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VOL. 7 | NO. 18 | Saturday, April 26, 2014

Crossroads

Looming driver shortage threatens trucking industry

By Amos Maki

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After starting work as a butcher when he was just a teenager, Ron Manis began his career as a truck driver in 1979.

A looming driver shortage is threatening to sideswipe the trucking business, a key part of the global supply chain and economy, and an economic juggernaut in Memphis. New federal rules governing how much time a driver can spend behind the wheel and other factors have made the career less attractive.

(Memphis News/Andrew J. Breig)

“I started when I was 16 years old, learning how to cut meat and, after being in that building 10 hours a day every day, I thought I wanted to do something outside and I’ve been driving a truck ever since,” Manis said. “Every time I saw one going down the road I thought to myself that I’d like to do that one day to see what it was like, seeing places I’ve never seen before, meeting interesting people.”

After driving for his father-in-law, delivering aluminum for recreational vehicle manufacturers, Manis joined Ozark Motor Lines in 1989 and has been with the Memphis-based carrier ever since. His career as a truck diver has taken him to 37 states.

“You see some beautiful country,” Manis said. “You meet some interesting people. I’ve made a lot of friendships with people I may never run into again. We’ve got some real characters out here on the highway. I’m a people person and I like to meet different people.”

But Manis, 61, is part of a vanishing breed: men and women who make a career – and life – out of truck driving. A looming driver shortage is threatening to sideswipe the trucking business, a key part of the global supply chain and economy.

“Trucking is such an essential service to our economy,” said Jim McCullough of General Truck, the exclusive Volvo truck dealer in the Mid-South. “Our economy couldn’t function without it.”

Long weeks on the road away from home, family and friends, flat pay rates, retirements and shifting public perception of the industry have made it difficult for fleets to recruit drivers, especially long-haul operators.

New federal rules governing how much time a driver can spend behind the wheel have also made the career less attractive. The new regulations have reduced the amount of time truckers can spend driving their vehicles and imposed more rest periods. The end result is drivers paid by the mile are spending more time on the road but aren’t being compensated more.

Long weeks away from home, flat pay rates, retirements, new regulations and shifting public perception of the industry have made it difficult for fleets to recruit drivers.

(Memphis News File/Lance Murphey)

Trucking companies are ratcheting up recruitment efforts – often going toe-to-toe with each other over the shrinking pool of drivers – by paying for tuition, pursuing acquisitions or mergers and offering signing bonuses to lure drivers into the fold.

“All of these trucking companies are doing anything they can to get drivers in the seats,” said Daniel Pallme of the Center for Intermodal Freight Transportation Studies at the Herff College of Engineering at the University of Memphis.

When Ed Gatlin launched Empire Express Inc. in 1988 he had 12 trucks and 12 trailers. With the help of his son, Tim, Empire Express, which specializes in time-sensitive and hazardous materials transportation, has been in growth mode. The company employs around 235 people today and now has 750 pieces of equipment.

“We just worked hard, gave good service and built up a good customer clientele,” said Gatlin, chairman of Empire Express.

But the driver shortage has Gatlin worried about the ability of the company to grow in the future. One of the first things people see when they log on to Empire’s website is a red, white and blue banner advertising that the company is “Now Hiring Drivers.”

Most firms today are laser-focused on recruiting, training and retaining drivers, Gatlin said.

“We have had trouble growing like we would like to because of the driver shortage and we are considering acquisitions,” he said.

A driver shortage is threatening to sideswipe the trucking business, a key part of the global supply chain and economy.

(Memphis News File/Andrew J. Breig)

The trucking industry has been wrestling the driver shortage for several years but the problem is growing more acute, with the gap between supply and demand widening dramatically in recent years and projected to get worse.

With a recovering economy and demand for trucking services expected to rise, the driver shortage is looming like an 18-wheeler in a rear-view mirror. Today, the trucking industry is facing a shortfall of around 30,000 drivers but the demand for drivers could increase by 330,000 more jobs by 2020, according to the U.S. Bureau of Labor.

“The shortage of drivers is impacting us,” said Tom Watson, co-chairman of Armstrong Relocation & Cos. “There’s a huge demand for drivers and there’s not enough of them.”

Driver turnover remains a vexing problem. According to the American Trucking Associations, the turnover rate at large truckload carriers for the fourth quarter of 2013 came in at 91 percent. For the calendar year 2013, driver turnover averaged 96 percent, slightly below 2012’s 98 percent and below the all-time high of 130 percent in 2005.

With turnover that high, companies simply can't hire new workers fast enough to make up for the number of people leaving the field.

The turnover rate has a huge impact on a company’s bottom line. A 500-truck truckload carrier faced with a 100 percent turnover rate could spend as much as $2.5 million annually recruiting drivers.

“We spend a large amount of money, like most truck lines, recruiting,” Gatlin said. “That’s where we really compete with other lines. We’re hiring a lot of drivers out of schools, and they’re good drivers, but a lot of times they realize driving isn’t for them.”

The driver shortage has the potential to have a large impact on the local economy.

Memphis, which has become a powerful distribution and logistics hub thanks to FedEx, geography and transportation infrastructure, has the third busiest trucking corridor in the U.S. Total trucking industry activities employ 14,629 people in Shelby County alone, with an annual average payroll of $644 million, according to U.S. Census data.

Trucking is also a critical component of the growing intermodal freight delivery movement.

“We have all these intermodal operations and the first mile and last mile is by truck,” said Dr. Martin E. Lipinski, director emeritus for the Center for Intermodal Freight Transportation Studies. “It’s an industry that is very vital to our whole supply chain and distribution and logistics and supply chain industry in Memphis.”

Industry veterans and experts say there are multiple reasons for the shortage, with everything from an aging workforce to new regulations impacting the number of drivers on the roads.

Pallme said that with Americans placing a greater emphasis on family or personal time, and with public perception of truck drivers dipping, it can be hard for companies to find long-haul drivers willing to spend days or weeks on the road away from home.

“You have the demographic changes where nobody wants to be a truck driver,” Pallme said.

New national safety regulations that went into effect in 2013 limiting the number of hours a driver can be on duty are negatively impacting compensation for some drivers who are paid by the mile.

The changes to the 34-hour restart provision of the hours-of-service rule for truck drivers – which requires drivers to take a 34-hour break once they hit 70 hours – include two overnight periods. That means that drivers can only use the 34-hour restart to reset their weekly driving limits once every seven days. The restart will have to include two periods from 1 a.m. to 5 a.m. and drivers are required to take a 30-minute break before driving more than eight hours.

Manis said many longtime drivers simply retire instead of having to comply with shifting regulatory burdens. The average age of a commercial driver in the U.S. is 55, according to the Bureau of Labor Statistics.

“People are tired of it,” Manis said. “They’ve changed the rules and regulations and how we can run and a lot of guys who have run as long as I have are deciding to get out and retire.

“Every time you turn around they’re changing something again. You’ve lost 30 minutes a day where you don’t make any money at all. It’s overregulation and instead of putting up with the hassle, they just quit.”

On a Saturday just outside of St. Louis, Manis, who estimates that he has driven 2.5 million miles between Memphis and St. Louis over the last 17 years, was preparing for another shift on the road.

“I probably know every twist and turn on that route,” he said.

While the industry is facing a severe driver shortage, Manis said truck driving remains interesting and that he can’t imagine doing anything else.

“I like the challenge of it,” he said. “You have to pick up on time and you have to deliver on time. I’ve got to say that trucking has been very good to me. Over the years I’ve made good money, supported the family and enjoyed work.”

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