80,000 drivers needed-An overreaction or a call to action?

Today we’re going to talk about the current driver shortage debate and whether or not adding 10’s of thousands of drivers into the current truckload market would alleviate some of the supply chain bottlenecks we’ve all been experiencing over the past year or not.

Now as we’ve talked about in past the problems, we’ve been facing over the past 16 months have not only been supply-related, but demand-related as well. This is one of the fundamental differences between the 2018 capacity shortage and our current environment.

You can see the difference in the data depicted as rejections spiked in 18’ while imports remained relatively flat. Ultimately, caused an overcorrection towards the end of the year, lasting until the start of the pandemic when both imports and rejections skyrocketed.

Now unfortunately before the increase in steady demand a huge round of layoffs and resignations began as the fear of the unknown plagued employment back at the end of March last year. This however for the truck transportation sector was short-lived as consumer demand quickly rebounded, although in between that time many found employment outside of the trucking realm which helped kick start the shift from a shipper’s market to a carrier’s market.

Since summer truck transportation employment overall has returned to pre-covid levels and is within 2% of its record high set back in July 2019. Which at that time, the outbound tender rejection index was below 4%, and the outbound tender volume index was 34% below current figures.

The average van rate per mile, according to the International Trucking Services, was hovering around $2/mile back then. That’s a significant decrease from today’s more than $3.40/mile average. As you can see even as employment has begun to return to pre-covid heights, rates have persisted at record levels as unprecedented demand has remained.

So much so that if we bring back our truck transportation employment compared to volumes, on the Left, and put it next to rejections, on the right, you can see that both rejections and volumes grossly outpace pre-pandemic levels.

Now it’s important to keep in mind, That the overcorrection in capacity from 2018 to 2019 contributed to a record number of trucking bankruptcies as there was a quick and drastic shift from a carrier’s market to a shipper’s market. These figures speak volumes when considering how to avoid the extreme-scale tips and volatility we’ve experienced over the past several years.

I believe the mainstream headline “80k drivers needed” is a bit aggressive as that much capacity entering our current environment would only swell our most congested areas and eventually when restocking and consumer spending did subside lead to a blood bath of carrier bankruptcies like in 2019 when over 1000 trucking companies went belly up.

While I don’t believe any one solution will resolve the problems, we are currently going through. I do believe that drivers, warehouse employees, and dock workers already have unique solutions to the complications we know about and even more important to the ones we don’t know about.