With the dawn of another year, shippers face planning transportation strategies that will ensure coverage, all while trying to predict budgets in a stressed market. Consumer demand continues to rise, yet the number of truck drivers on the road is considerably less than in previous years. This shift in the workforce has caused the industry to see a chronic capacity shortage and skyrocketing rates pressing on into 2021.
Carriers continue to find the spot buy or ad hoc markets to be more profitable, making the traditional methods of contracting rates and ensuring guaranteed coverage for shippers even more difficult. How do shippers navigate this to efficiently and effectively ensure that they have service coverage at an affordable rate?
It’s essential to understand why the industry is suffering from such a significant decline in professional drivers. Many factors are contributing to the “backbone of the nation” growing weary. Working in this front-line, essential position throughout the COVID-19 pandemic has been challenging and has contributed tremendously to the driver shortage.
As cited in a recent Journal of Commerce (JOC) article, it is estimated that over 150,000 driver jobs were lost when federal subsidies wrapped up in the summer months, causing many smaller carriers to close their doors. This series of events coincided with an uptick in the markets, causing a surge in goods needing to move and a smaller number of drivers to move them. Additional contributing COVID-19 factors that continue include:
Aside from the COVID-19 pandemic, there are many other contributing factors to the limited driver pool. The Federal Motor Carrier Safety Administration (FMCSA) has continued to develop its driver requirements by introducing its Drug and Alcohol Clearinghouse, with the initial rollout eliminating 40,000 drivers from the already depleted group, as reported by the Commercial Carrier Journal (CCJ). The article continues to discuss the fact that there has been some discussion forecasting that the U.S. Department of Health and Human Services (HHS) may adopt hair follicle testing rules. If this comes to fruition, it is estimated that the driver pool could diminish an additional ten times the original loss. The surge in eCommerce has also contributed to over-the-road drivers having the opportunity to take positions closer to home, affording set schedules and home-time, appealing to many in these uncertain days
Carriers nationwide are working to attract drivers and compensate those they have with higher pay rates and incentives. While volumes plummeted in the first half of 2020, they have quickly rebounded to near record-high numbers.
Historical rates are being secured in every part of the industry, increasingly being shared with drivers, including receiving higher rates-per-mile or bonuses to stay out on the road. Carriers also continue to promote technology advancement with both Electronic Logging Device (ELD) requirements and in-house technologies to attract Millennials, who have grown up with technology as part of their lives, to mitigate the aging workforce.
As forecasts predict that elevated rates and volumes will continue well into 2021, carriers are cautiously optimistic that they can grow their driver bases and remain stable for the long-haul.
With the traditional shipper and carrier model, vendors have a small number of providers they rely on to fulfill their transportation needs. However, in a stretched market, carriers are pulled in many directions and continually being offered additional money and opportunities for the capacity they control. With that, shippers are left somewhat unprotected, as capacity is sent elsewhere unless high rates are offered.
Good news – there’s a solution. By developing a relationship with a brokerage or 3PL, shippers can tap into a large pool of vetted, reliable carriers. Brokerages have a unique relationship with carriers – they offer a broad range of freight and lane opportunities, allowing them to backfill empty capacity, backhauls and have access to consistent freight to bid on in a tumultuous market. By shippers working with a brokerage or 3PL, the broker maintains the carrier relationship, facilitating audits for insurance coverage and safety and regulatory compliance.
Brokerages will ensure vendors have multiple vetted carriers competing for their business, which provides coverage and offers more competitive rates than they could secure on their own. Brokers also offer technology for seamless communication and tracking and industry expertise to avoid pitfalls, freeing up the shipper’s time to focus on other areas of their business.
Ascent Global Logistics offers this and more. Our depth and expertise across all modes afford clients creative shipping solutions, all while watching your bottom line. Ascent helps its clients simplify supply chain management by providing customized solutions, premium customer service and state-of-the-art technology.
Who says logistics has to be complicated? We certainly didn’t. Contact the Ascent team to learn more.