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NO ONE BEHIND THE WHEEL: With a 100% annual turnover, everyone knows there's a problem keeping truckers in the driver's seat. There are some short-term aids such as higher pay, a more diverse workforce and an improved lifestyle. But it's going to take more. New practices and advanced technology are approaching on the ramp.

Everyone knows the trucking industry has a problem behind the wheel. After all, who hasn't heard that annual driver turnover is near 100%? Or, in a really good year, it's only 95%. If you think it's bad now, just wait: It's going to get worse. According to the American Trucking Associations (ATA), the industry is short about 63,000 drivers today. By 2026, the ATA estimates that number will be nearly 175,000.

In Houston and Sacramento and Chicago and Boston and everywhere in between, we have a problem. A big one by any measure.

The question is: What can be done to fill those jobs? If only the answer were as simple as the question.

A review by Logistics Management of the truck driver landscape makes it clear there are multiple levers that can help minimize the problems in the near term and beyond. These include pay, working conditions and workforce diversity. And while these are the topics most people focus on during trucker shortage discussions, they are only the tip of the iceberg.

Other key issues focus on the efficiency of moving goods by truck in the first place. Consider these two statistics. On average, most trucks are only 60% full. Worse yet, 25% of all trucks are completely empty. Neither of those numbers have anything to do with driver availability or turnover. They are all about how the trucking industry manages loads and fleets.

This isn't the first time that usage rate has been an issue in the transportation industry. When was the last time you got on anything but a packed passenger plane? In 2002, the occupancy rate of flights was 70%. In 2018, that's up to 85%, according to the U.S. Bureau of Transportation.

But that shift alone has had a major impact on airline profitability. And, in all likelihood, is part of the solution for the trucking industry. In other words, the driver shortage is what we all talk about. But, in fact, the driver shortage may just be a symptom of fundamental structural problems in how the trucking industry fills trailers and the technology it uses.

This article will not provide the solution. Just one won't be enough. But it's clear that the industry needs to start looking where few have looked to make any headway here. After all, several improvements have been made in the past 18 months, but the industry is still short more than 60,000 drivers.

More than one elephant

"Safe, reliable and efficient motor carriers enable businesses throughout the supply chain to maintain lean inventories, thereby saving the economy billions of dollars each year," says ATA president and CEO Chris Spear.

Or as President Trump put it: "When trucks are moving, America is growing." Spear and Trump are not overstating the importance of trucking.

According to the ATA, trucks moved 10.77 billion tons of freight in 2017, accounting for 70.2% of all domestic freight tonnage. Furthermore, the industry generated $700 billion in annual revenue in 2017, 79% of the nation's freight bill.

The ATA's annual report on the industry goes on to say that roughly 3.5 million drivers are employed with 1.7 million heavy and tractor-trailer drivers. Minorities account for nearly 41% of drivers and women for slightly more than 6%. More on this later.

According to The National Transportation Institute (NTI) CEO Gordon Klemp, the average driver age is 52, retirements are up and new entrants don't make up for exits. His comments were made at the 2018 CSCMP conference this past fall.

On the same panel as Klemp was Kevin Knight, executive chairman of the board at asset-based Knight-Swift Transportation Holdings. He says that during the next decade about 440,000 drivers will be needed just to replace retiring drivers.

According to ZipRecruiter, the national average driver wage is $50,737. That's $24 an hour. The annual range is from a low of $22,000 to a high of $82,500, says ZipRecruiter. The hiring cost per driver is just over $13,000 at asset-based Maverick Transportation, said Chairman and CEO Steve Williams at the CSCMP event. Drivers at Maverick make an average of $64,770 annually and turnover has dropped from 71% to 57%, putting the company well below the national turnover rate. While some will quibble over the numbers presented here, they are clearly indicative of the problem and its complexity.

All of that said, the truck driver shortage is certainly an elephant in the room for both the supply chain and the overall U.S. economy. And when you start to break it down, there is more than one elephant here. In other words, the crux of the driver shortage is multi-dimensional.

What can be done?

To summarize the situation at a high level, there are already too few drivers available as turnover, including retirements, continues the churn. Meanwhile, U.S. unemployment is at a low and the size of the workforce is not increasing appreciably. There's even talk of being at full unemployment already. Furthermore, the average driver age is above 50 and pay is comparable to the national average of $23 an hour.

On the surface, that lineup sounds a bit like we're at a dead end. Maybe. Maybe not. Experts in the field generally agree that possible solutions fall into three categories: short-term, mid-term and long-term.

"Early in 2018, it appeared that the driver shortage created a tipping point of structural change in the industry." That's according to Michael Zimmerman, lead partner for the Americas in the analytics practice of consultant A.T. Kearney.

That said, start with what is being done now to ease the pain of recruiting drivers. "Let's face it. Long-distance truck driving is a tough job and it's always been tough to recruit people," says Ben Cubitt, senior vice president, procurement and engineering at freight broker Transplace. "Drivers are away from home for extended periods and the lifestyle is not for everyone," he adds.

Until just recently, recruiting long-distance drivers was much tougher than for short haul drivers who are home most nights. "However, that has now changed and it's tough to recruit even short-haul drivers," Cubitt adds.

One solution that is a short-, mid- and long-term solution rolled into one, says Cubitt, is to greatly expand the driver pool. In addition to recruiting more women, Cubitt says African Americans (14% of drivers today), Hispanics (12% today) and Eastern Europeans are all sorely underrepresented in the driver workforce.

Klemp of NTI is a strong proponent of recruiting more women. "Women take fewer risks, crash less, collaborate more, work efficiently, are eager to learn and train, and put more effort into choosing a company and staying longer," says Klemp.

Another short-to-mid-term solution is to lower the age when drivers can get their commercial driver's license (CDL). Just that shift would greatly increase the potential pool of driver candidates.

Today the age is 21. Unfortunately, that creates a three-year gap between high school graduation and eligibility for a CDL. As a result, many potential drivers move into other fields rather than wait to drive. Reducing the driving age, however, is not without controversy. There is concern that younger drivers increase the risk of accidents on the road. "Do we just want more drivers or do we want the safest and best-trained drivers with fair compensation?" asks Knight of Knight-Swift.

The power of training

All agree that training is critical to making drivers successful and retaining them.

In November, the ATA's Spear pledged his organization's full support for National Apprenticeship Week (March 4-8, 2019). "We know the enormous value and incredible potential that apprenticeship programs offer--both to employers and job seekers alike," he says.

Early in 2018, ATA pledged to enroll 10,000 people a year for each of the next five years in enhanced career programs. Even Georgia Tech and JPMorgan Chase are part of this effort. To date, JPMorgan has funded $600,000 in grants to the university's Logistics Education and Pathways (LEAP) program, explains Tim Brown, director of Georgia Tech's Supply Chain & Logistics Institute.

The program, says Brown, is focused on inner city youth from 16-24 years old in Atlanta and Savannah. He says that more than 500 students have been involved with or are now involved with the program and various aspects of trucking.

Knight-Swift is intensifying its training efforts through its 11 academies. The company is also a strong supporter of third-party driver training facilities around the country. Yet another approach is offered by Cubitt of Transplace. The idea comes from one the company's LTL carrier partners.

The idea is to create a training program for recent high school graduates. Start them working on the docks. As 19 year-olds, make them part of a driving team, pairing up with one or more experienced drivers until they are 21 and eligible for their own CDL.

Increasing wages

Cubitt sums up the driver compensation problem quite succinctly: "Pay is not commensurate with sacrifice." Worse yet, increases in driver income have been "very slow" going back to 2007, says NTI. But that is beginning to change, especially in the past year. The ATA says that its 2018 survey shows 50% of carriers plan to either increase wages or offer a one-time bonus.

In fact, many companies report a 10% increase in driver wages in the past year with more to come. That could be an additional 8% in wages in 2019.

Another relatively new practice is catching on: signing bonuses. The range, according to NTI, is from $2,000 to $10,000. There are reports of team driver fleets offering bonuses as high as $30,000. In addition, some companies offer referral bonuses. Walmart, in particular, offers referral bonuses of $1,500.

But pay and signing bonuses are not the only issues here. Benefits matter too. Health care and paid vacation days are high on the list. Walmart, once again, is a leader here offering as many as 21 paid vacation days to its drivers. ATA chief economist Bob Costello says a recent survey of the association shows that some carriers also offer paid leave and 401K retirement savings.

Improving the driver experience

Then there is the matter of technology. It comes in two buckets. One is current changes in on-board technology that greatly improves the driving experience. The other is longer term as autonomous vehicle technology develops and provide driving assists to truckers.

To begin, truck cabs are starting to feature amenities not previously available. Falk of Nolan explains that technology in the cab is making it easier to drive a truck and be gone from home for extended periods. But these are only incremental improvements described by one expert as similar to moving from a typewriter to a computer.

"We are now at a point where technology is becoming increasingly essential to improving the driver experience," says Ben Harris, director supply chain ecosystem expansion at the Metro Atlanta Chamber. He says that technology in the cab will simplify the task of fulfilling operational requirements for drivers, some federally mandated, from driving regulations to truck maintenance.

Probably the most important here are electronic logging devices (ELDs), which are congressionally mandated. These devices log truck information from hours driven to miles covered. They also track hours of service that limit the time a driver can be on the road in a 24-hour period. ELDs are required on many trucks already with another year ahead for others to comply.

Quite simply, ELD devices greatly simplify the time and effort drivers must devote to tracking required information. They also guarantee that the information is collected electronically and reported according to federal mandates.

Other technology advances in the cab include GPS and on-board mapping software. Both help to get drivers get from point A to point B. There are also lifestyle technology advances. These include more comfortable sleeper cabs and in-truck audio and video entertainment systems.

Fundamental shifts in trucking practices

Everything discussed so far is about making driving more attractive to those already involved and potential drivers. Now it's time to go off that grid and discuss potential developments that will fundamentally change trucking practices. These range from autonomous vehicles to collaborative shipping. One of the most comprehensive programs advocates completely rebuilding the trucking supply chain.

None of them are around the corner, but all require attention now and into the future. Furthermore, none need be adopted in their entirety to remove at least some pressure from the driver shortage.

The one solution that everyone is at least slightly familiar with is the autonomous vehicle. It is worth noting up front that autonomous trucks are a long-term solution that will make driving easier in the short term before they potentially replace some drivers in the long term.

Talk autonomous vehicles and most people immediately go to the driverless stage. Fact is SAE (originally known as the Society of Automotive Engineers) established five years ago six distinct levels of automation for vehicles. This framework has been adopted by the U.S. Department of Transportation and the National Highway Traffic Safety Administration.

The levels range from no automation to partial and full automation. For instance, the first stage includes blind spot detection and lane departure warning systems. Move up a couple of levels to partial automation and lane change assist is part of the technology. Full automation does not occur until the sixth level. And we are a long way from that.

That is especially important. Driverless trucks are some time away, if they ever pull onto the highway. There are almost as many timelines out there as there are experts. But the general consensus is that driverless trucks are at least five, if not 10 or 15 years away. And no one expects the technology to entirely replace drivers at any point.

In the meantime, the first four levels of the technology will assist drivers, enhancing the driver experience just as other devices are doing today. The hope is that driving will become sufficiently easier that it will appeal to a broader range of people than it does today.

The ATA, in particular, sees "driver-assist technology" as a powerful addition to trucks that is akin to auto-pilot on airplanes. In addition, ATA expects that a key component of this technology will be a network that will connect trucks on the road. Its own internet of things, so to speak. Such connectivity has a strong potential to improve safety and reduce traffic congestion, says the ATA.

Moving loads differently

"More efficient trailer utilization is a big opportunity," says Brown of Georgia Tech. That can come in different forms. One is to ship more product and less air. Another is to build more efficient routes. There's also the matter of collaborative shipping. The most disruptive of all is rethinking routes to the extent that drivers are never more than a few hours away from home.

This is also where solutions that will help alleviate the driver shortage get complicated. Even very complicated. While all of these ideas are under development today, none have what could even remotely be called critical mass. "All of us in logistics are working to drive miles out of the system," says Cubitt of Transplace.

The first three forms just mentioned do just that and are central to a practice Cubitt calls lane matching. It combines shipments from two similar, but noncompetitive companies.

Both want to ship product to the same area but don't have a full load. Lane matching combines product from both, filling out the trailer. Better yet, mix the right products by weight to stay under the trailer weight limit, avoiding what otherwise would have been another partial load.

This practice is only in the early stages in the United States, but is more widespread in Europe.

Collaborative shipping, also known as shared shipping, manages fluctuations in supply and demand as parties from different supply chains combine their shipping operations more efficiently. That's according to professors Robert Boute and Tom Van Steendam of Belgium's Vlerick Business School and University.

They point out that the general concept is not new. However, there is a new twist. Companies now adjust their planning and bring forward or delay the shipping until it is most advantageous for all. The result, Boute and Van Steendam say, is more combination of less-than-full truckloads and fewer empty trips by backhauling full truckloads. That takes miles out of the system.

Making all of this happen is not easy, however. A cornerstone is a strong partnership between companies. To be successful, collaborative shipping requires all participants to feel that they are benefitting equally from the arrangement. That does not always happen. However, collaborative shipping offers strong upside for those who can make it work.

On a completely different level is a radically different concept for managing shipments called the Physical Internet. It is an idea developed a decade ago by professor Benoit Montreuil of Georgia Tech. As the supply chain's metaphor for the information internet, the Physical Internet is a handling and logistics system for moving and deploying goods.

More specifically, says Montreuil, "it is a meshed multi-party network of hyper-connected facilities that cross dock and store goods across the supply chain. It's a continuous flow, multimodal logistics model with a network of hubs on one side and of open distribution and fulfillment centers."

In the Physical Internet model, those hubs and DCs are never far apart. That makes it possible for drivers to drive four hours or less between locations. They can deliver one trailer and return with a second one and sleep in their own bed each night, vastly changing the current trucker paradigm.

Montreuil is currently developing simulations with several companies in the United States and internationally to see how the Physical Internet would work in their network. "We are taking a long-term view on this. And there is no question the Physical Internet will be in place, at least in part, before completely autonomous trucks are on the roads," says Montreuil.

Clearly, the driver shortage is a major challenge for the supply chain and the U.S. economy right now. And most expect that it will become more acute before it gets better. But as others have said, where there is motivation and money there is sure to be innovation.

Gary Forger is editor at large for Logistics Management
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Title Annotation:Transportation Best Practices/Trends
Author:Forger, Gary
Publication:Logistics Management (Highlands Ranch, Co.)
Date:Jun 1, 2019
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