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Despite high jobless rate, trucking firms fight driver shortage

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Trucking companies, including Indianapolis-based Celadon Group Inc., are struggling to find qualified drivers even as the U.S. unemployment rate remains at the highest level in almost 30 years.

Driver turnover rose to 89 percent in the third quarter of 2011, the highest since 2008 and the fourth consecutive quarter of increases, according to data from the American Trucking Associations. That’s mostly because new regulations and job prospects in other industries are creating a “quality shortage” of available workers, said Bob Costello, chief economist for the Arlington, Va.-based group.

The increase in turnover is troubling because as the economic expansion continues to gain strength, trucking is “an industry that has jobs and may not be able to fill them,” said Charles Clowdis, managing director of transportation advisory services at IHS Global Insight in Lexington, Mass. To attract and retain drivers, trucking companies will need to offer higher pay, which will probably necessitate rate increases, he said.

Companies such as Celadon and Swift Transportation Co. may be able to outpace the higher costs with rate increases that will improve profit, said John Larkin, an analyst in Baltimore at Stifel Nicolaus & Co. He maintains “buy” recommendations on those stocks.

The U.S. jobless rate remains elevated by historic standards, at 8.3 percent in February, compared with less than 5 percent before the 18-month recession that began in late 2007.

Celadon CEO Steve Russell said last week that he thinks the driver shortage would be mitigated if the U.S. government cut the length of time people can receive jobless benefits.

Reducing the eligibility period to about 15 weeks from 99 weeks would spur people who lose jobs to re-enter the labor market more quickly, Russell said March 16 at a Society of American Business Editors and Writers conference in Indianapolis.

Celadon, which provides long-haul trucking services in the U.S., Canada and Mexico, is “seeing the economy is OK” and that confidence among customers is recovering, Russell added.

Even so, difficulty in recruiting and retaining workers probably will be the “No. 1” issue affecting the industry, Swift President Richard Stocking said at a March 15 conference hosted by JPMorgan Chase & Co.

“It’s kind of a weird situation when you have millions and millions of people out of work to have a driver shortage, but it’s starting to present itself again,” Stocking said.

Swift and Celadon should be able to raise rates faster than the cost of inflation, analyst Larkin said. Swift shares have risen 50 percent this year and Celadon is up 38 percent, outperforming the 12-percent rise in the Russell 2000 Index.

Newfound stability in construction will exacerbate the problem as trucking candidates get poached as hiring in this construction picks up, said Thom Albrecht, an analyst in Richmond, Va., at BB&T Capital Markets. Construction work offers a “better quality of life,” he said: Instead of spending several days on the road, people can work the same number of hours, make a comparable salary and go home every night.

Worker mobility between these industries caused many people to take trucking jobs during the recession, Clowdis said. Those who obtain a commercial driver license often get one that’s “all-encompassing,” qualifying them to drive both a dump truck, for example, and an 18-wheeler, he said.

The number of people working in construction grew 1.2 percent in February, to 5.6 million, from a year earlier—the sixth consecutive month of gains, Bureau of Labor Statistics data show. The economy has added about 65,000 jobs in this industry in the past year, though it’s shed more than 2.1 million since peaking in April 2006.

New regulations intended to increase truck safety also are affecting hiring, Larkin said. Some of these rules -- from the Department of Transportation’s Federal Motor Carrier Safety Administration—were implemented in 2010. More are on the way next year, which “will further reduce the effective work force, as well as hamper productivity,” he said.

Safety records are now posted online for infractions that include speeding tickets, moving violations and improper load securement, Larkin said. The resulting shrinkage in available drivers has cost the industry as much as 3 percent of capacity. Forthcoming changes include further limits on the number of hours that drivers can work and requiring on-board trip recorders.

The regulations are tightening the supply of available drivers for such companies as Werner Enterprises Inc. The Omaha, Neb.-based carrier anticipates finding drivers will be “even more challenging” this year than last, the company said in a Jan. 26 statement.

Similarly, Arkansas Best Corp. forecasts a “potential drag,” with more than 400,000 drivers possibly exiting the industry by the end of 2014 due in large part to the regulatory changes, Chief Financial Officer Michael Newcity said at a Feb. 16 conference hosted by BB&T Capital Markets, citing FTR Associates data.

Some people laid off during the downturn may be claiming jobless benefits and supplementing this with “under the table” jobs instead of returning to work, Larkin said. The extension of unemployment insurance payments to as much as 99 weeks is one of the “larger competitors” for Werner, President Derek Leathers said at a Nov. 16, 2011, conference hosted by Stephens Inc.

To combat this, companies are trying to make driving jobs more attractive by offering pay increases, sign-on bonuses and other perks, Clowdis said.

Phoenix-based Swift will provide raises based on miles driven, safety and service to customers, Stocking said. Old Dominion Freight Line Inc. bumped up salaries by 3 percent in September, Chief Financial Officer J. Wes Frye said on a Feb. 2 conference call.

Higher wages probably will translate into increased rates for customers, the trucking associations’ Costello said. An index of truckload revenue per mile rose 5.3 percent in December from the year earlier, to the highest level since July 2008, based on a survey of the association’s members.


 

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  • Life is too short lets quite complaining and do something
    List every body who has driven for any time at all knows by know things are not write. So tell me what advantage do big companies have. Let me tell you the most drivers this is why shippers go with them. I have a farming back ground and the same thing has taken place the big guy gets a lot more breaks. The farmers wouldn't band together and keep out corporate. So sense we can't change that part of corporate why not come together and beat them at their own game? Its funny you see all kinds of small business men and they will not come together but then in a few years they are ran out by corporate. This has gone on for ever. Well he who as the drivers win right. With out the drivers the trucks don't move and the shippers don't sell their products. I can break down for all of you how every load pays out the facts are this. Load pays so much period that the shipper is willing to pay. So what happens next is the broker takes who knows how much their is no true data on the average amount taken. So a shipper may pay 2.50 a mile by the time the broker takes his cut out the factoring company takes its cut out the trucking company takes its cut out you are left with the amount the driver is paid. So what every driver is saying to the company is I need more they say their is no more. But what the truth is this. The CEO The investors or owner wants so much of the pie to pay for their life style they have. The driver is saying hey I am not making enough for my life style I am living. So you' see from birth we all have a problem we don't like to share. So what's the answer well I have a good one that will benefit everyone, from company to driver to shipper to customer. In this idea no one makes a dime until all expenses are paid including the owner or CEO. I could break it down any further but if I did the big man wouldn't like it because in the end the driver would get paid what they are worth and so would everyone else. I will give one example. If a dispatcher was paid a certain percent of every load they dispatched then they would be paid what they are worth. So is you get this it would be in their best interest to make sure you are loaded all the time and are hauling the most profitable load they can find. So hints being paid after all expenses so if they are bouncing you real far to get a load that just cut in to their profit because it took more fuel to run the load. The driver is all so going to do the same because the shorter the route the less the cost see how it works. I have way more details all the way down the food chain stream lining and making more money for all. So all I need is the driver see. So something can be done if we come together. But It seems everyone would rather stay working like they are and continue to give away their time and money to the people who don't really do anything other than put you in the trucks and line their pockets with your money. Here are a few things no matter the size of company they can't control break downs fuel price expense of the equipment those are things that have to come out of the each load first before anyone makes a dime. But what happens so many times in big companies is a CEO or OWNER gets paid what ever amount on the future of what they expect the company to do for the year. Then after years of running in the red they either fold up shop or file bank rupt. If you can't take what ever product or service you are providing and factor all expense out and their be a profit before paying anyone that business has no business being in business. That's a lot of business. lol Well don't want to give out all my info because I like you would some day like to make a nice living.
  • Unemployment
    The unemployed collect the benefits due them through previous employers that profitted from their employees labor. I personaly have know many truck drivers that maxed out their log book each week and still not pay the rent for their family. Many truck driver would not have a place to sleep if it wasn't for the truck they drive ! The Trucking Industry thrives on free driver labor for company interest
  • Convince/teach the younger generation
    It's pretty unbelievable how many truck driver jobs there are in Ontario. We really need to convince the younger generation to go trucking. Without items being shipped from one place to another, things will stop functioning. Thanks for sharing!
  • A Job For Imbiciles
    Well...it really doenst pay diddly squat..bein a company driver..AND you WILL be gone from whatever "home"(trailer?) you can afford. You will never see your family. IF you are some how mentally disabled and dont mind sitting couped up in a truck day and nite for Eternity..talking to yourself..this job is for YOU. No logical person will last very long in this Abusive environment. It is DEPRAVED basically...mostly it is Becoming the job of CHOICE for IMMIGUNTS..illegal or otherwise. The ABUSE the driver must Endure from his "company bosses" is enuff to make Most rational employees to QUIT on day ONE. It is a Special Circumstance job living ALONE out on the highways. Divorced guys, ex convicts, recovering drunks and dopers. Basically WEIRDOS...and Elderly Kooks. I would NOT recommend ROAD DRIVER work to ANYONE on this planet!
  • RIPOFF INDUSTRY
    The job is a total ripoff. Driver is treated like dirt, pay is way too low. Smarter to work near home in another industry. Build a LIFE instead of wasting time.
  • Slave 2 the machine
    All these comment are the truth..I use to drive but my last Dispatcher left me sitn all weekend on the yard in Memphis 2 hrs from home my load was on the yard and the Dispatcher had to leave to start her weekend ,leaving me sittn 2 hrs from home and the load i needed to get there sitn just yards from me thanks JB
  • Not Surprised
    All the other comments speak for themselves, And speak the truth. There was a time when truckers actually made a living. And a good one at that. Truckers always made good money because it cost so much to live on the road, now there are truckers who can't even eat..Just for themselves, Much less a family, If truckers salaries were based on government guide lines, Truckers would make at least 60-70 thousand a year, Walmart understands this, why don't everyone else understand it???? Make no doubt about it...Its either going to have to change for the driver, or there will be no drivers..Its coming, Just go to the truck stops, all you see is old , old drivers, No young drivers there, And they will not come to the industry, because they know its not worth it, I've heard this.
  • And the tolls
    Cash cow sums us up pretty well. Company drivers get routed through the cornfields to avoid tolls, losing time. If you do take the toll roads (often no choice), you may actually run at a loss. That squeezes an already too-narrow margin.

    Everybody's perception is that we make $160,000 a year -CLEAR! One of the biggest forces behind this "cash cow" mentality are the bill boards that are so misleading.

    And let's not forget the liability. A whole life spent fighting a stacked deck, and you risk losing everything because of a drunk or texting driver.

    I'm doing my best to get the hell out of here. I haven't seen a promise kept in 15 years.
  • Lose of Drivers
    In today time, a lot of these trucking companies are losing drivers because drivers are tired of being ripped off by the companies. When you drive 3,000 miles for a company or 70 hours a week, we expect to get paid. Instead, because of expenses and etc (lease operators) you end up with a negative check. Who wants to work for someone and owe them money at the end of the week? A hourly rate at burger king will end more revenue then what these companies are paying. Driver should be paid more than $.26 to $.41 per mile. If you want to keep drivers around, you need to up the pay per mile. Those of us who didn't know better when we signed up are quickly seeing what is going on.

    As a lease operator, I know exactly how they feel. I had 3 negative checks in a row and all my company could tell me was that I was purchasing fuel incorrectly. Instead of splitting fuel cost with me. I already have to pay a steep truck payment per week + fuel cost + maintenance + insurance, when do I make money to pay my rent or family bills? I chose a local job over the road because I do not have to pay all the abovementioned expenses and I walk away with $1,000 per week. That is a no brainer!! For the companies, rethink your strategy because us drivers are your number one asset and without us...you lose that million dollar contract with Walmart, Kroger, Kraft, etc... Treat us fairly and we may stay longer.
  • unemployment
    Thats easy for you to say if you are driving a truck!!!!!!!!!!!!!!!!!!!!!!!
  • Trucking not a good job
    Trucking is not for most people. Its a hard life where 70 hrs of work might make you decent money. But some weeks are roses and some weeks are duds. Such as being broke down, waiting for a load in a low freight area. Or just doing short stuff that pays you very little but waste lots of time. Their is a reason for driver shortages. Just as their is a reason for turn over rates higher then 100% for some companies. I can tell you, that some are probably making more on unemployment.
  • Regulations
    Now along comes the MRB and it says ANY driver with a BMI over 30-35 MUST go thru a sleep survey at a cost of about 5000.00 after its all said and done, guess who doesnt have insurance, most Owner Operators who now must pasy for this OUT OF POCKET, Then the new HOS, and the lack of addressing the low pay, detention times, predatory DOT officers trying to save there budgets by using trucks as a stopgap funding source, and it goes on and on, Trucking used to be a great job, one I was proud to do, Today I wonder if I even want to this anymore. I take pride in my driving record but Im not even recognized for it, Insurance companys dont give me a break even though Im a safe driver, I carry safe driver awards and Jackets but there not worth the material there made of, THE FMCSA, MRB, DOT all look at me as a CASH COW, and Im tired of following STUPID regulations that dont make my life better, just take my hard earned cash.
  • Steve's Right
    The people are collecting un-employment because they can. If they weren't getting paid to do nothing, they'd be working tomorrow. End of conversation. But the "Department of Workforce Development" send them money anyway. That's the name of our unemployment office. I haven't seen them develope a workforce. Quite the opposite.....
    Thanks Steve. Second time I've seen a great statement from you in an article on here.
    • Steve's Right
      The people are collecting un-employment because they can. If they weren't getting paid to do nothing, they'd be working tomorrow. End of conversation. But the "Department of Workforce Development" send them money anyway. That's the name of our unemployment office. I haven't seen them develope a workforce. Quite the opposite.....
      Thanks Steve. Second time I've seen a great statement from you in an article on here.
    • EXCELLENT COMMENTS
      What an EXCELLENT COMMENT! You have the pulse of the driving industry. These men, and women, are at the mercy of many things, and sitting for a couple of hours waiting to load or unload is done in most cases without pay. It also cuts into the amount of time they can drive, so they can sit almost an entire day (away from family/home) and not make a penny. How I WISH the president, etc., of my husband's company would step into his shoes for a couple of days. 1. He would be very hard-pressed to keep driving. 2. He would soon see how dispatchers that don't care about their drivers are costing him MAJOR money as a driver sits idling in cold weather (or hot) for hours. A truck sitting makes NO money, for the company or the driver. Drivers ARE "beat to crap."
      • Sad Commentary
        The commentary mentions drivers leaving the industry due to increased regulation to "make truck driving safer." These regulations cause much grief for professional drivers. My husband has been driving for more than 25 years. He has never caused an accident, although was in a minor fender bender years ago, when a college student tried to make a right turn inside his turning radius - when he was already in the middle of a turn. My husband was recently cited by ISP during a routine inspection, for not having a properly secured load. My husband had picked up an already "sealed" trailer (which they are not allowed to break the seal to check the load). While at a weigh station, the DOT asked to see inside the trailer. Nothing had moved in the load, but the customer had not properly secured a couple of straps. My husband was given a $140+ ticket, which now goes against his record for 3 years, at a VERY high points rate. Between dispatchers that have NO idea how long it takes to drive from point a to point b (they could use MapQuest), to picking up trailers that they have no control over the load . . no wonder drivers are quitting, or being forced to quit through NO fault of their own. It would be good for the trucking companies to step in and give drivers a better safety net - so they don't lose so many good drivers.
      • I can tell you why you have a driver shortage
        I have worked as a receiving supervisor for over 8 years and have seen how these drivers are treated. The LTL (Less Than Trailer Load)
        drivers are given some really crazy delivery schedules, a driver with a 8:00am appointment with us in Bolingbrook, Illinois and will then have a 10:00am in Chicago. I think it was less than 10 miles away but he was going to have to drive through Chicago rush hour traffic. So he checks in at 6:30, when we open and he begging to be unloaded right away, so he is not late for his 10:00am appointment. This usually happen a couple of times every day. And, the same thing would happen with the OTR (Over The Road) drivers. Example, a driver comes in a whole day earlier, and wants to be unloaded that day because his dispatcher instructed him to "come in anyway" as he has a nice back haul that has to be picked up that day, or they lose the load. So, the drives are at the whims of the dispatcher, the loading crew, the unloading crew, traffic, weather, construction, the price of diesel if you are a owner/operator and other acts of god. How about this, just go you your nearest truck stop and get a good hard look at the drivers. It doesn't look like they having a good time, actually they look "beat to crap" to me. This is not a slam on the drivers, actually I have a lot of respect for what they go through. So I challenge the President of Swift, Mr Richard Stocking and CEO of Celadon Mr Steve Russell to play "Undercover Boss" and jump into the cab of a truck. Just for a week, and it must be during the Christmas holiday rush or other peak season, so you two can see what your drivers go through to keep you guys in business. Plus, I am sure that both of you are encouraging your sons and daughters to become truck drivers, since it is a great job.

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