Driver Shortage Ahead

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					 Is There An End in
 Sight to the Driver
     Shortage?
           Lana Batts
Larsen, Batts, Welborn & Cp.,   LLC
         Lbatts@LBWco.com
 Causes of the Shortage
--Recruitment Problems--
» Demographics
  » Fewer young, white men
  » Child care problems for women
» Regulations
    Physicals              Language
    Drug and Alcohol       Criminal History
    Fingerprinting for hazmat
» Full Economy
  Need to Find 80,000 New Drivers a Year
  Causes of the shortage:
  --Retention Problems--
» Life Style
   » Never home on weekends
   » Eating chicken fried steak, using public
     showers, constant enforcement
» Pay
   » Less in real dollars than made in 1980
» Full Economy
   » Other options

          Result: 125% Turnover
    Recruitment vs. Retention

» Conclusion:
  » We can hire them;
  » We just can‟t keep them
» Costs $8,000 to hire new driver
» Pay just doesn‟t overcome the
  terrible lifestyle
             Impacts
» Capacity Crunch
  » Too few drivers,
  » Operating too few tractors,
  » Pulling too few trailers
» Trucks Parked along the Back Fence
» Carriers unwilling to add new capacity

  Drivers Finally in the Driver‟s Seat
 Industry-Wide Dynamics
» 2004 was the best year for Truckload
  Carriers since 1980
» Capacity increased less than 2-3%
  compared with 15% annual rate in
  1990‟s
» Rates increased 8%
» Driver wages increased 6-10%
  » --labor is 40% of revenue
      What Doesn‟t Work
» Newer Trucks with more amenities
   » Just added new, expensive capacity
   » Raised the bar for everyone
» Soft benefits (Park „n View)
   » Couldn‟t quantify it helped driver retention
» Growing/training your own drivers
   » Added drivers for other carriers
» Incremental increases in driver pay
   » Too little to make up for crummy lifestyle
 Industry-Wide Dynamics
  --Don‟t look to Washington--
» Washington has reduced productivity
  » Hours of Service and congestion
     » Requires more drivers
     » Reduces take home pay
» Reduced productivity requires more
  drivers
  » No interest in lowering driving age
  » No interest in Longer/heavier vehicles
  » No industry consensus on either
 Industry-wide Dynamics
    -- Increase Pay--
$40,000 per year won‟t retain
  drivers
  » Pay increases of 6-10% in
    2004 and 5-7% in 2005 will
    still be too little to overcome
    lifestyle issues
» Will probably have to
  increase to $75-$80,000 per
  year to have any impact
     Industry Dynamics
     --Revamp Operations--
» Increase the home time
  » Direct relationship between number of
    days home a week and driver turnover
» Putting freight on rail and
  establishing hub and spoke
  operations -- JB Hunt model
» Establishing smaller regional
  divisions -- Knight model
     Industry Dynamics
   -- Improve the Lifestyle --
» Better truck stops
» Better connected to family
» Fewer hassles
      Industry Dynamics
    --Buy Another Company--
» Add 100 trucks,need to hire 300 drivers
» Buy 100 truck fleet in hopes of keeping
  50 drivers
» Pay more in goodwill if driver turnover is
  low
» Give contracts to individuals who have
  the driver contact
» Paying $5,000 for each driver
    Industry Dynamics
  --Change Size of Company--
» Larger           140%

  companies can    120%


  pay more, have
                   100%
                   80%
  more benefits    60%

» Smaller          40%
                   20%
  companies         0%

  “know” each              Large TL   Small TL   LTL


  driver                  Driver Turnover Rates
    Industry Dynamics
 --¿Se Habla Español? --
» Compañias norte americanas
  pueden emplear chóferes
  mexicanos para transportar
  entre de al frontera
  »   Joven
  »   Enthusiasmo
  »   Capaz de aprender ingelés
  »   Capaz de trabajar para sueldos
      minores
When will be Shortage Be
         Over?
» When people in the industry
  encourage their children to become
  truck drivers

				
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posted:3/26/2010
language:English
pages:15