Truck driver pay has increased 17% over the last two years and will continue to climb. Truck drivers haven’t seen pay raises in years. They’re now demanding more money, and carriers must oblige.
What Caused Driver Pay Increases?
Many carriers have recently doled out their biggest pay raises in decades. The average annual pay of a truck driver is $57,000, an all-time high, with many long-haul truckers receiving upwards of $70,000. Carriers have had to significantly increase pay to fight driver retention and help recruit new drivers.
Driver retention reached as high as 96% in 2014. According to a report from the American Trucking Association (ATA), the industry is already short 48,000 drivers. Current truck drivers are nearing the age of retirement and there are not enough young drivers to replace them, let alone keep up with the growing U.S. freight volume. The large pay increases are a direct result of these major challenges facing the industry.
How Does this Affect Shippers?
Increasing driver pay accrues more operating costs for carriers. Over the road (OTR) carriers have been financially hurt by high fuel prices, expensive equipment investments and razor thin margins in recent history. With the new, additional costs of increased driver pay, carriers must pass these expenses on to shippers. All shippers can expect transportation costs to increase by at least 10% in the coming years.
In addition to increased transportation costs, shippers are having a harder time securing the truck capacity they need to ship regularly and on time. This is because carriers have to use their drivers wisely since there are so few of them. Carriers are very selective with the freight they haul.
Due to the rising cost of transportation and the difficulty of securing capacity, many shippers are scrambling to improve transportation operations. This is in order to gain preferred shipper status so that carriers choose to haul their freight over others.
Outsourcing Transportation
Outsourcing transportation is becoming very popular amongst shippers. About 80% of Fortune 500 companies and 96% of Fortune 100 companies use 3PL services in some way. This is because most 3PLs have access to guaranteed capacity and can leverage down prices in carrier negotiations.
3PLs typically have the expertise to help carriers navigate the difficult trends in the transportation industry.
Enjoy this post? Learn more by reading how to leverage practical big data solutions to save money on transportation.
