Freight Costs Could Soar as Driver Shortage Grows - Modern Distribution Management

Freight Costs Could Soar as Driver Shortage Grows

Transportation companies expected to pass ballooning labor costs along supply chain.
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A growing driver shortage in the United States has forced transportation companies to drastically raise wages for truckers, a move that will drive up costs for companies across the supply chain, according to a report in The Wall Street Journal.

“Everyone is fighting over the same drivers,” Dan Pallme, director of the Intermodal Freight Transportation Institute at the University of Memphis, told the WSJ. “Eventually, what has to happen is salary has to rise, and the only way motor carriers can do that is by increasing the costs to their customers.”

The American Trucking Associations estimates the shortage of U.S. truck drivers has risen to nearly 48,000 and could grow because of "industry growth and a retiring workforce."

Meanwhile, The National Transportation Institute says average pay for long-haul truckers increased 17 percent since 2013 while average pay for U.S. workers in that same timeframe rose by less than 4 percent.

Coupled with signing bonuses and other perks, truck drivers' rising wages will get passed along to customers – including distributors, manufacturers and logistics firms – moving their goods along the supply chain.

Rising freight costs was among the top business-specific and industry concerns for distributors in the MDM Industry Outlook Survey at the end of last year. And about one-fifth of respondents in the survey said better transportation/freight/logistics management is a business priority for next year – a figure that is sure to rise as national truck driver shortage endures.

The rising costs to attract drivers is also sparking companies to adjust their supply chains, according The Wall Street Journal article, which could have an impact on everything from shipping strategies to distribution center locations.

“Given the fact that the cost of transporting products over the road is rising, it has kind of forced us to rethink our distribution network strategy,” Jim Keppler, Whirlpool’s vice president of integrated supply chain, told the paper. “Driver pay is a big part of that.”

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