Nothing’s new about capacity shortages in ground transportation. This sector of the larger logistics industry is historically in high demand. Also, it may be especially susceptible to the ebb and flow of economy and weather.
Importer-exporters are used to a marketplace with a flexing amount of available space. They make adjustments and try to anticipate changes.
The factors affecting U.S. trucking capacity in 2018—an upward economy, labor shortages, equipment delays—are familiar stories. What’s surprising industry experts is the levels to which each of these pressures are compounding the problem.
Ground transportation is moving more goods than ever. The American Trucking Association reports a seasonally adjusted increase of 9.9% year-over-year increase in for-hire truck tonnage in October 2018.
What is causing the shortage?
Shipping capacity issue: Increased shipping in a strong economy
From clothing to groceries, car parts to medicines, the United States has become a home-delivery society. This massive surge in businesses offering to send their products to the consumer’s doorstep is mostly served by smaller delivery vehicles.
These vehicles, in turn, are supplied by large container trucks. The increase in all consumer shipping has put a strain on the entire ground transportation industry as it struggles to adjust to new marketplace norms.
As consumers’ buying habits change to demand more online purchasing power with home delivery, their spending is picking up. As Bloomberg reports, consumer spending was up in October 2018. In what many believe is a bullish economy, capacity could struggle even more as consumer activity increases.
Shipping capacity issue: Class 8 truck shortages
Someone has to build trucks to accommodate all this new shipping, and original equipment manufacturers (OEMs) are struggling to keep up with demand for new trucks and equipment.
Meanwhile, these companies face industrial challenges of their own. They import and export within the same stressed logistics system and face some of the same booking issues as their customers in terms of scheduling and capacity.
As fleet managers start to notice and feel the effects of equipment shortages, their response has been to accelerate their ordering in preparation for the future and with hope to get more trucks as quickly as possible. This ironically has instigated an even greater backlog among OEMs.
Additionally, most industrial OEMs are scrambling to find new suppliers of steel, aluminum, plastics and multiple other products after the Trump Administration’s tariffs interrupted their existing foreign import relationships.
Shipping capacity issue: Lack of drivers
If you don’t have drivers, you can’t move trucks. If you can’t move trucks, you offer the market less capacity. Even if logistics equipment providers could keep up with demand for new vehicles, ground transportation companies are having a tough time finding enough people to put behind the steering wheels.
The Washington Post reports the U.S. has a truck driver deficit of about 51,000 drivers.
Two major factors are negatively affecting commercial driver availability. The first is the electronic logging device mandate that went into effect in December 2017.
The Federal Motor Safety Carrier Administration has long placed “hours of service” limits on truck drivers, mandating a number of hours they could drive per day. Since the system’s inception, drivers tracked these hours on pen-and-paper logs.
Hours of service rules still exist, but now the government has mandated that driving hours be tracked by electronic logging devices. These on-board computers are connected to a truck’s engine and automatically record the number of hours it is active. This means drivers are on the road for fewer hours per day, leading to less available capacity.
Perhaps the biggest challenge faced by the ground transportation industry in staffing is a declining number of people interested in being truck drivers. The job, which offers relatively low pay, keeps drivers away from their families for days at a time. Working conditions can be daunting and the roadways are filled with inconsiderate, disrespectful motorists, many truck drivers say.