Monthly Archives: May 2018

Truck Driver Shortage affecting both Retailers and Customers

If everything’s price hikes in the coming few months you may probably blame on it the fact that there aren’t enough truck drivers to make deliveries to stores.

It’s sad to see how the severe shortage of truckers is leading to a rise in freight costs and, sequentially, increasing retail prices. And sometimes, retailers experience a spree of empty shelves due to late deliveries. While some are counting on self-driving trucks to ease the tension, experts say the driver shortfalls may persist or even get worse over the coming few years.

The crisis is far-reaching, even affecting the stock market & corporate profits as the high costs of transportation weigh heavily on company earnings. At times manufacturers have unwillingly stopped production due to the late arrival of raw materials.

The truck driver chomp has persisted for years despite the fact that a small group of millennials has been working hard spending weeks from home on cross-country trips to make deliveries. But it has also strengthened the economy, led to increase in demand for products like oil, housing supplies & consumer electronics. The fast-rising shipments by e-commerce companies, particularly Amazon has added to the congestion.

“We have never experienced a situation like this before; the demand is high, and the workforce is limited,” says Bob Costello, The chief economist American Trucking Associations (ATA).

Industry safety officials launched an operation on April 1 enforcing a law demanding that all trucks carry along electronic devices that enable company owners to monitor their compliance to the minimum driving span (before taking a break). This requirement has reduced the number of trucks in operation at any given time and caused some drivers to quit the business thus contributing to the decreased capacity.

According to the ATA, there is a 51,000 shortage of truck drivers countrywide, a figure up from 2013’s 20,000 and 2016’s 36,500. The company predicts the driver gap may increase to a whopping 100,000 by the year 2021.

The constraints in shipping were acute at the start of the year due to harsh weather conditions and the driver scarcity. The conditions eased a bit in March when the Chinese reduced shipments to United States ports at New Year. But the shortages are mounting again because spring home-building is near and laws on driving limits have become more stringent.

At the losing end are retailers who have to pay more for shipment, sometimes even seeking merchant cash advance to get the extra money. Truck Firms have increased rates from 6 to 10 percent in the past year to pay off higher wages and make the most of the high demand and limited workforce.

To offset the higher shipping costs, business owners have raised shelf prices from the beginning of 2018, but most of them pulled back following Amazon and Walmart’s bold stand to retain last year prices, says Scott Mushkin, a Market analyst at Wolfe Research. But Scott still fears that freight costs may shoot higher forcing business owner to increase shelf prices later this year.


Author bio: As an account executive, Michael Hollis has funded millions by using alternative merchant cash advancesolutions. His experience and extensive knowledge of the industry has become a true asset for First American Merchant.