Market Matters Blog

ATA Reports Trucking Revenues Grow in Spite of Shortage

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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Grain trucks waiting to unload at Cargill elevator and biodiesel plant in Kansas City, Missouri. (Progressive Farmer photo by Jim Patrico)

OMAHA (DTN) -- Every day, U.S. trucking companies are forced to refuse hundreds of loads due to a short of drivers, and the problem is likely to get significantly worse over the next decade, according to a recent University of Tennessee report.

"Some estimate the shortage today is about 40,000-50,000 and growing rapidly," a recent report by the Supply Chain Management Faculty at the University of Tennessee stated. "Another estimate has the shortage increasing to over 300,000 drivers before it peaks in 10 years, and that could be catastrophic. Such a shortfall would amount to a 20% gap between demand and supply. One estimate is that only 25,000 new drivers are being added annually, not nearly enough to keep up."

The study reported that there are trucking companies having to refuse hundreds of loads every day due to the lack of drivers, resulting in a major revenue loss.

Reasons for the shortage are plentiful, according to the April 2015 study. Driver wages did not rise as fast as wage rates in general over the 2000-2013 period.

"The current $40,000-45,000 pay rate lags behind overall wage inflation in the economy. On an inflation-adjusted basis, one estimate shows that drivers make 6%-8% less in real terms than they did 25 years ago, in 1990. Thirty years ago, the average truck driver earned four times the wage of a food service worker," the University of Tennessee report stated. "Today the $41,000 average wage is only 1.8 times higher. During much of this time, the margins of trucking companies were constantly squeezed, making significant wage increases impossible. In addition, HOS (hours of service) rules limit the amount of hours a driver can work, which in turn depresses their income since truck drivers are often paid per mile driven."

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Another cause of the driver shortage is rules have become stricter for new drivers. Those wanting to obtain a commercial driver's license (CDL) must be 21 years old.

Also, the Federal Motor Carrier Safety Administration (FMCSA) safety compliance and enforcement program (CSA) has likely reduced the driver pool by 5%-7%, according to the study. CSA affects motor carriers, including owner-operators, by "identifying those with safety problems to prioritize them for interventions such as warning letters and investigations. CSA affects drivers because their safety performance and compliance impact their safety records and, while working for a carrier, will impact their carrier's safety record." The CSA also requires a prescreening of drivers before they can be licensed to learn of work history, driving record and any legal problems. Overdrive Magazine said, "CSA's inequities and irregularities remain a topic of large concern all around the industry."

TRUCKING REVENUES TOP $700 BILLION FOR FIRST TIME IN 2014

Despite the shortage of drivers, the trucking industry generated $700.4 billion in 2014, making it the first year in history the industry topped $700 billion in total revenue, the American Trucking Association (ATA) stated in a press release May 11, according to the latest edition of American Trucking Trends. The $700.4 billion in revenue accounted for 80.3% of all freight transportation spending.

"Last year, we saw freight volumes grow significantly," said ATA Chief Economist Bob Costello. "Increases in freight combined with continued tight capacity helped drive revenues, and coupled with lower fuel prices, we saw motor carriers go on a buying spree for new trucks as they replaced older equipment."

In the press release, ATA said that in 2014, trucks moved 9.96 billion tons, or 68.8%, of all domestic freight. While trucking employed more than 7 million people, including 3.4 million drivers, driver shortages have been growing since the beginning of 2015.

"(American Trucking) Trends is a valuable resource for showing just how critical, how essential, our industry is," said ATA President and CEO Bill Graves. "It is one thing to say trucking is our economy's lifeblood, but it is quite another to show it. And (American Trucking) Trends shows it clearly: Trucking is, and will continue to be, the dominant way to move goods in this country."

Over 60% of the grain marketed in the United States is moved by truck, according to USDA. Each quarter, USDA releases a Grain Truck and Ocean Rate Advisory report based on responses from elevators located in nine states that produce the most corn, wheat and soybeans. The report shows truck rate information for a local haul of 25 miles, as well as longer hauls of 100 and 200 miles and diesel fuel costs, both key components for elevators in pricing grain. The ongoing system of data collection establishes a foundation for identifying longer-term trends and shifts in the market that will be valuable in addressing marketing, policy and risk-management issues related to this critical mode of grain transportation.

See the entire 2014 fourth quarter report at http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

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Comments

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Mike Durey
5/25/2015 | 6:51 PM CDT
Many farmers in my area have chosen to buy their own semis for hauling their grain. The ability to haul grain directly to ethanol plants bypassing grain merchandisers at $200.00 a load that can easily equate to an extra 10 to 20 thousand dollars a year in added profits. Not losing valuable harvest time waiting for coop trucks is another incentive. As for corporate companies , the shortage of drivers wasn't created by a lucrative welfare system but as the article points out it was by the inability, or choice of corporations not to pay a suitable wage for a valuable service rendered by today's drivers.
Bonnie Dukowitz
5/22/2015 | 5:35 AM CDT
The shortage is not just in transportation. Why should people even attempt to work when S.S. Disability and welfare benefits seem to pay more than working for a living.