Managing a successful business requires focus on tackling the day-to-day operational issues while strategically steering the company towards growth and increased profitability. For some this means addressing worker shortages, training needs or developing new recruiting programs. Others may focus on product development, supply chain management and vendor issues. The strong economy in 2018 created additional demand for services opening the door to new growth opportunities. Trucking and transportation is one industry that has benefitted from the economic windfall. In fact, the American Trucking Association (ATA) reported there was a 7.2% increase in freight hauled in 2018 than in prior years. While good for business this has also created staffing issues that industry companies have struggled to overcome. According to the American Transportation Research Institute (ATRI) 2019 Critical Issues in Trucking Report, not only is driver shortage a concern but so is driver compensation and the frequency of delays. To help clients, prospects and others, Barnes Dennig has provided a key summary of report findings below.
About the Report
The report is based on responses received from 2,119 participants collected between July 29th and September 20th, 2019. It was promoted through traditional and trade press, website, email and other digital efforts. There were a diverse number of participants including motor carriers, commercial drivers and other freight stakeholder groups. Participants were asked to identify their top three challenges from 28 broad categories and provide insight on how to address each.
Key Report Findings
- Driver Shortages – This has been a recurring issue for companies as they struggle to bridge the gap between demand and capacity. The ATA estimates over 60,000 additional drivers will be needed within the year, and 100,000 drivers over the next five years. The shortage is impacting over-the-road (OTR) truckload sector because the work often requires long haul trips that keep drivers away for extended periods. To resolve the issue, companies are implementing new recruiting strategies including working with the federal government to permit those between 18-20 to drive interstate.
- Driver Compensation – This has become a leading concern for many companies because increasing compensation is a strategy fleets use to attract drivers. Many have introduced new compensation models including salary plus, per load and percentage of load rates. Although drivers are happy to receive the increased compensation, they are typically not keeping pace with inflation and don’t compensate for driver downtime.
- Delays at Customer Facilities – The amount of time a driver is delayed at a customer facility directly impacts many variables including compensation. To underscore the issue, a recent ATRI study revealed that drivers reported an average increase in delays of more than six hours between 2014 to 2018. It may also lead drivers to park in an unsafe location if they are unable to find proper parking before their hours run out.
- Truck Parking – Access to suitable truck parking is a concern because drivers are often forced to drive beyond allowable HOS rules to parking, or resort to parking in undesignated and often unsafe areas. Although many states are conducting assessments of available facilities, the shortage is well documented and ranks as a top concern again. To help address this concern, there is a push to implement a truck parking reservation system.
- Insurance Cost/Availability – Over the past few years, drivers have experienced consistent increases in insurance costs. One ATRI study found there has been an additional insurance premium cost of over 17% per mile. It’s believed the cost of equipment repair, medical costs, settlement awards and broader legal exposure are contributing factors. Unfortunately, this is a pressure point for both owner/operators and fleets.
The report findings paint a clear picture of the challenges and issues plaguing the industry. While each company is impacted differently, the insights provided offer some insight into how companies are impacted, and steps be taken to remedy them. If you have questions about the report findings or need assistance with a tax or audit issue, Barnes Dennig can help. For additional information call us at 513-241-8313 or click here to contact us. We look forward to speaking with you soon.