Truck driver shortage impacting food deliveries

Expect delays and price hikes

Gloria Dawson | Feb 14, 2018

The trucking industry is facing a shortage of qualified drivers, with more items to deliver than ever before. Trucks move about 70% of all freight in this country, and shipments and costs of produce and packaged good have already been impacted.

“Shippers and wholesale suppliers, they're certainly going to feel the hit," said Rod Suarez, an economic analyst with the industry trade group American Trucking Associations (ATA). “The consumer won't really notice. It will be more of a bottom line for companies.”

In 2017, the ATA predicted the trucking industry would experience the highest level of driver shortfall, and by 2026 the ATA estimates the shortage could swell to over 174,000 drivers.

“Across all segments, freight costs have escalated as trucking capacity has tightened nationwide,” Thomas P. Hayes, president and CEO of Tyson Foods, said during the company’s fourth-quarter earnings call in February. “We expect these costs to continue to rise as carriers compete for drivers and new federal regulations come into play. We estimate this will add more than $200 million to our costs this year. At the same time, marketplace dynamics are driving wages higher, pushing up our labor cost. These additional costs are included in our outlook. However, we're assuming we'll recover the majority through pricing.”

Sysco, Hersey, Campbell Soup, McCormick & Co. and J.M. Smucker also mentioned freight costs concerns during recent earnings calls.

“One of the first pieces I see it affecting on our time is lead time,” said Paul Burton, director of logistics and distribution at JTM Food Group, a company that supplies and manufactures food products for retail, restaurants and schools. “The food industry tries to run a lean supply chain. It's tougher to run a lean supply chain when your service isn't what it once was.”

Many retailers operate with minimal back stock, and when trucks are late to deliver, it’s easy to run out of product. For JTM, “It's hurting our cost,” said Burton. “It's affecting our budgeting and projections.”

A number of factors contributed to the driver shortage. Drivers are aging out — the average truck driver is 49 years old — and high licensing fees and long drives can turn off younger workers. And a new federal mandate requiring most truckers use electronic logging devices hasn’t helped.

The mandate, which requires drivers to use an electronic device plugged into the truck’s engine to record driving time rather than a paper record, “has good intentions and there's certainly some good outcomes that will come, but the overall net effect on the trucking industry will be a loss of productivity,” said Suarez. “We see a lot of drivers and a lot of motor carrier companies themselves have simply closed up because they don't want to deal with [electronic monitoring] or drivers have left the industry because they don't want to deal with it.”

Burton views the federal mandate differently: “It forces them to make them legal.” But he does advocate for changes in the hours of service regulation. For example, while a truck is being unloaded a driver is still considered on duty, limiting the time he or she can be on the road.

The most important thing to do now is to “stabilize the transportation industry,” said Burton. His company feels the impact of the driver shortage as ingredients come into its warehouse and when its snack foods are shipped out. “It's hard for every piece of the business to function on an on-time base if the transportation end of it falls apart,” he said.

Suppliers and the trucking industry are looking for solutions.

Motor carrier companies are raising salaries and helping applicants with licensing fees, and hauls are shorter than they were a decade ago, so drivers need to spend less time away from home, said Suarez.

“We need to glorify the industry,” said Burton. “We need to let young people know that it's not bad to be a truck driver. You can make good money driving a truck, and you can be home. You don't have to be gone all the time. We need to look at our industry. Ground transportation is a dinosaur right now.”

Retailers and operators are hoping the industry modernizes quickly.

Roger Lowe Jr., CEO at Lowe’s Market, has already experience problems getting items in stock at his warehouse, he said during the National Grocers Association show in this week.

“I think the trucking shortage is going to be a huge challenge moving forward.”