Even as freight volumes continue to improve, the looming driver shortage could hold back growth in the trucking industry, American Trucking Associations Chief Economist Bob Costello told the annual ATA Management Conference & Exhibition Monday.
“Freight volumes are growing nicely on a year-over-year basis for most trucking sectors as economic growth remains solid,” Costello said during a panel discussion, “The Economy and Its Impact on Trucking.”
Costello was joined on the panel by economists John Felmy of the American Petroleum Institute, Jack Kleinhenz of the National Retail Federation and Chad Moutray of the National Association of Manufacturers.
Costello noted the ATA tonnage index hit an all-time high in August
“Industry revenue and average revenue per mile are increasing nicely as capacity remains constrained,” Costello said. “However, the industry is having a difficult time adding trucks due to the driver shortage.”
The shortage was “as bad as ever and is expected to get worse in the near term,” as freight volumes continue to grow, he added.
As evidence, Costello reported that turnover – often a proxy for tracking the driver shortage – rose 11 percentage points to an annualized rate of 103 percent in the second quarter.
The increase set the rate at its highest point since the third quarter of 2012.
Turnover at small truckload fleets – fleets with less than $30 million revenue – surged 16 points to 94 percent, the highest level since the third quarter of 2012.
“These turnover rates show that the shortage is acute,” Costello said, “and if the freight economy continues to grow, it will worsen very quickly.”
To simply replace retiring drivers, the industry must attract 92,000 new drivers a year, he pointed out. Additionally, a booming oil and gas industry, along with revitalized retail and manufacturing sectors, means that trucking will have a lot of competition for qualified workers, the panel agreed.
“Solid demand, continued tightness in supply: That’s all good news,” Costello concluded. “Watch your bottom line. We could see margin compression as driver pay goes up.”