THE PERFECT STORM…RELOADED
Posted on Tue, Apr 19, 2011 @ 08:51 AM
I’ve previously used this blog to talk about the perfect storm looming over not just trucking but the transportation industry as a whole. We’re all familiar with the potential impact of proposed Hours of Service regulations and the new Compliance, Safety, Accountability (CSA) initiative.
Despite six of the safest years in the history of trucking the Federal Motor Carrier Safety Administration (FMCSA) has proposed to reduce the number of hours drivers can drive. Any reduction of hours equates into lost capacity. The proposal was in response to the third challenge of their Hours of Service regulations. Rather than defend the regulations a third time the FMCSA entered into a consent agreement. There is a huge cry, including from Congress, for the agency to scrap the proposed changes and defend the regulations they spent years and millions of dollars crafting.
CSA, if it delivers on the promise, should help the FMCSA identify, intervene with and logically shut down more unsafe carriers. Less carriers further reduces capacity.
Now the FMCSA mandate for electronic on-board recorders and electronic logs within three (3) years will further constrict capacity.
Meanwhile carriers are scrambling to beef up pay programs in an attempt to retain and attract good, safe, qualified drivers. Upward pressure on rates is helping but having been depressed for so long even the spot capacity issues of the past few months hardly scratch the surface of this longstanding issue.
If all that isn’t enough, the US Department of Labor reminds us that Baby Boomers began turning 65 this year and are projected to begin retiring at a rate of 10,000 per month. 120,000 retirees per year shouldn’t be too alarming except that we know far too many of our drivers are Baby Boomers. Our driving workforce averages more than 50 years old and the average increases yearly. Driving is not particularly attractive to young people. The hours and work are difficult especially for the long-suppressed wages we offer. The drain of retiring Baby Boomers will further reduce trucking capacity.
Finally, unrest in the Middle East and unconstrained speculation with respect to futures have combined to once again cause a dramatic spike in fuel prices. As with any other overhead item with any other industry this will result in higher freight rates and fuel surcharges. The likelihood that prices will ever decline again is anybody’s guess but clearly is very unlikely.
The perfect storm can be tamed but the cost is going to be staggering and must be shared by everyone. Trucking carries more than 70% of all US freight according to the latest Commodity Flow Survey (CFS) conducted by the Bureau of Transportation Statistics (BTS) and the US Census Bureau in 2007. The vast majority of US homes and business are served only by trucking. Other modes of transportation are not an option. Everyone is going to have to pay more. Rates must rise and rise precipitously for shippers who will, naturally pass those increases along to consumers. We are all going to pay to right the transportation ship but righting it is the only option.
Only when drivers can earn a decent income, for a reasonable work week, can we expect new people to come into the industry.
Only when shipping rates rise and rise substantially can we pay good, safe, professionally drivers what they are really worth.
There’s been a lot of discussion about this issue but it’s time for the discussion to end and shippers and carriers to ante up.
Article Written By Kevin Mullen, Director- Safety & Recruiting.