“We’ve Never Seen Anything Like This” – Freight Companies Scramble To Hike Wages As Trucker Shortage Intensifies

Zero Hedge – by Tyler Durden

Millennials would apparently rather live in their mothers’ basements for the rest of their lives than take a “blue collar” job like joining the ranks of America’s long-haul truckers – and that’s creating serious problems for the US economy that could prompt the Federal Reserve to hike interest rates even more quickly, as the central bank attempts to head off an “overheating” economy.  

In a report published Tuesday, the Washington Post became the latest US news organization to explore the factors driving up freight costs in the US. These include a shortage of drivers that is forcing trucking companies to hike wages at a seriously rapid clip. As we pointed out last year, the Trump administration’s focus on restoring blue-collar jobs in the US has inadvertently helped create a “yuge” labor shortage. According to a study done by one industry group, freight companies could be facing a shortage of more than 175,000 drivers by 2024.


The problem is that few young people are willing to dedicate their careers to long-haul trucking for fear that tech giants like Uber and Google will soon render them obsolete by introducing fleets of self-driving trucks.

The US has been struggling with a shortage of drivers for years. But in 2018, that shortage has reached a crisis level as a strong economy has caused demand for goods to soar across nearly every sector of he US. In addition, the federal government introduced a new rule in December that limits driving shifts to 11 hours before drivers must take a legally mandated break.

In response to these circumstances, Joyce Brenny, chief executive of Brenny Transportation in Minnesota, gave her drivers a 15% raise this year, but she still can’t find enough workers for a job that now pays $80,000 a year – well above the national median income. Brenny added that she might be forced to hand out another 10% raise later this year.

“I’ve never seen it like this, ever,” said Brenny, who has been in the trucking industry for 30 years. “It doesn’t matter what the load even pays. There are just not drivers.”

Trucking executives say their industry is experiencing a perfect storm: The economic upswing is creating heavy demand for trucks, but it’s hard to find drivers with unemployment so low. Young Americans are ignoring the job openings because they fear self-driving trucks will soon dominate the industry. Waymo, the driverless car company owned by Alphabet, just launched a self-driving truck pilot program in Atlanta, although trucking industry veterans argue it will be a long time before drivers go away entirely.

Brenny anticipates she will have to raise pay another 10 percent before the end of the year to ensure that other companies don’t steal her drivers.

“The drivers deserve the wages. They really do, but the raises are coming so fast that it’s hard to handle,” said Brenny, who is having to adjust contracts for drivers – and customers – rapidly.


“It’s as bad as it’s ever been” to find drivers, said Bob Costello, chief economist at the American Trucking Associations. “Companies are doing everything they can to make drivers happy: increasing pay and getting them home more often, but that means they aren’t driving as many miles.”

America had a shortage of 51,000 truck drivers at the end of last year, Costello found, up from a shortage of 36,000 in 2016. He says “without a doubt” it’s going to be even higher this year, even though many companies are giving double-digit raises. He gets asked about the driver scarcity daily as companies try to figure out how to handle the growing backlog. His best advice is for companies to invest in technology like what Uber and Lyft have to cut down on the time a driver or truck sits idle between runs.

Trucking executives who spoke with WaPo said their industry is facing what they described as a “perfect storm”. Low unemployment is making it hard to find drivers. And young Americans are wary of taking a job that could soon disappear thanks to intensifying automation and AI. Alphabet’s Waymo just launched a self-driving truck pilot program in Atlanta – though industry veterans say it’ll be years, or even decades, before the program is ready to expand.


Meanwhile, rising wages and climbing energy prices are driving the trucking price per mile to its highest level since the financial crisis.

This rise is eating away at profit margins for everybody from grocers to manufacturers. Eventually, companies will have no choice but to pass on these expenses to their customers in the form of consumer price inflation.

And the situation will likely only get worse as the summer driving season jumps into full swing.

Logistics and transportation accounts for about 10 cents of every dollar in the U.S. economy, says Donald Broughton of Broughton Capital and author of the Cass Freight Index publication.

“I don’t normally speak in hyperbole, but we’re entering some uncharted territory,” Broughton said. “If there is a 10 percent increase in transportation costs, that gives you a 1 percent increase in inflation for the broader economy. That’s real.”

It could mark a turning point for the U.S. economy. Inflation has stayed unusually low in the past decade, largely because costs have stayed low for food, clothes and other items Americans buy in store or online as companies got more efficient and worker wages barely increased. But rising shipping costs could change that dynamic in 2018, potentially forcing people to have to spend more and employers to hike pay as they try to compete for workers with the trucking industry.

There already aren’t enough trucks on the road to keep up with demand this spring. It could get even worse when the holiday season hits.

Long-haul trucking doesn’t require a college degree – but drivers must repeatedly pass drug tests, something that’s becoming a major hindrance for younger male workers.

But perhaps as young people start to realize that they need to find a job that pays better than the $30,000 a year they’re making as a social media guru, then the shortage of drivers will start to clear up.


7 thoughts on ““We’ve Never Seen Anything Like This” – Freight Companies Scramble To Hike Wages As Trucker Shortage Intensifies

  1. Sure. After spending my life on the road, now retired, now they raise the wages. There ain’t no justice.

      1. Yeah, it’s a good time for us out here right now, some companies are talking salaries, no more per mile. Guaranteed weekly paychecks.

        Good medical, ect ect.

        What it really boils down to Is more pay for less work.

  2. Id do it. If i could smoke pot in my time off. What i did last weekend is not bodies business. And it pissing in a cup on demand just because dot says so. They need to switch to mouth swabs. 6-48 hours and your good.

  3. “….Millennials would apparently rather live in their mothers’ basements for the rest of their lives than take a “blue collar” job…..”

    Well maybe the millennials’ mothers should say “get the hell out and get a job, you lazy bastard” on their eighteenth birthday instead of encouraging the Peter Pan syndrome.

    “Oh, not my darling boy. He’s only 42, so he can’t be expected to get a job and pay rent” — Eternal Soccer Mom.

    Or…. there will be plenty of wetbacks willing to take the blue collar jobs.

    This is also the result of a media campaign designed to destroy the American work ethic, along with everything else that made this country great.

    1. Well said, and I’m glad my two kids aren’t into that “mother’s basement” scene (besides which, in our case “mother’s basement” means living under the house!)

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