When Carriers Win, Shippers Win

Goods need to move faster than ever, but trucking isn’t keeping up. From supply chain experts to media, everyone’s blaming a record-high driver shortage. But it’s not that simple. In this original whitepaper, Transfix pulls back the curtain on an assumption that’s holding back best-in-class shipping—and an entire industry.

Trucking Matters, but There Are Pressing Industry Challenges

Trucking is the undisputed backbone of the American economy—the $700 billion industry moves nearly 70% of the country’s freight tonnage, and for financial experts, it’s a leading indicator of the country’s economic health. The baseline assumption has long been the same: if trucks are moving more freight, companies are producing more goods, and consumers have more spending power. But there’s another key economic concept at play: supply and demand fundamentals. With higher consumer expectations around shipping speeds, increased global competition and omni-channel retailing, shippers nationwide face imposing challenges. Confounding this is a record-high shortage of current and prospective drivers, a top-of-mind problem for most shippers as freight demand continues to surpass supply, and transportation costs rise in response.

THE DIMINISHING TRUCK DRIVER POOL

The average truck driver is 55 years old, with most soon approaching retirement. The American Transportation Research Institute projects 175,000 open spots by 2026, and given lifestyle and values concerns, few Millennials are in the pipeline for the profession.

Capacity Crunch: More than Meets the Eye

Tales of the direct impact the driver shortage has on shippers abound in the media: Companies like General Mills (Haagen-Dazs, Cheerios) attributed cutting 625 jobs by the end of 2019 to rising commodity and freight expenses.3 According to The Wall Street Journal and Fox Business, major food giants—Mondelez International (Cadbury, Nabisco, Trident), Hershey Co, Nestle SA, and Coca-Cola Co—all planned to hike 2019 North American prices, passing the burden of rising ingredient and transportation costs onto retailers and consumers. Reliance on last-minute, higher-cost shipping has also significantly increased. Last summer, Freightwaves reported that General Mills had to quadruple its spot freight in just one quarter.

While the impact of the shortage is felt industry-wide, the problem is more complex than it seems. In fact, adding more drivers is just one piece of the solution. It’s also crucial to address the inefficiencies throughout the supply chain that impede the smart utilization of existing drivers and their trucks.

“While we were climbing the hill, the grade steepened and now we are estimating the full-year impact to be roughly $250 million. {We} cannot subsidize the increased freight.” -Thomas Hayes, Former CEO of Tyson Foods

Solve a Complex Problem with Better Experiences and Data

Taking a deeper look, it’s clear that there’s more to the shortage than meets the eye. First, rampant lifestyle and work issues significantly reduce drivers’ satisfaction, health and productivity. Without addressing the driver experience, adding more headcount won’t solve anything, especially for potential Millennial truckers, who place a high premium on employee engagement and experience.

Shippers also don’t typically have access to the actionable data that would allow them to significantly improve productivity and reduce costs, even with a shortage of drivers. Low adoption of the right technology limits network visibility and reduces efficiency at facilities. It also stands in the way of solving common driver pain points.

Shippers are singularly poised to drive change in the marketplace, but without proper insights, many fall short. In order to succeed in this competitive environment, shippers must act now to improve the driver experience and build trust, in turn improving their own performance. The answer lies in a combination of human and data-based insights, with new capabilities employed to improve this relationship on both sides. When drivers win, shippers share in the victory.

Truckers Talk: Hear Firsthand from Drivers

Listening to the direct experience of drivers is the first key to incisively addressing the current industry problems. At Transfix, we’re partnering with thousands of carriers, and innovating to solve their most pressing concerns. Wasted miles is another issue that is particularly catastrophic for the industry. Too often, deliveries are made with no return consideration, leaving the driver with empty miles and no compensation for time, fuel, or vehicle wear and tear. Nearly 15-20% of miles are driven with empty trailers, or “dead-head.” According to Transfix, this adds up to 65 billion empty miles annually.