The trucking industry is dealing with a frustrating shortage of drivers. The supply chain is the backbone of American commerce, but without people to see it through, the entire economy is affected when products cannot move between places easily. Trucking prices — both for routes and products — are taking serious hits.

Why is there a shortage?

Much of the issue is rooted in the driving job itself. The American Trucking Association details that truckers working national and irregular routes received $53,000 annually in 2017, which is $7,000 (about 15 percent) more than in 2013. Private fleet drivers earned over $86,000, which is a $13,000 increase over the past four years.

This pay raise is the result of shipping companies attempting to retain current drivers and encourage new ones to join. Despite the extra incentive, though, the ATA also “saw a shortage of 50,000 over-the-road drivers in 2017, and predicted the number could grow to 175,000 by 2026.” Drivers are changing careers, opting for construction sites or factories rather than life on the road. These jobs pay more, but they also allow employees to go home each night, whereas trucking requires long and arduous hours in new places.

The average age of truck drivers is 49 years old, so many of them are retiring. Younger generations are finding the road lifestyle unappealing, so trucking is not seeing an inflow of new and interested talent. People who do join the supply industry often quit within a year of starting due to low pay and inflexible time commitments.

How is this affecting prices?

In a podcast, WBUR notes:

“According to industry analysts at DAT Solutions, just one truck was available for every 12 loads needing to be shipped at the start of 2018, the lowest ratio since 2005. That’s pushing some retailers to delay nonessential shipments or pay high prices to get their goods delivered on time.”

Conversely to the driver shortage, demand is only increasing.

Companies that choose not to delay nonessential shipments pay premiums to ensure big rigs are readily available. The Wall Street Journal specifies that the price of hiring standard big rigs was $2.11 per mile at the end of 2016 (including fuel surcharge), which is a 3.5 year high. Dave Menzel, Chief Operating Officer at Echo Global Logistics, Inc., also told the WSJ that at the end of 2017, the cost to ship freight between 500 and 750 miles rocketed up to 30 percent on certain routes (timekeeping regulations sometimes turn one-day trips into two, which forces companies requiring next-day delivery to pay even more expensive drivers).

Weather affects prices, too. Refrigerated trucks are essential not only to keep perishable items cool when traveling through heat, but to keep them from freezing in frigid temperatures. Climate-controlled trailers are, naturally, more expensive than typical vehicles.

What about product prices?

Food Dive mentions,

“According to the Food Marketing Institute, grocers lose $75 billion a year in sales — 10 percent of the industry total — due to out-of-stocks and unsaleable goods, often the result of late deliveries. If fleets can’t find new drivers, expect those numbers to increase. If the problem isn’t solved, it wouldn’t be surprising to see retailers and manufacturers pass the cost of those losses on to consumers.”

Healthy economies dictate that supply must meet demand, but the supply industry is having a difficult time meeting… well, supply. If there is a lack of drivers, retailers might compensate for missing sales by charging more for the items they do have. Food Dive also reports that certain retailers, like Walmart and Kroger, actually fine suppliers for late deliveries. This penalty is intended to incentivize punctuality, but it may ultimately exacerbate the problem because it means less money for suppliers to draw in potential recruits with.

Besides fines, Freight Waves says that tariffs on steel and aluminum imports have affected the industry as recently as March 2018: prices on steel mill output increased almost two percent over the course of the month.

There’s still hope

We at Fr8 Network recognize that the truck driver lifestyle is a demanding one. It can be exhausting and especially frustrating when brokers connect suppliers to the cheapest carriers without regard for efficiency or vehicle capacity. By enabling drivers to find jobs themselves and ensuring that their trailers are as full as possible, we plan to save $66 billion each year from wasted space and time.

Coordinating logistics to save truck routes will in turn bring down this staggering need for truckers as well. At the moment, we are partially paying truckers for deadhead driving; in effect needing more drivers on the road than necessary.

A more efficient system means less frustration, which we hope will encourage a new generation of truckers to take up the occupation. More drivers (with better pay thanks to saving excess money) allows supply to actually meet demand, keeping both shipment and product prices low for everyone.