Logistics

The holiday season is immensely busy for the trucking and transportation industry. With the drastic focus on consumerism that’s associated with this time of the year, retail sales soar in preparation for holiday gift-giving. While most people don’t think twice about where their selected gifts come from, truckers and carriers understand the intense efforts that need to happen before people can get their packages in the mail or pick up their Christmas ham at the grocery store. Many of the purchases made during this season come from around the nation, and even across the world, and the trucking industry makes it all happen. Here is our insight on how this booming industry is impacted by the holiday season.

The Growth of E-Commerce and Retail Sales

With the rise in online shopping jumping 16.9% last year, the demand for drivers is only expected to increase in upcoming years, especially during the holidays. A large amount of the freight during Christmas time consist of gifts and extra retail merchandise that result from deals and sales. The holidays have always been the busiest time of the year, but with the exponential growth of online shopping, it’s not uncommon for many businesses to rely on holiday business to get them through the rest of the year. The extra cargo can mean more truckloads, stricter deadlines, and longer hauls.  For consumers, this can be a means of easy and quick delivery of gifts and treats, but for the transportation industry, it means extra work to make it all happen.

Carriers are doing more daily loads than ever and it’s only increasing with each year. In fact, UPS is expecting a five percent year-over-year increase between November 29th and December 30th this year as opposed to 2018 numbers.

FedEx will be shipping approximately 510 Million individual packages from Black Friday to New Years. Many companies choose not to hire seasonal help, especially with the national driver shortage making it harder to find additional drivers. Usually, only the massive scale carriers such as Walmart and Amazon hire huge amounts of seasonal help to make up for the increased loads.

Immediate Demand

The rise of e-commerce brands such as Amazon have changed the shipping game for everyone. Amazon’s famous two-day shipping has prompted everyone to step-up to the plate and speed up their shipping. Since the boom of Amazon Prime, another powerhouse in retail, Walmart.com, has also begun offering two day shipping. Both have really amped it up recently, offering one day shipping on thousands of items. While this is convenient for the customer, it adds an immense amount of pressure on the transportation companies responsible for fulfilling all of these demands.

Not only is the industry being blasted with retail shipment, but this is also a busy time for grocery shipments as higher quantities of many items are needed to satisfy the demand. Your delicious holiday turkey doesn’t just appear out of thin air, it was most likely delivered to your store by a carrier. The high demand for these types of seasonal items makes for shipment overtime. Food transport is especially busy due to the time-sensitive nature of transporting food in a short enough window of time to maintain freshness, which is a tricky balance to find when you’re short on drivers or facility workers, as most major providers are lately with the employment shortage.

Pressure on Carriers

Many companies who previously only operated during the daytime may switch to being 24 hour operations to accommodate the massive hoards of product that need to be transported. This effects drop-off and pick-up timed appointments. Smaller or private carrying companies are often left scrambling for workers to work more hours on the road or manage hand-offs at facilities, but many choose to offer various perks to incentivize the occupation of these extra hours.

Potential Bonuses for Drivers

Drivers are in higher demand than ever. To keep up with the demand, many companies are offering perks such as additional overtime pay or a holiday bonus to demonstrate their appreciation. This is especially true if you end up working on any actual holidays such as New Years Day or Christmas. Holiday pay is usually especially lucrative, and while it might seem unappealing originally, many drivers really enjoy it. Driving on a Holiday is supposedly very peaceful, as most businesses are closed and roads are somewhat empty. Additional hours often mean overtime pay as a reward for picking up those longer routes. Overtime pay is often as much as “time and a half” which can greatly boost your overall yield. Keeping drivers motivated and happy will be crucial to fulfilling the heavy demands this seasons. 

According to industry experts, the United States trucking industry has been experiencing a massive driver shortage. The shortage is causing ripple effects and creating consequences for suppliers, carriers, and drivers alike. While the situation has worsened in recent years, it’s only expected to decline in the near future with the lack of incentives for drivers. Additionally, the demand for services is growing quickly with the increasing population and product demand. While the industry is growing, driver employment just can’t keep up. While this is good for trucking job prospects, the demand has created a busier schedule for individual drivers who are picking up the current slack. The American Trucking Association has said, “if conditions don’t change substantively, our industry could be short just over 100,000 drivers in five years and 160,000 drivers by 2028.”

Replacing retiring drivers and keeping up with economic growth requires the industry to hire about 110,000 workers per year, but many companies are struggling to do so. So what’s the fix? Here’s what you need to about the current national driver shortage.

Where Did the Shortage Come From?

More freight services are needed to account for product demand in the ever-growing U.S. economy. A substantial portion of this demand comes from the sharp increase in delivered products from online commerce, which has absolutely skyrocketed in the past decade. Additionally, the complex political situation concerning trade between the United States and China has increased the demand for American freight.

One of the biggest threats to the current driver workforce is simply age. Drivers are retiring at rates that are not balanced out by the rates of new recruits, shrinking the pool of candidates. Also, there is heavy competition from other blue-collar fields such as construction and plumbing that have similar pay ceilings and benefits without excessive traveling and time away from home. Many eligible candidates for trucking positions gravitate towards these other options, especially if they have families that they don’t want to be away from for long periods of time.

How Companies Can Help Fix it

There are many things that companies can do to get more drivers on their team. Some have tried to sweeten the pot by offering incentives and focusing on recruiting a lasting workforce. Here are some of the ways that companies can ease the burden of the driver shortages.

Improving Work-Life Balance

Companies should offer a better work-life balance for their employees. Truckers often work long and tiring hours, all while spending time away from home, and this can be unappealing to people outside of the industry thinking about jumping in. If companies encouraged more manageable hours, people might be less hesitant to accept the job. Additionally, providing extra days off between trips would allow drivers to achieve a more well-rounded routine. If companies could guarantee that there would be a good work-life balance, new drivers would be more likely to get involved, and this could help establish a lasting pool of drivers.

Encouraging More Women

The industry is missing out on a large potential workforce by not trying harder to appeal to female drivers. Less than 7% of semi-truck drivers are female, a staggeringly small percentage. Making more of an effort to get women into the industry could potentially double the workforce.

Additionally, while the trucking industry has drastically raised its percentages of minority drivers in the past decade, continuing this process will aid the crisis even more. Reaching out to all demographics will lead to a larger supply of qualified workers.

Recruiting Veterans

Recruiting more veterans can revolutionize the trucking industry. It eases their transition into civilian life and they likely already have experience with similar machinery from their served time. Many companies are formulating plans for programs that provide Commercial Drivers Licenses (CDL) for veterans with similar military-based licenses.

Persuading Younger Drivers

Another basis for training programs is getting younger recruits to serve in the workforce for decades to come. The average age for a commercial truck driver is 46, whereas the average age for other blue-collar professions is 37. Attracting more young drivers into the industry can help offset the progressing retirement rate, as long as these drivers can be convinced to stay in their careers. Fortunately, there are many incentives for entry-level employees to join the workforce, such as competitive salaries, job security, minimal accreditation, and all of the advancements in autonomous technology.

Get into the Industry Today

Now is a good time to enter the transportation and trucking industry considering the high demand and low supply. Getting into the industry young and qualified can set you up for a lifetime of stability, as the industry is only expected to grow in the coming years. If you’re interested in getting started and need help with financing, check out Mission Financial to jumpstart your future career as a semi-truck driver!

Prices on consumer goods are on the rise for a variety of reasons. From new tariffs against China upping prices on technology, tires and other imported items, to inflation, there are many reasons we may be seeing higher prices on the things we buy every day. But could the trucking shortage also be a contributing factor? Especially when it comes to the rising prices of groceries, there is reason to believe the deficit of truckers could be directly related.

Grocery Prices on the Rise

According to the U.S. Department of Agriculture, food prices will increase by 1-2 percent in 2019. This was a common trend for many decades; however, the rise of food prices has slowed over the past few years. Now, these prices are back on the rise, with notably higher prices on groceries of all kinds.

The price of dairy products is projected to increase by 3-4 percent, vegetable costs will rise 2.5-3.5 percent, and both bakery and fruit prices will increase by 2-3 percent. As for meat, all costs are expected to rise by from 1-3 percent, with the exception of pork, which could actually drop in price by .75 percent.

What is Causing this Raise in Prices?

The rise is grocery prices could be due to a number of factors. From oil prices to overseas trade, a variety of things can spark a cost increase at the grocery store.

High Oil Prices

Oil prices can affect grocery store prices in two different ways. High oil prices often lead to increased shipping costs, which results in higher grocery prices. Because of the higher oil prices, food that gets transported across long distances costs more to ship, so grocery stores have to charge their customers more. Oil prices are constantly in flux and are influenced by several complex factors of their own.

Oil can also affect farming, which can make groceries more expensive as a result. Oil byproducts are an important part of fertilizers, and their price accounts for 20 percent of the cost of growing grains.

Climate Change

Climate change can cause extreme weather conditions that harm crops or make them much more difficult to grow. Because of greenhouse gas emissions, the hot air can absorb moisture and cause it to rain less, drying up ponds and lakes. Additionally, when it does finally rain, the water runs off the land and doesn’t get absorbed by the crops.  These factors force farmers to invest more money into yielding a smaller number of crops and selling them to market at a higher price.

U.S. Government Subsidies

Because it is used to create ethanol, a large percentage of the U.S.’s corn production is subsidized. Currently, 40 percent of corn crops go to producing ethanol, which is a huge increase from 2000’s six percent. This means less corn is going to the food supply each year, causing the prices at the grocery store to rise.

World Trade Organization

The World Trade Organization also has a say in the world’s corn and wheat stockpiles. Because many developed countries like the U.S. and countries in the EU subsidize their agricultural production, they have an advantage over poorer, developing countries. To compensate, the World Trade Organization limits the amount of stockpiling a country may do. However, this means that in a shortage, prices of corn or wheat could rise dramatically in the U.S.

How Does the Truck Driver Shortage Contribute?

In recent announcements, brands including Mondelez, Hershey, Nestle, Unilever, and Coca-Cola stated they will need to increase prices in 2019. These price hikes are in reference to two factors: Higher ingredient costs and increased freight expenses.

A detailed analysis revealed that the cost of a refrigerated truck moving from Washington State to New York rose by 18 percent in only a few weeks. So, a shipment that costed $8,450 jumped to $10,000 a few weeks later. In addition, a truckload heading east out of California saw prices rise by 25 percent during the same time period.

So, what does this have to do with the trucking shortage? Because there are less truckers on the road, the demand for qualified drivers is boosting prices across the board. The cost to transport food across the country has risen, and those higher prices are reflected in markets and grocery stores as well.

American Trucking Associations says the industry is lacking at least 50,000 drivers. If the trucking shortage continues on its current path, that number will be at 174,000 by 2026. And in a decade, it could take 890,000 new drivers to adequately close the gap. Now more than ever, trucking companies are on the lookout for new, qualified drivers to help keep grocery prices low and the economy healthy.