But with many Baby Boomer truck drivers retiring and fewer new drivers entering the profession to replace them, a growing driver shortage has made it difficult for companies with smaller fleets to stay afloat. The American Trucking Associations, or ATA, estimating a shortage of between 35,000 and 40,000 drivers, with new drivers entering the profession slower than older drivers are retiring.
In this climate, companies with smaller truck fleets are the most vulnerable, in part because it is increasingly common for larger carriers to offer sign-on bonuses that smaller companies can’t compete with, executives have said. Smaller companies have also been hit as drivers quit over new federal truck safety regulations that stepped up enforcement of hours-of-service rules and capping the number of miles and money they could earn.
Turnover rates for smaller fleets grew to 95% from 90% in the last quarter of 2014, “primarily due to the larger fleets attracting drivers away with higher pay, bonuses and better benefits,” the report said. Some 390 companies with an average of 27 vehicles declared bankruptcy in the first quarter of last year. Meanwhile, rising costs for retaining drivers have translated to higher prices for shippers.
The effect has been a boon, however, for intermodal shipments, or transportation of containers or trailers using a mix of truck and rail freight. Intermodal volume grew at a record high 5.2% rate last year. Overall rail traffic was up 4.5% reaching a record high of 28.7 billion carloads, containers and trailers, the report said, and the cost for rail transportation increased 6.5% in 2014.
That indicated railroads were better at charging higher prices for their transport, said Rosalyn Wilson, the CSCMP report’s author. “The railroad industry has been raising rates in markets where they can,” she said.
Source: Wall Street Journal