Driver Shortage Stalls Rapid Growth of Trucking Firms
Business at truck companies has kicked into high gear, with many companies experiencing record growth, profits and trouble finding qualified drivers, according to the Memphis Business Journal on September 9.
"Business is great," says David Owen, president of Hendersonville, Tenn.- based National Association of Small Trucking Companies. "We started rocking and rolling in 2003 and we've been going strong ever since."
After riding out a rough couple of years, trucking companies that survived high fuel and insurance costs and the general downturn in the economy are finding themselves swamped with business. "The companies that survived that perfect storm are really thriving," Owen says.
"We're expecting really robust growth," says Tavio Headley, staff economist for the American Trucking Associations. "We are confident the freight market will continue to strengthen and we base that on the growth we see in production and manufacturing, retail sales and business investment."
Executives at larger companies such as Yellow Roadway Corp. and Swift Transportation Co. express similar sentiments. Yellow blew away earnings expectations during the second quarter, with earnings increasing more than 50% from last year. The Kansas-based trucking company reported earnings of $46.9 million, or $.97 a share, for the quarter that ended June 30. This compares with earnings of $18.4 million, or $.62 a share, for the same period last year.
The increase in demand has softened the blow many trucking companies absorbed from the high cost of fuel. "There is more freight right now than trucks," Owen says. "That has allowed companies to demand and receive fuel surcharges."
But while officials say business is booming now, a few factors could put the brakes on growth. The lack of qualified drivers means that companies are missing out on the increased demand. "They would like to add more capacity, but it makes no sense to add capacity if you've got nobody to drive the truck," says John Ficker, CEO of the National Industrial Transportation League, a trade organization for shippers. "There is business to be had if you have the truck and driver to haul it.
"Everybody has driver problems," says Shellie Robinson of the safety division at D&L Trucking Co., Inc. "It's something everybody deals with." D&L has more than 50 trucks in operation in the Memphis area.
The Memphis branch of Staffmark Transportation, a company that trains and places truck drivers, is seeing huge interest from potential drivers and company executives. "There is a huge demand for drivers because the trucking industry has exploded by leaps and bounds," says Dennis Whidden, Memphis branch manager for Staffmark Transportation. "A lot of companies tell us they get drivers who have felonies on their record or they get drivers who pass all their requirements but they can't drive a truck."
The industry's labor troubles are most severe among truckload carriers, companies that dedicate entire trailers to one customer, haul goods over long distances and run irregular routes — meaning drivers often have little idea where they're going from one week to the next.
Capacity isn't there to meet rising demand because a lot of companies went out of business in the late '90s. "The full truckload industry lost three times as many companies as is the norm for almost three years in a row" in the late '90s, Owen says.
And, concerned about accidents caused by fatigued truckers, the U.S. Department of Transportation is looking at whether to mandate the use of electronic devices to record drivers' hours behind the wheel. The department also is exploring whether satellite-based systems that track fleets may be used to record driver hours. The DOT announcements were made in a notice published last week in the Federal Register.
The department allows drivers to work for up to 14 consecutive hours, 11 of them behind the wheel, followed by 10 hours off. The ATA, a trade group with 3,000 members, opposes a mandate to electronically track drivers' hours. An overriding concern is the accuracy of the devices.
The Insurance Institute for Highway Safety's request for the government to mandate automated, on-board devices to track drivers' hours has been turned down repeatedly. The Institute is concerned that paper logs leave room for cheating or mistakes.