The shortage of drivers is having ripple effects throughout the transportation industry, squeezing carriers with smaller truck fleets and boosting the use of rail freight.
As freight volume gained momentum, “the trucking industry edged even closer to 100% utilization,” said a State of Logistics report released Tuesday by the Council of Supply Chain Management Professionals. Industry indicators for hauling capacity indicate “that truck capacity has grown extremely tight.”
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