Overcoming the Trucking Industry Shortage

May 21, 2018 • Posted in Market Insights

The trucking industry is facing a serious challenge: With an estimated shortage of over 63,000 drivers, trucking companies in the U.S. are experiencing a capacity shortage that is rippling through the entire supply chain.

So, how is this shortage affecting the plastics industry? M. Holland relies on bulk trucks to deliver about 50 percent of our plastic resin and ensure seamless delivery to our clients.

“The trucking shortage has become the new normal since last year’s holiday demand and natural disasters,” says Michelle Rupke, M. Holland Logistics Manager. “Luckily, we have great relationships and work efficiently with our core trucking carriers and logistics partners to minimize the impact of this challenging new logistics world we live in.”

But the driver shortage is caused by more than weather disruptions and seasonality:

  • Ironically, it’s symptomatic of a strong U.S. economy. Every year, more than 70 percent of all domestic goods are transported by truck. That takes more than 3.68M registered trucks and 3.5M drivers to keep things moving. The trucking industry is a vital element of the U.S. supply chain, with freight demand at its highest since 2004.
  • During the Great Recession, many drivers left the industry for others. However, recruitment efforts have not kept up with the soaring demand. Additionally, strict commercial driver’s license age restrictions limit the pool of applicants (commercial drivers must be at least 21 years old).
  • To further complicate matters, a recent federal safety regulation is increasing the trucking shortage. Effective April 1, 2018, all truck drivers must use electronic logging devices (ELDs) rather than paper logs to document their mandated limit of 14 hours behind the wheel. These devices must stay powered on throughout the entire job to track driving behaviors and hours, as well as allow more visibility for safety and fleet managers. While increasing road safety was the goal for this mandate, it is causing the early retirement of some drivers and fewer hauls and money for others.

G&D Trucking, Inc./Hoffman Transportation, LLC, one of M. Holland’s long-standing carrier partners and business partner for the Coal City Gold Standard Distribution Center, thinks the new mandate should also result in a look to change the Hours of Service (HOS) law.

“The transportation industry as a whole needs to incentivize the market to draw in new youthful talent, and work with legislators to provide a law that allows more flexibility to cater to different drivers’ driving and rest habits,” says Jordan Hoffman, VP of G&D Trucking/Hoffman Transportation, National Tank Truck Carrier Association 2018 North American Safety Champions and Heil Trophy award winner. “I believe the electronic logs can be a positive thing for the industry, but we need to look at reforming the Hours of Service (HOS) law with it. There needs to be an allowance to turn a driver’s 14-hour clock off if they are not driving. Under the current HOS law, the ELDs have created a situation where a driver can be tired but feels forced to drive due to having driving hours left.”

Educating clients on the importance of a driver’s time is an initiative for M. Holland. Oftentimes a driver’s HOS is negatively impacted by factors beyond their control. Some of the delaying factors are created at various client facilities resulting in lower productivity, which ultimately increases driver demand.

The trucking shortage is causing not only transportation delays but rising prices as well, as trucking companies grapple with rising labor and regulation costs. To mitigate both delivery and cost pressures, it’s important now more than ever to have open streams of communication with carriers and logistics companies.

Mike Mobley, Senior VP of Operations at Echo Global Logistics and M. Holland’s Full Truckload (TL) and Less Than Truckload (LTL) partner, says companies need to budget and plan for seamless freighting.

“We look forward to working with M. Holland and their clients to mitigate cost and availability challenges by shipping differently, refining routing guides, developing more regional shippers and helping them budget more proactively,” says Mobley. “We have had a long-term strategic relationship with M. Holland that focuses on continuous improvement. Shippers with this mentality will likely be able to provide quality service in the face of the market challenges.”

With partners like Echo Global Logistics and G&D Trucking/Hoffman Transportation, M. Holland can focus continuously on providing and improving quality service in the face of the trucking market challenges.

“M. Holland recognizes that our carriers are true partners, and we must integrate them into our business to mitigate potential issues,” says Pete Nutley, Vice President of Operations at M. Holland. “They have seats at our strategic planning sessions and full visibility of our logistics systems. This transparency allows us to ensure our clients experience regular, dependable fulfillment.

“We started integrating carriers more into our business by partnering with them after we created the Gold Standard Distribution Centers (GSDC). We now have 15 GSDCs strategically placed across the nation to serve as all-encompassing facilities with resin supply, transportation modes, logistics and increased speed-to-market.

“We are also in the process of implementing a new, advanced transportation management system (TMS). It will allow full visibility into all lanes of the trucking market. Our logistics team will be able to utilize contracted carriers and spot markets to optimize loads, hold rates, reduce freight costs, and better forecast for coming months,” adds Nutley.
Trucking industry experts and economists have predicted the trucking shortage will last for at least a couple more years, but M. Holland is ready.

“We are diligently working with our carriers and logistics partners to be strategic during this shortage,” says Roland Wilson, M. Holland’s Director, Supply Chain. “We hear our carriers’ concerns about loading times and driver shortages, so we’re forecasting more efficiently and communicating with more of our customers to allow for seamless freighting.”

While the truck driver shortage continues to grow over the next few years, it is imperative that M. Holland employs smart solutions and works seamlessly with strategic logistics partners to protect both clients and suppliers.

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