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Have trucking carriers damaged the industry beyond repair?

After years of stagnant wages, truckers look to be in line for several years of strong income growth as the major motor carriers scramble for drivers.

The factors playing into the crunch are myriad.

At the top is the low appeal of trucking as a career for wage and quality-of-life reasons. Then there’s difficulty obtaining insurance for inexperienced drivers, restricting access to the worker pool.

An anticipated surge in construction demand amid a labor shortage following major hurricanes in the U.S. this fall is expected to shrink the potential supply of drivers. Florida and Texas, the states hit hardest by the storms, are typically strong recruiting grounds for drivers. Trucking will have to compete with a surge in post-hurricane construction jobs.

Driver wages could climb 30 to 40 percent over the next two years, said Eric Fuller, chief executive of US Xpress, a 7,400-truck motor carrier.

“We are absolutely scrambling for drivers,” Fuller said. Large double-digit increases will be needed to bring new drivers into the industry, he said.

“Each month it gets a little bit worse,” Fuller said.

Other large carriers are bracing for a jump in driver pay.

Lori Lutey, chief financial officer of Schneider National Inc., blamed a dip in operating income on “inflationary driver costs” in an August conference call with investment analysts. David Jackson, chief executive of Knight Transportation Inc., said in a recent call with analysts that driver wages are headed into a “volatile” period. J.B. Hunt Transport Services Inc. also highlighted “driver wages and recruiting costs” when it reported a dip in third-quarter financial performance this month.

A national infrastructure initiative – something both the Trump administration and Democrats say is necessary to repair the nation’s roads and bridges — would siphon even more workers from trucking and put the industry into an “absolute crisis,” Fuller said.

The driver shortage is looming even as e-commerce and a growing U.S. economy foster demand for trucking. The American Trucking Associations projects freight volumes to grow 2.8 percent in 2017, followed by 3.4 percent annual growth through 2023.

In a report issued at the start of the ATA’s Management Conference & Exhibition in Orlando, Fla., Sunday, the trade group said the driver shortfall could reach 50,000 positions by the end of this year and if trends hold, will grow to more than 174,000 by 2026.

“While the shortage is a persistent issue in our industry, motor carriers are constantly working to address it,” said Bob Costello, the ATA’s economist. “We already see fleets raising pay and offering other incentives to attract drivers.”

Driver wages and benefits are rising as motor carriers try to retain the drivers they have and recruit new workers, increasing by 5 percent and 18 percent, respectively, in 2016, according to the American Transportation Research Institute. Driver wages now top fuel as the biggest operating expense for motor carriers.

From August 2016 to August 2017, median annual base pay for U.S. truckers jumped 5.7 percent, to $52,079, according to jobs site Glassdoor.

Reimagining Trucker Pay

Already, industry observers are asking if it’s time to change how truckers are paid. The pressure on driver wages could mean hourly pay could become the norm in the next 10 years, Fuller said. Currently Most truckers get paid by the load. Essentially it is a fee per mile.

Such a change could lead to higher shipping charges.

“We would have to probably then reevaluate how we charge our customers,” Fuller said.

An imminent federal regulation that requires truckers to use electronic logging devices, or ELDs – digital equipment that monitors whether they are adhering to limits on driving hours – could put more pressure on carriers to raise wages. Some drivers are threatening to leave the industry rather than submit to the digital monitoring, a factor that could exacerbate a shortage.

“It’s a little less attractive for some people who feel like they may be constrained, and I think there will be some old-time drivers … who are going to potentially decide that they’re going to retire as opposed to complying with a new law,” Fuller said.

Truckers, he said, don’t like “Big Brother” monitoring.

ELDs are also putting pressure on shippers and carriers to use a guaranteed pay mechanism.

The more accurate accounting of time puts pressure on management to prevent drivers from running out of time or being paid for hours spent waiting at a shipper’s yard, said Mark Murrell, cofounder of the trucking technologies firm CarriersEdge.

Half of the CarriersEdge Best Fleets To Drive For survey’s 65 finalists last year had a guaranteed pay program, as did 77 percent of the top 20 companies in the ranking.

However, not everyone agrees with the idea that wages need to rise and that a shortage is coming.

The shortage isn’t necessarily for a lack of licensed drivers: it’s for a lack of drivers experienced enough to be insured at an affordable price, said Joe Rajkovacz, spokesman for the Western States Trucking Association.

Higher pay isn’t necessarily a panacea, he said, noting that wages for some truckers top $100,000 annually.

“It makes my skin crawl”

The problem is that trucking is not seen as an attractive career. It is a solitary job that requires long periods away from family.

“Trucking is really kind of the bottom of the barrel, unfortunately,” Fuller said. “The job is not as easy as people would perceive it, and the pay’s not great.”

Companies could consider steps to make the job more attractive — potentially by developing regional lanes, or routes, that would allow drivers to come home more frequently, or rearranging schedules to create predictability and consistency. As of now, drivers can spend weeks on the road, sleeping in uncomfortable conditions, rarely home for the evenings or weekends.

“Pay is a factor. It is not the sole thing,” said Rajkovacz, who spent 30 years driving a truck and says he would never encourage his children to enter the field. “Younger people just don’t want to check out of having a life….  It makes my skin crawl to think that 30 years ago I worked like that raising a family.”

Ultimately in the U.S., there could be an escalation of factors — the driver crunch deepens, carriers feel pressure to raise wages and transportation prices rise. Eventually, this could mean higher shipping costs across the board considering that more than 70 percent of domestic freight is hauled by truck.

“I think that’s where you’re kind of at that breaking point, where the customer says, ‘What does it take?’” Fuller said. “There’s going to definitely be some significant cost pressure and inflation there as we try to figure our way through this shortage.”

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