Dive Brief:
- J.B. Hunt is warning customers about cost increases up to 10% or more as fall distribution season and the upcoming electronic logging device (ELD) mandate deepens the driver shortage, JOC.com reported Monday.
- Qualified driver availability is the main issue. Application numbers are healthy, but skills and experience are often lacking. Sign on bonuses and double-digit pay increases are becoming standard issue for new hires.
- Previous rate increase predictions were more modest before Hurricanes Irma and Harvey. Peak fall season also arrived early, driving rates higher. Spot market and intermodal rates are also higher than they were a year ago.
Dive Insight:
Rate increases were predicted as early as May; now early warnings seem prescient.
Some experts cite an unsustainable business model for the shortage of truck drivers, many of whom work long hours — 70 to 80 per week — in an effort to manage debt to training schools and pay for fuel. However, even transport lines are having trouble sustaining a stable workforce, despite pay increases and an easing of transfer rules for military to civilian CDLs. Finally, the conflict between hours-of-service laws and pending ELD demands, which initially prompted early predictions of shortages and resulting rate increases, accounts for at least some early retirements, driving employment numbers still lower.
Though the sudden surge caused by recent storms receded quickly, peak season need for drivers began early this year, affected in part by slow intermodal transport opportunities. With trains running slower and congestion heavy for some lines, trucking is dominating as the most effective means of shipping.
Fuel prices, too, have risen in the wake of weather disasters, making air transport even more expensive than usual and therefore less realistic for those retailers and e-commerce vendors already taking a hit on free shipping. Will increases hold at 10% as suggested? It depends on the weather.
