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USA Trucking Crisis: How to mitigate high costs

The USA trucking industry has been impacted heavily by a range of factors throughout 2018, making it increasingly unpredictable and very volatile. Leading analysts are predicting that the situation will only continue to get worse. Below are a number of factors that continue to impact the industry across the USA:

Driver Shortage 

The United States is estimated to be over 60,000 truck drivers short right now, which is due to many factors including driver pay and the demographic of the current workforce. PLG Senior Consultant, Michael Muhich believes, “the current driver shortage will continue for the next eight years, as an ageing driver workforce heads for retirement, regulations push out other drivers, and the trucking lifestyle dissuades younger folks from joining the industry” (FleetOwner). There’s a lack of encouragement for younger workers to come into the industry and with business and the technology sectors talking about a future of self-driving trucks, it is likely having an impact on giving prospective workers the incentive to commit to multi-week classes to attain a commercial driver's license for this industry (Bloomberg).

Full Enforcement of ELD

With the full enforcement of the FMCSA’s Electronic Logging Device (ELD) Mandate that commenced on April 1st 2018, shippers’ businesses have been impacted due to delayed shipments, overtime for warehouse workers, chargebacks, and longer transit times. The full enforcement has resulted in an increase in operational costs for truckers, due to the cost of the ELD devices themselves, as well as a decrease in earnings associated with reduced productivity. Stricter enforcement of Hours of Service (HOS) limits mean drivers are no longer able to (illegally) surpass 11 hours of driving per day, causing them to miss out on revenue. The ELD mandate also effects on-time deliveries, making loading and unloading efficiency more important than ever before, with trucking companies increasing driver detention fees to make up for increased costs.

Healthcare Costs

Due to a number of reasons resulting in an increase in healthcare costs (Trucking Info), healthcare now represents 17% of total trucking costs and is continuing to increase (FleetOwner). Additionally, out-of-pocket medical expenses for truck drivers are also growing due to rising health care deductible levels (American Trucker).

Fuel

The price of diesel fuel in the U.S. increased approximately 22% from May 2017 to May 2018 and is expected to continue to climb, increasing trucking cost to shippers (Trucks.com).

Rising Freight Demand

The ratio of loads to the number of trucks on the spot market increased by more than 120% in February year-over year while on the spot market capacity was also down 8.5% (Wall Street Journal)

What Can You Do to Navigate a Volatile Market?

Woodland will always work to mitigate the impact on our customers, but as truckers raise rates and shipping lines refuse to arrange US trucking in response to rising operational costs and driver shortages, it’s important for shippers to adapt ways to mitigate high costs. Below are a few suggestions:

  • Look to increase lead times with any orders to/from the US so to allow for time taken to source a reliable trucker. In some areas across the US there is a backlog of up to 3 weeks for trucking availability!

  • Educate collection and delivery locations to the importance of loading and unloading within free time (sometimes just one hour is given before waiting charges are issued). Alternatively, make us aware of loading time required at quote stage, so we can factor this into cost and source appropriate trucker to meet your requirements.

  • Allow for additional, unforeseen costs being invoiced by truckers as a result of port congestion or waiting time.

  • Be willing to consider paying extra for reliable service to ensure products make it to their final destination as expected; doing so may be less expensive than the alternative—missed deliveries/collections, chargebacks, or delays.

While Woodland Group are not immune to market conditions, our network of own US offices and over 30 years of experience specialising in the US market mean that we are able to offer more solutions than most to help our customers through this difficult situation. 

Should you have any questions or concerns relating to the above, please do not hesitate to contact your local Woodland representative.

 

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