The Driver Shortage – My Dissent, A Contrarian’s Take
This post is a guest post from Steve Hitchcock, Chief Operating Officer with Duncan and Son Lines (a member of the TC04 Best Practice Group)
I’ve been hearing that there is a driver shortage every year over the seven years I’ve been in the trucking industry. I’ve heard that the industry has been saying this for well over 20 years (save about 1-2 years after the housing bubble crash). If there is such a shortage, why are the shelves full of food at the grocery stores? Target and Walmart have full shelves as well. Home Depot and Lowes both have plenty of lumber, nuts/bolts/screws, conduit, paint, ceiling fans, tile, etc. How can Amazon ship me my order from their warehouse? How did the goods get to their distribution center if there was a shortage of drivers? How is there always a driver to bring boxes to my house within two days if there is a driver shortage? I think I know- There is no driver shortage.
In all of my formal education and life experience, I’ve learned that there really aren’t shortages, per se. There are just shortages at particular price levels. And of course, there are surpluses at other price levels (thanks be to my ECON 101 professor, right?). In my niche trucking market, all of us say we could use 10-20 more drivers. That’s a shortage, right? But what would happen if we all got them? I’d venture to say that we’d have a surplus. And if we had a surplus, we would make decisions to haul freight for lower rates than we haul them for today. So we’d work harder and do more for less money. We should be careful what we wish for.
Every trucking conference (American Trucking Association, Arizona Trucking Association, CO, Truckload Carrier Association, etc.) spends an inordinate amount of time on the driver shortage; ways to advertise for, hire, and retain drivers. For some reason we see this endeavor as an opportunity for group-think. But again, what would happen if we all got our 10-20 drivers? So now we’re going to innovate together on the subject? I’m for innovating alone on this one. I want 10-20 drivers, but I don’t want my competitor to get them. That’s how competition works. But I also don’t want over-supply. I don’t have that now and I’m happy with that.
If there is indeed a “shortage,” isn’t that a good thing? Doesn’t constriction of supply/capacity cause trucking rates to increase? Isn’t that good for a trucker? But we march on to the tune of “The Driver Shortage is the Biggest Threat to the Trucking Industry.” It feels like I’m the one guy in the back of the room quietly dissenting. My dissent doesn’t end with the subject of driver supply, though.
There are all kinds of things that cause a restriction of capacity, which in turn causes trucking rates to rise. There are EPA mandates, hours of service regulations, ELDs, driver age restrictions, weight restrictions, length restrictions, etc. And how do the people in my industry react? We react with a “the sky is falling” theme. Most of this is dogmatic- almost religious. Because we are “against” this government involvement, we’re disgusted and now our world is slowly ending, one government intervention at a time. Again, I’m alone in the room . I see every one of those regulations as a reduction in supply and an increase in rates. While most in our industry have an approach that is dogmatic, I urgemy organization to be pragmatic. I urge us to position ourselves to take advantage of the supply reduction.
I may agree with my colleagues from a philosophical standpoint when it comes to the role of government. I probably vote like them when electing leaders. But at the end of the day, “don’t hate the player, hate the game.” I’m going to play the game as well I can with the rules clearly laid out in front of me. There is an absolute equilibrium between the supply of drivers and the demand of drivers. It’s true. If it wasn’t true, you’d see a dramatic increase in driver wages from trucking companies. But you don’t. If the driver shortage actually caused a constriction of capacity, shippers would be bidding up freight rates. They aren’t. Just because we keep saying that there is a driver shortage doesn’t make it true. For what our industry and customers are willing to pay, we have the exact amount of drivers we are supposed to have. The invisible hand of Adam Smith works. There is no driver shortage.