their partners questions. 
4. Stress to their internal teams, vendors and customers, the importance of good communications, flexibility and advance notice. In freight, time and communication are simple to understand:

a.      Advance notice = Least cost routing = product & freight savings

b.      Late notice = High cost routing = product & freight increases (and lost sales, etc.)

Those who don’t plan now to adapt to 2013 HOS will likely be left with an expensive problem that results in lost sales, downed production time, and lots of headaches, for which the only “cure” is money that isn’t in anyone’s budget. 

This is not the time to gamble. Trust those who got you through tough times. Two other factors to keep in mind:  (1) Chances are, 2013’s growing season and peak season  will strain capacity, on top of tightening HOS rules. (2) The driver shortage issue is not improving. In fact, as the housing market finally seems to be showing life in pockets around the country, burdensome trucking regulations and better pay from construction opportunities are driving drivers away.