Taking the bad with the good
During last month’s CCJ webinar, “The Outlook for Trucking,” FTR Associates President Eric Starks gave a market overview that only can be described as positive, especially when set against the backdrop of recent years.
The optimism for the industry’s future was shared by webinar attendees; 64 percent of poll respondents during the webinar indicated things indeed were getting better, and another 27 percent said the worst is behind them. I recently spoke with one fleet executive who told me the turnaround in his business nearly was instantaneous. “It was like someone flipped the switch on April 1,” he said.
Starks continued to show slide after slide of market indicators bearing good news as the trucking industry transitions out of survival mode and into growth mode. Manufacturing activity is approaching levels we haven’t seen since 2004, inventory levels are the lowest in history, freight capacity is tightening and carriers negotiating freight rates with shippers are gaining the upper hand.
“We’re telling shippers to lock in long-term rates today because tomorrow they’ll be higher,” says Starks. “If [carriers] haven’t started pushing for rate increases, they need to start looking at it now.”
FTR Associates’ forecast for driver demand shows a shortfall of more than 200,000, doubling the driver shortage the industry experienced in 2004.And suddenly, with the click of a computer mouse, reality set in as the next slide advanced. Amid all the optimism in the near term, an impending driver shortage lurks – the likes of which the industry never has experienced. Just how bad will it be? “This dwarfs what we saw back in 2004,” says Starks. FTR forecasts the driver shortage to reach 200,000 drivers by the end of 2011.
Amid all the optimism in the near term, an impending driver shortage lurks.
The problem, says Starks, is the driver supply pipeline. The industry doesn’t have enough capacity to process people and get them in a truck fast enough as the economy improves. And though it’s debatable just how many drivers will be sidelined when the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis 2010 system rolls out at the end of the year, any amount lost only will intensify the problem. “It’s possible we could be 400,000 drivers short of what we need,” says Starks.
Meanwhile, even as Starks spoke about all the data indicating the U.S. economy is in the midst of recovery, the Dow Jones Industrial Average was in the middle of a 376-point drop amid market worries in Europe. Also, diesel prices certainly will increase as the economy improves. While we clearly are in a recovery phase, there are a number of issues that threaten to derail even the best-managed companies.
Navigating the driver shortage headache that inevitably accompanies stronger freight demand begins at home. Get out ahead of the problem before it becomes an issue. Train drivers now on the importance of CSA 2010 compliance. When hiring new drivers, use resources such as FMCSA’s Pre-Employment Screening Program to weed out the bad apples. When recruiting new drivers, re-examine incentive programs to put your company ahead of the pack. Whatever your strategy on drivers, being proactive now can enable your company to reap the benefits as shippers ramp up business and freight demand increases.
If you’d like to view the archived PDF version of “The Outlook for Trucking” webinar, go to www.ccjwebinars.com and click the “Archives” tab. n
Jeff Crissey is Editor of Commercial Carrier Journal.
E-mail [email protected] or call (205) 248-1244.
