2/19/12 Tanya Bons
For years we’ve been told about the “driver shortages” and though they did exist, they were self-inflicted. Shortages have been created and maintained by: Companies using drivers as disposable temporary labor, Driver Bonuses based on stealing drivers from other companies, Wage Stagnation, Lack of knowledge of the industry/lifestyle, and “Free Training” Schools focused on getting contracts signed, not creating drivers.
We have cried wolf too many times and now the wolf is really here and no one is listening.
WHERE ALL OUR DRIVERS WENT
Industry Effect: Increase in Hiring, Increase in Training
For at least a decade the trucking industry has been combating an ageing population. The average age of a truck driver is forty-eight and in the last decade drivers over the age of fifty-five have increased 19%.
The advanced age of the trucking industry is due to generations of individuals believing that a college education was more beneficial. In 2005 only one out of five high school students pursued a specialized industry, skill.
Colleges have annually increased their tuitions and yet failed miserably with job placement. The average 2010 college graduate carries a debt of $25,250. In 2010 student borrowing was over $100 billion and outstanding loans exceeded one trillion. Unfortunately, 80% of bankruptcy lawyers say they have seen an increase in clients that have student loan debt and that debt is rarely discharged in bankruptcy court.
Currently the Council of Economic Advisers is estimating an increase demand for graduates that receive specific skill training to overtake those with a university degree and MDRC has found that career schools increased students’ earnings by 11%. The new Community College to Career Fund has been established to award grants to institutions that train students for careers and the Educational Department ordered colleges to show that they are preparing students for “gainful employment” or they would risk losing federal student aid. Private vocational schools are at an advantage because gainful employment has always been their goal, no placement, no students.
OUR ECONOMY IS GROWING
Industry Effect: Increase in Hiring
The economy grew about 1.7 in 2011. It is estimated to grow about 2.3 in 2012. One of the first signs in economy growth is the increase in trucking.
About 170,000 trucks were taken off the road during the recession; we will need to replace those trucks, and drivers, before we are prepared for the ongoing growth of the economy.
TRAINING OUR TRUCK DRIVERS
Industry Effect: Increase in Hiring, Increase in Truck Driver Wages, Increase in CSA Compliance, Increase in Recruiting, Decrease in Driver Shortage, Decrease in Unemployment, Variation in Driver’s Backgrounds/Educations
Job placement, job security, price comparison to college educations and even the rampant television truck driving shows have all factored into the increase of enrollment. The telephones at the schools are ringing off the hook and the email boxes are full; everyone wants to know how they can become a truck driver. If everyone that wanted to be a truck driver could attend training we might be able to delay the driver shortage and avoid some fall-out but it isn’t that easy.
Financing and funding has been a major deterrent for many. In 2009 the Workforce Investment Act, WIA, was funding 60-80% of the students attending truck-driving schools. The WIA funding for 2011/2012 has seen a decline of 72.8% in funds, a cut of over $1.94 billion. Many of the WIA offices are limited or completely out of funds.
Historically many low income, often less educated, individuals received the funds to attend the schools. In 2006 starting pay for a truck driver was $32,000, this varied greatly from the $5.15 minimum wage. WIA offered many of these individuals the opportunity to change their lives. Now the funding isn’t here and the disadvantaged individuals become even more disadvantaged.
In 2012 the majority of students enrolled in truck driving schools are self-pay. The lack of WIA funds, the tightening of the banks and the factor that most potential students are unemployed has created a beg, borrow, steal defense to pay for enrollment. This has ruled out training for many of the disadvantaged and has opened schools to a new clientele.
The 2012 truck driving school student often has, at minimum, a high school diploma, they previously held a good job prior to the recession, they are a veteran, they may have had their own business and they still have access to some money. Though these rules do not apply to everyone, many of the students fit at least one of the above categories.
Starting pay for truck drivers is now around $36,000 while minimum wage is $7.25. Students entering the truck-driving field are no longer from low income, less educated backgrounds; these new students are used to making money and sometimes double the trucker’s salary.
These new students, along with making money, are also used to holding full-time jobs. They’re not as apt to quit when things get rough; they hang in and try to make a go of it.
Many students also consider using their education, experience, and self-motivation to start their own business and become owner-operators in the future.
Truck driving schools are popping up everywhere. Colleges are throwing programs together on a side campus, contract training schools are loading their classrooms and new vocational schools are opening down the block from existing schools. Students have never had a better opportunity to choose the type of training they will receive. Students, with cash in their pockets, can enroll in programs that offer longer driving hours, improved placement and better training because they are paying themselves. The disadvantaged students will be forced into signing contracts for “free training” and the real “lucky ones” will be ushered into the partnering college programs that their WIA office prefers.
OUR COMPLIANCE, SAFETY, ACCOUNTABILITY, CSA
Industry Effect: Increase in Hiring, Increase in Hiring of Truck Driving School Graduates, Increase in Safety, Increase in Training, Increase in Insurance, Increase in Pricing on Consumer Goods, Decrease in Current Driver Pool
The last four decades has seen a steady decrease in injuries and fatalities but the Compliance, Safety, Accountability, CSA, safety-scoring system, in its infancy, is now hoping to increase the decrease. It’s uncertain whether CSA will make a marked difference or not since it is too early to tell; CSA has graded only about 15% of the carriers.
CSA explores carrier and drivers by the seven Behavioral Analysis Safety Improvement Categories, BASIC,; driving safety, HOS, driver fitness, controlled substances, vehicle maintenance, cargo securement and crash statistics based on state reports. One third of the carriers surveyed indicated that they have made changes in their maintenance programs to be better meet CSA requirements.
The initial step to meeting CSA requirements is to have a team; drivers, mechanics, and office staff, that all work together to make sure that a thorough pre-trip is performed, infractions are recorded and repaired before the trucks leave the yard. Infractions, like brakes that are out of adjustment, can leave a severity score of 4 on a carrier’s report.
Carriers will need to review their drivers and dismiss drivers that have high CSA scores as it will have a large impact on a carrier’s insurance costs. Truck driving school students do not have any CSA points when they graduate so hiring them is a perk for carriers. In addition, students that received proper training will be able to perform a thorough pre-rip inspection.
CSA has found a higher number of citations in particular geographic regions, which has forced carriers to increase shipping rates in those areas. Increasing shippers’ costs ultimately effects pricing on goods to consumers.
OUR NEW HOURS OF SERVICE (HOS)
Industry Effect: Increase in Hiring, Increase in Shipping Costs, Increase in Pricing on Consumer Goods
Currently the trucking industry is in an uproar over the change in the Hours of Service. The American Trucking Association, ATA, is suing the Federal Motor Carrier’s Safety Association, FMCSA, in regards to the new rules.
Previously truck drivers could work a maximum of 82 hours in a seven-day period. The new HOS, taking effect July 2012, limits a driver’s week to 70 hours. Also, drivers must take at least a 30-minute break after working eight hours. The new HOS also require a 34-hour rest period each week with two consecutive nights off from 1:00am to 5:00am. The new hours are being established to fight fatigue and increase safety on our roads.
The new HOS will cause companies to re-work routes, change deliveries, hire additional drivers, create new delivery fees and run drivers during peak traffic hours. It is estimated to cost the industry about a billion dollars to implement the new hours.
The new HOS will cause drivers to change their sleeping patterns, change their delivery patterns and ultimately, lose money along the way.
The FMCSA isn’t solving any problems; they’re creating new ones. If the FMCSA wants to tackle the issues of fatigue and safety they have to start with the basics. Commercial drivers drive when they’re tired, lie about their hours, eat while they are driving and speed for one reason; they get paid by the mile. How many miles a week would you drive if you were getting paid .34 cents a mile? - Yep, as many as you could.
If the FMCSA really wants to take distracted, tired, unsafe drivers off the road they need to mandate the way these drivers are compensated.
In the end, the new HOS rules will force some drivers into early retirement and other drivers into career changes for financial stability. Carriers will find themselves replacing the drivers that left and hiring additional drivers just to manage the deliveries they currently have. Shippers will have see negative results in their supply chains, distribution and productivity and their costs will be added to the price of their wares.
ELECTRIC ON BOARD RECORDERS (EOBR)
Industry Effect: Increase in Hiring, Increase in CSA Compliance, Increase in Pricing on Consumer Goods
In 2010 the FMCSA, Federal Motor Carrier Safety Association, issued a rule that would require motor carriers with a 10% violation rate on their Hours of Service, HOS, regulations to have a mandatory Electric On Board Recorder, EOBR, installed on their equipment before June 4th of this year.
Currently there is a proposed rule that would make it mandatory for all drivers documenting their HOS with logbooks to have an EOBR. The proposed rule would affect about 500,000 carriers.
In May of 2006 Europe made it mandatory for all new commercial trucks to have a Digital Tachograph, EOBR. The majority of European drivers with EOBRs are paid hourly rather than per the mile; carriers paying per the mile are looked on as being deceptive.
EOBRs can track drivers’ locations, speed and hours making it difficult and costly for carriers to push drivers into racking up the miles. Some carriers will push their drivers to make the delivery on time but the EOBRs will make that pushing difficult and it will be reflected in shippers’ pricing. The FMCSA proposal will require carriers to monitor and regulate their current drivers more closely and hire additional drivers to cover their “renegade” drivers.
THE CARRIERS HIRING US
Industry Effect: Increase in Hiring, Increase in Wages, Increase in Bonuses, Increase in Pricing on Consumer Goods, Decrease in smaller carriers, Variation in Qualifications, Variation on Hiring Processes
Carriers are entering a position where they are forced to make decisions and changes. Currently companies that could not hire students are meeting with their insurance companies and asking for the ability to hire properly trained students. Companies that previously put ads out to get drivers are now calling schools and asking how they can attract graduates. Carriers that never employed recruiters are calling schools and asking what recruiters “do” when they come in and speak with students.
Carriers are increasing wages and introducing bonuses to entice new drivers. They’re placing ads and opening their own schools just to keep up with current demand.
Carriers are keeping the “Hiring” signs up longer because they have to look at about 20 applications before they find the right driver.
Carriers, even in the midst of CSA regulations, are lightning up on some of their qualifications. They are looking at the “complete picture” of a student rather than denying everyone with a speeding ticket. Being unemployed for over a year isn’t preferred but if the student has not tickets, no alcohol related incidents, no accidents, no misdemeanors, no felonies and they have a good previous job history they shouldn’t have any problem finding placement with many companies.
Carriers will also find that as they revise their qualifications they are under more scrutiny from students then ever before. The new students are no longer desperate for employment with the first company that comes along. These students are educated, informed and planning their futures. They expect to stay with trucking companies, for the long run or until they can purchase their own trucks. Students have many options, especially with the influx of new carries hiring graduates, and students can choose the company that best fits them.
Students will find carriers they like and attend schools because those carriers recruit from those schools. Carriers that don’t “offer more” may not even have the opportunity to speak with students as many of the schools will be forced to reconsider their placement offerings to students.
Carriers that offer contract “free” training will be at an advantage due to the fact that they will not have to improve their offerings or “impress” their students. They will continue on their path of getting contracts signed, offering accelerated training and putting students behind their steering wheels. Their turnover rate will remain excessively high but they will offset that by increasing their contact default costs.
Many of the small carriers are entering a “make-it” or “break-it” stage. They can’t offer the benefits or the services larger carriers offer. Their business is increasing daily and they need to have cash available since the banks are still tight with funding.
In addition, the Transportation Intermediary Association, TIA, is putting the smaller carriers to the fire with a proposed mandatory bond in the H.R.7, American Energy and Infrastructure Jobs Act of 2012. The act includes a compulsorily $100,000 bond for freight brokers, regardless of company size. The husband and wife team running a business in their Kenworth will be subjected to the same bond as the largest and most successful freight brokers in the country. All brokers should have bonds but they should be relative to the amount of business a broker consumes.
THE TRUCKS WE DRIVE
Industry Effect: Increase in Hiring, Increase in Fuel Mileage, Increase in CSA Compliance
In December 2011 Peterbilt announced a 93.2% increase from December 2010 sales and Kenworth announced a 105.3% increase. Class 8 truck sales from January 2012 bypassed sales for the January of 2008, 2009, 2010 and 2011. Sales for trailers grew 69% in 2011. Carriers are estimating that they will increase their fleets by 16% in 2012.
Equipment manufacturers have added shifts, called back laid-off individuals hired new employees and built onto their plants. Suppliers are rationing their products and some manufactures are even setting up shop to make their own parts because growth is crippling their suppliers.
All that new equipment entering the workforce is going to need drivers. Some of the carriers will be replacing used equipment but as mentioned previously, they are estimating increasing their fleets by 16% this year alone.
THE SIZE OF OUR TRUCKS AND OUR LOADS
Industry Effect: Decrease in Driver Shortage, Decrease in Shipping Costs, Combat New HOS, Increase in Infrastructure Costs
For over thirty years trucking in America has meant no more than 80,000 pounds maximum weight for a standard load. Permits have been available for exceptions, both on weight and height, but those are exceptions.
While Americans have been hauling 80,000, Canadians have been hauling 95,000, most Europeans have been hauling 97,000 and Mexicans have been hauling 106,000 pounds.
The Safe and Efficient Trucking Act, SETA, included language allowing the increase from the standard 80,000 to 97,000 with the addition of a sixth axle. The Association of American Railroads, AAR, successfully began a campaign to overtake the proposal and circumvent the 21-31% increase in truck freight capacity. The trucking industry claims it was “rabbit punched”; they weren’t aware the AAR was opposed to the weight increase because the AAR was initially using consumer safety groups for opposition rather than directly addressing the issue. Certainly shippers are interested in the increase of capacity as it would help cut costs and increase competition between truck and rail but the trucking industry’s claim of being “rabbit punched” may be hard to swallow as the American Trucking Association, ATA, agreed to join the AAR and table the capacity increase for at least three years in order to keep peace with their transportation partner. In addition, the Owner-Operator Independent Drivers Association, OOIDA, was strongly opposed to the increase from the beginning.
Our loads may not be getting heavier but our trailers are getting longer. Around 1980 maximum trailer length went from 48 feet to 53 feet and now many of the trailers on the road are 53 feet. Some carriers believe that shippers were really at an advantage when this happened because carriers neglected to charge for the increased capacity. Today, Sec. 1404. Trucking productivity, would allow a size increase on double trailers. These “pup” trailers, at a maximum of 28 feet will now see a maximum of 33 feet. This will increase the load capacity by around 18%. We may or may not see an increase of double trailers on the roads but you can be certain the shippers will pay for the extra capacity.
FIXING OUR ROADS
Industry Effect: Increase in Hiring, Increase in Road Construction, Increase in Traffic, Increase in Pricing on Consumer Goods
The House Bill, Surface Transportation Reauthorization Bill, is committing $260 million to spend on our highways, bridges and more over the next five years. The Senate is also working on their own Bill that would devote $109 billion to infrastructure over the next two years. Lastly the Obama administration recommends a $476 billion commitment for the next six years.
All this road construction will be good for the country but bad for truck drivers and carriers. Construction means traffic and traffic means trucks are not moving; no one is making money. The traffic delays may show up in shippers’ bills as carriers pass their cost down. Shippers will also pass their cost down to consumers.
CROSSING OUR BORDER
Industry Effect: Increase in Hiring
The war rages on regarding Mexican motor carriers crossing the borders to drive in America. OOIDA is suing the Department of Transportation, DOT, and FMCSA in regards to establishing a double standard on the safety of the Mexican trucks; Mexican trucks do not need to comply with all U.S. safety regulations that the American trucks must meet.
Mexican carriers must meet the Pre-Authorization Safety Audit, PASA, before they are granted the authority to operate in America. Currently there are eight Mexican carriers that have applied for authority. One carrier has been denied, two just applied and five others are awaiting their PASA results.
Regardless of who is winning or losing, it may be awhile before we see Mexican carriers crossing the border with their own authorities.
INDUSTRY RESULTS
The majority of trends and influences in the trucking industry are all pointing to an increase in hiring and a negative fall-out from a shortage of drivers. There are many changes on the horizon, which should be implemented through carriers, truck driving schools, truck driving students and shippers; their success or failure will ultimately be reflected in your pocketbook.
Drive safe, Tanya Bons
