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How the Truck Driver Shortage is Affecting CPG Brands

  • Writer
    Zach Jones
  • Printed
    October 16, 2021
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    926

The truck driver scarcity has been extensively publicized these days because the home provide chain nonetheless grapples with the post-COVID fallout. As demand for freight companies continues to mount, the provision facet is having issue assembly the wants of shippers. This imbalance has left CPG manufacturers feeling the pinch as extra quantity enters the freight market than will be fairly transported.

Nonetheless, a driver scarcity is nothing new to the freight market. Trade consultants declare that the difficulty has been persistent in trucking for many years. However the affect of the worldwide pandemic introduced the subject straight into the general public consciousness as shoppers have begun to face out-of-stocks and different provide chain challenges extra usually.

Because the pandemic winds down, will the truck driver scarcity proceed to have an effect on the business? Let’s discover a number of the causes for the demand imbalance and the way it’s impacting CPG shippers.

Truck Driver Scarcity Exacerbated by COVID-19 Demand

Trucking is an enormous business accountable for hauling the overwhelming majority of products that make it to the top client. Practically each client good rides truck in some unspecified time in the future in its journey from producer to vacation spot.

In accordance with the American Trucking Associations (ATA), 72.5% of all freight within the US was transported by the trucking business. That equates to shut to 12 billion tons of products. Consequently, the business is valued at slightly over $790 billion.

Regardless of its dimension, the business runs notoriously lean. Only a few carriers make use of extra drivers, and resultantly, disruption can drastically affect the market. With the elevated quantity introduced on by COVID-19, business forces struggled to maintain up.

Demand far exceeded provide throughout the second half of 2020, and we proceed to see comparable points. Fundamental economics dictates that this misalignment may have an upward value strain, primarily the explanation for fee will increase that hit freight in 2020. At the moment, trucking is over 50,000 drivers in need of demand.

Just lately, the ATA reported that the business would wish to rent roughly 1.1 million new drivers within the subsequent decade to offset pressure. That equates to 110,000 drivers per 12 months. And because the present workforce continues to age, the median age for a trucker continues to climb.

Why Is There a Truck Driver Scarcity?

Labor shortages have been a hot-button situation as of late, however this has been looming for fairly a while in trucking. Fewer drivers are coming into the occupation, which is especially accountable for the scarcity. There are a number of principal causes for the difficulty. Let’s discover a couple of additional in-depth.

An Growing older Demographic

The business is reliant on an more and more getting older phase of the workforce. In accordance with the Bureau of Labor Statistics, the common age of a business truck driver within the US is 55 years previous, suggesting that retiring drivers should not replenished rapidly sufficient. Many imagine that as a result of the federal authorities requires all truck drivers to be 21 or older, the business fails to draw youthful drivers who graduate highschool and start different professions, by no means giving trucking a second thought. This age requirement makes it tough to accommodate an more and more better demand for freight companies from a rising inhabitants.

Work/Life Stability for Lengthy-Haul Drivers

The life-style of a truck driver shouldn’t be as interesting to new generations as earlier ones. Rookie drivers typically obtain tough long-haul routes that preserve them on the highway for days and even weeks at a time. The job instructions lengthy hours away from residence, which will be tough, harmful, and traumatic. These components have contributed to fewer contributors within the labor power selecting trucking as a occupation.

Harmful Occupation

Prolonged hours should not the one reason behind driver stress. The job is inherently a harmful one. In accordance with The Journal of Commerce, truck driving is the eighth most harmful job within the US. The fatality fee is six occasions better than the nation’s common, which might slender its attraction to new candidates.

Compensation Struggles

Regardless of its hazard and required hours, pay for truck drivers is lagging. The current growth has raised wages, however not sufficient to compete with warehousing or different basic labor positions. The annual turnover fee for drivers is close to 95%, in accordance with current studies. Virtually all drivers go away their job after a 12 months, making it tough and expensive for carriers to fill their seats.

Regulatory Surroundings

Laws in recent times have made trucking much less interesting to the workforce. Issues like hours of service and drug-testing packages have cleared out their truthful shares of drivers. Roughly 55,000 drivers have been barred from the business since new substance-use legal guidelines went into impact in 2020.

What the Truck Driver Scarcity Means for CPG Shippers

There are present efforts underway to lower the driving force scarcity; nevertheless, as a result of it’s a complicated scenario with many causes, there aren’t any one-size-fits-all options. As demand for trucking companies continues to develop, firms might want to handle the difficulty. Autonomous options might sooner or later resolve a number of the challenges, however these are extra aspirational than sensible presently.

Present circumstances might persist for fairly a while, and as CPG business consultants forecast extra of the identical on the demand facet, shippers can count on to cope with larger charges. Manufacturers might finally see some capability aid to shut the 12 months. At the moment, demand for driver college has elevated considerably, as has truck manufacturing, which is able to permit carriers to rent and seat extra drivers.

Till then, it’ll profit shippers to work with a devoted logistics accomplice to make sure circumstances don’t jeopardize profitability. A real freight accomplice may also help your group precisely forecast prices and discover extra favorable pricing by means of consolidation or mode optimization practices.

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