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Nov. 18, 2021, 11:23 a.m. EST

How trucking became the weak link in America’s supply chain

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By Claudia Assis

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Chassis drivers used to be able to make as many as six or seven trips a day, said Pat Nolan, vice president of North America operations at C. H. Robinson Worldwide Inc. /zigman2/quotes/203490767/composite CHRW +1.33% , the largest third-party logistics company in the U.S. by revenue.

With chassis not always available and the overall congestion at the ports, they might make only three trips or as few as one a day, Nolan said. Terminals at the Port of Los Angeles have shut down for as long as three days because of a lack of empty chassis, and that’s not just an L.A. problem, he said.

“We’re seeing that chassis shortage in Seattle, New Jersey and Savannah, too,” he said. “One way we’re getting around it is to help our customers bypass the ocean ports. We’re running on average 12 to 15 air charters a week, some of them passenger planes with freight strapped right into the cabin.”

Nolan estimated that about 20,000 new trucks are partially built, sitting unfinished because of the chip shortage, and another 187,000 are back ordered.

“That has pushed the average price for a used truck to $65,000 – up 50% over last year. Prices for older trucks have doubled. Until those supply-chain issues clear up, expanding the nation’s fleet will be problematic,” he said.

Truck driver shortage hits a historic high

At the nation’s biggest port in Los Angeles, some 17 ships have been berthed daily this fall, as dozens more wait anchored just offshore. The Port of Los Angeles has been averaging an unprecedented volume of 900,000 container units each month for more than a year and efficiently getting this vast amount of cargo out of port has been near impossible, creating a bottleneck. Containers have been stacked five at a time, turning the port into a giant warehouse, waiting for trucks to remove them. Some 40% of the imported containers linger for at least nine days, as opposed to, on average, four days before the pandemic.

“The ability to have enough chassis, enough truck drivers, to actually make the operations work at the port is one limitation as well that I think we are paying close attention to,” White House Port Envoy John Porcar said at an October press conference.

Starting this month, the Port of Los Angeles is fining ocean carriers $100 per day for each truck-bound container that’s left at the port for nine days or more. Many truck drivers won’t venture anywhere near the ports because of the long lines, wait times and, often, low pay involved in the work.

There are not enough drivers at the ports, and the nation more broadly. There’s a long-standing shortage of truck drivers, and that shortage is headed for a record this year.

The American Trucking Associations recently estimated that the truck driver shortage will hit a historic high of just over 80,000 drivers this year. That’s the difference between the number of drivers currently in the market and an “optimal” number of drivers based on freight demand, ATA said. That driver shortage is most acute in the long-haul, for-hire truckload market, it said.

Pay has increased, but getting enough people to sign up for long hours of driving and extensive time away from family and friends remains difficult. The profession attracts few women, who make up about 7% of the drivers. Barriers include inability to clear drug tests and meet driving-record standards and other hiring policies. Like everything else, truck-driving schools were closed for some of 2020, and there are fewer recent graduates.

Long-haul drivers spend weeks on the road, and amid the current scramble to keep goods moving, their time away from home is stretching. There are countless hours of waiting at docks and warehouses to load and unload cargo. And the demands placed on drivers only increase near the end of the year.

“It’s going to be very tight to get things moving” for the holidays, DAT Solutions’ Adamo said. “This year is going to be peak in every sense of the word.”

Adamo doesn’t expect things to ease until next year, perhaps by the end of the second quarter. Peak season now lasts into the second week of January, to account for the longer return windows of items bought online. After that, we may see a small slowdown, but spring will be busy again, he said.

By the end of the second quarter, we could be easing back into what Adamo describes as not “normal, but more sane levels.”

Kyle Lintner, a freight consultant in Chicago, likens the potential fixes to America’s trucking challenges as similar to trying to get out of a traffic jam. “If we all go to the same road at the same time, we will bottleneck,” he said.

The efforts to ease congestion at the ports in Southern California are creating warehousing issues in the nearby areas. Trucks that work transporting goods from ports to warehouses are being sent farther and farther away, creating more downtime and more inefficiencies, Lintner said.

The overall productivity of U.S. truck drivers willing to do the work can also be limited by the fragmented nature of the industry. Nick Dangles, a former freight broker and a co-founder of Kinetic, a Chicago sales and marketing consulting firm for freight tech companies, has focused on technological solutions. He suggests that currently an 11-hour driving day can consist of seven hours of driving, with the rest going into route planning, and driving around inefficiently to get the next load. “A lot of the technology is focusing on the fact that the truck industry is really fragmented and inefficient,” he said. “It may have a driver-utilization problem more than it has a driver shortage.”

Some tech tools to come to the market include shipper review platforms that sort out the shippers that are quicker in getting drivers in and out their facilities. Freight tech could also smooth out the loading process and dock appointments, and improve pricing and capacity tools. When capacity is tight, you see an emphasis on these kinds of tools. But the vast majority of trucking companies in the U.S. are smaller operations, and money to invest in problem-solving technology might be an issue for such small outfits.

When Dangles got out of the freight brokerage business, in June 2020, one of his frequent quotes were trips between Chicago and St. Louis for $650 a truckload. Recently, working with a dynamic pricing tool, he couldn’t believe his eyes when he saw his old Chicago-to-St. Louis runs, often giant rolls of Bubble Wrap, show up at around $1,200.

“I knew rates were higher, anecdotally, but I hadn’t been in brokerage in over a year, and it shows me $1,200. I thought this pricing tool is broken, there’s no way Chicago to St Louis is $1,200,” he said. “So I called my buddies still in the industry, and they all tell me the same thing, $1,200, $1,300. And that’s just crazy to me.”

/zigman2/quotes/203490767/composite
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