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CAUSE FOR CONCERN?

24th August 2006, Page 48
24th August 2006
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Page 48, 24th August 2006 — CAUSE FOR CONCERN?
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Which of the following most accurately describes the problem?

By British standards, the US driver shortage is nothing to get worked up about. Yet the American trade associations are already making sure the general public and the government are aware of it. 011ie Dixon asks why we haven't done the same.

Much has been made of the similarities — or lack of them —between the United Kingdom and the United States of America. But irrespective of where you stand on the matter as a whole, one thing is for certain. Speak to any [IS truck operator and, once he's got the price of diesel off his chest, the next grumble will he the tack of drivers. Just as here, the shortage is becoming a major problem. Or so it would seem.

At present, according to figures from the American Trucking Associations (ATA). America has 20,000 vacancies for the heavyduty Class 8 sector.Tiffany Wlaziowski, the NUA's Director of Public Affairs, believes this problem is going to become worse as demographic effects kick in.As in the UK, the US population is ageing and truck driving seems no longer lo be an attractive option to twenty-something Americans.

Writing in the Jackson Sun newspaper earlier this year, Wlazlowski makes her case with some feeling: "The baby-boom generation starts to turn 60 this year and. like many market sectors, the truck transportation industry is facing a potential labour shortage," she argues. "But unlike other businesses, where the ageing workforce will only translate into an employee shortfall, a national shortage of professional drivers will bring with it economic implications stemming far beyond trucking's boundaries.

"Currently, the long-haul, heavy-duty truck transport industry in the United States is experiencing a national shortage of 20,000 drivers. An ageing workforce combined with a decline in the primary demographic group that comprises the bulk of the driver pool has many fleets unable to seat trucks, or add capacity at a time when freight volumes are growing. f current demographic trends continue, that shortage of long-haul truck drivers could increase to 111,000 by 2014. "Because trucking is not a self-contained industry, the nation's economy will feel the pinch of the driver shortage. Indeed, truckers have a special place in Americana, and are indispensable to the way that the economy and society works.

We've heard this somewhere before. In the 13K, various commentators had put the driver shortfall at about 46,000. This number has now been reduced quite markedly, as the impact of the Working Time Directive (WTD) proved to be softer than originally anticipated. And, more pertinently, as the economy has contracted, so demand for road transport seems to have dropped off. But the US has no WTD, and its economy is still reasonably robust.

Two key issues regarding the shortage, however, remain unresolved, both in the UK and the US

Positive signs

Firstly, road freight accounts for part of the logistics chain on both sides of the Atlantic. Therefore,if there is a significant shortage of drivers, then logic dictates that this would result in a shortage of goods in the shops. Yet that hasn't happened, either here or in the US Secondly, at this year's Mid-America show in Louisville, Kentucky, and at the upcoming Great American Truck Show in Dallas,Texas, driver recruitment accounts for a big chunk of stand space. Indeed, the exhibitors' list for Dallas shows that around 8% of the displays are trucking companies whose primary motivation for attending is recruitment.

Keep this statistic in mind fora moment, and return to Tiffany Wlazlowski writing in the Jackson Sun: "As an industry that cannot be outsourced, trucking is the silent giant that does the heavy lifting to move, at some point in the supply chain, nearly everything consumed in our modern society "Trucks haul 87% of the total value of products upon which communities and people clepend.The remaining 13% is moved by trains, planes, pipelines and along inland waterways. To say that the difference is dramatic would be an understatement.

-If the US economy grows the way economists predict, even more goods will move by truck in the futureliucks hauled 9.8 billion tons of freight in 2004,a figure projected to increase to 13 billion in just a few years. It is equally predictable that if the driver shortage continues, the costs of almost all consumer goods will most certainly rise.

"The shortage of 20,000 truck drivers is the new reality that has prompted the ATA to launch a nationwide casting call for tractor-trailer drivers to join the 1.3 million professional truckers who ply the nation's highways 24 hours a day, seven days a week, 365 days a year.

"With such a critical driver shortage facing the industry, now, more than ever, trucking is looking toward recruiting and retaining a pool of experienced workers.The recruiting drive is robust and urgent, in part because economic demand is growing while the number of drivers is not."

Mountain or molehill?

A quick back-of-the-envelope calculation suggests that a 20,000 shortfall relative Loa driver population of 1.3 million works out at around 1.5%. At the risk of seeming cynical, it is surely possible that unplanned absence through sickness (for example) would see 1.5% of the workforce away from their place of employment at any one time anyway As such, this seems to be a lot of talk about something that isn't much of a problem.

So the shelves aren't empty and there doesn't seem to be much of a labour shortage. What's more, truck sales are not just good at the moment -they're nearly through the roof. That is largely attributable to businesses buying ahead of the 2007 EPA emissions deadline which will, as in Europe, add about 5% to the price of a new Class 8 tractor unit.

But a new truck brought ahead of any deadline is of little value unless it is being driven by someone. As here, US trucking is a low-margin business that demands long hours in order to make a return. A driver shortage on the scale the ATA is currently talking about would imply that many of these new trucks are lying idle:That's hard to believe.

Payment methods

But back to the trade shows, and the 8% or so of exhibitors who have invested time and money to recruit drivers.Why?

The answer may rest in the pay structure of the US trucking industry. Arguably one in four tractor-trailers on the road in the US has a driver-recruitment advert plastered somewhere on the trailer.The standard payment method used by American trucking companies is by mileage, although it should be pointed out that some operators such as Heartland Express do offer salaried positions paying $850-S1000 per five-day week.

However, most US company drivers are paid 38-50 cents per mile fine if you are covering the distances. Assuming a median mileage rate of 44 cents, it takes 2,272 miles to hit $1000around 450 miles per day across a five-day week.That isn't unfeasible; after all, the United States is a big place, and 450 miles per day shouldn't prove too taxing.

Initially, many drivers find there are new employers to keep them going. But according to the drivers CM spoke to at the Mid-America show, initially doesn't mean always.For a couple of months, everything is fine.., then the mileage may start to slide. At that point, the poster on the trailer in front becomes interesting, the phone is picked up and a new job is found.The upshot is that the first company is down one driver. Multiply this scenario a few thousand times and you get one ready-packaged driver shortage.

Floating workforce

We would argue that this is merely the demonstration of a truly mobile workforce. Company A doesn't come up to scratch, so Company B is given a try. Ultimately, the businesses with the best terms and conditions will prosper and retain their staff.

In many ways, it is no different from the situation in the UK. And the ATA's response is similar to that of operations such as Skills for Logistics in the UK. Here's how Wlazlowski put it in the Jackson Sun:

"The ATA is dipping into new resource pools for candidates to fill the gap. Most notably, the industry is targeting ex-military, minorities, women, workers who have lost their jobs because of downsizing or outsourcing, newcomers to the labour force and people over 50 who may want to trade a desk job for a career on the open road, "As part of those recruitment efforts, the ATA has developed a company driver-tuition finance programme that will partner motor carriers and lending institutions to provide low-interest financing to those who wish to attend a driver-training school, but otherwise might not be able to afford it. Truck-driver training schools annually turn away hundreds of eligible candidates due to their lack of funding or inability to obtain loans.

"Recently, Senators Conrad Burns and Mark Pryor introduced legislation that,if passed, will add trucking to the list of industry sectors for which servicemen and women moving to the civilian job market can receive expedited financial aid.

"Over the next 10 years,25 million workers will be eligible for retirement, the by-product of the ageing baby-boomer generation.As result, many employers are planning now for how they will retain a competitive advantage as the labour market tightens.

"For its part, the ATA is participating in the Alliance for an ExperiencedWorkftwce, a collaboration between industry associations and spearheaded by the American Association of Retired Persons, designed to promote strategies for recruiting and retaining workers over 50 as well as planning for the demographic challenges that will face the US workforce in coming years.The alliance is expected to serve as a catalyst for bringing government, employers and employees together to help and encourage workers to remain employed beyond the typical retirement age. For example, the alliance will cultivate industry-specific best practices for workers aged 50 and above, covering such issues as benefits, workplace design and recruitment strategies.

"Business is good, freight tonnage growth is robust and the economy is growing. Professional drivers' pay rates are increasing, benefits are attractive and getting better, and training opportunities for apprentices abound. ATA is reaching out and letting prospective truck drivers know that plenty of jobs are available and that anyone who decides to become a truck driver couldn't have picked a better time."

Deal with it

in many respects, the driver shortage in the US is far less of an issue than it is here, and we would argue long and hard over the real shortfall in the latter. But the US approach to alleviating its perceived shortage is a lesson for the UK transport industry.The American trade associations have already started to lobby — and lobby haat Their approach seems the opposite of that adopted in the UK.

'lime will tell whether the demographic time bomb on both sides of the Atlantic will explode. Skills for Logistics does seem to be back-pedalling somewhat from its previous doomsday scenario, and it is entirely possible that the same will occur in the United States. But whether the driver shortage over there is real or theoretical, the debate has spread from the confines of the transport industry and has reached at least the middle of the political agenda. •


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