Going, Going, Gone. The Auction Begins…Driver Shortage Has Arrived

02/25/2011

Going, Going, Gone. The Auction Begins…Driver Shortage Has Arrived

If you haven’t already heard, the capacity crunch (driver shortage) everyone has been predicting has arrived, and it’s packing a mean punch. This is not the story of the broker who cried wolf, friends, it’s the industry reality right now. To describe the online activity around this topic, FRENZY isn’t too strong of a word. Carriers are turning down loads in epic proportions, and it’s occurring for every reason you could possibly imagine.

FUEL is one of the largest impacting conditions right now as we’ve seen a steady increase to up to $3.573 this week, up $.74 from a year ago. Put quite simply, many carriers are flatly refusing to haul without a substantial amount of fuel surcharge increase.

DRIVER RECRUITMENT is another factor, considering the massive amount of new regulation thrown at trucking companies, including CSA. Finding qualified drivers with adequate scores is one side of the coin, being able to afford to hire them is the other side! It is simply harder to find good drivers in the face of the new scoring system.

Even the WEATHER is scoring some blame, with storms (real or just predicted) across the country delaying product, deliveries, and  freight routes where trucks are normally plentiful are truck-barren. The story in the Northeast and Midwest will not just be wet and windy. A band of snow moved through the Midwest Thursday into Thursday night and is now making its advance through the Great Lakes and interior Northeast today.

Some motor carriers are taking an auction standpoint. They wait out “booking” loads to see which shipper or broker will come up to the best bid price for their truck, and then going, going, gone…SOLD to the highest bidder! On the freight forums online, 3PL’s are crying “foul” as unethical providers hit below the belt, accepting a shipment, but backing out last minute when a higher paying load comes along. This is the time when REAL RELATIONSHIPS RULE, and it takes a lot of influence with a motor carrier to place their capacity in your hands. But don’t take our word for it, the experts are posting actual indexes showing how the capacity has already tightened, check out our resource information below.

FTR Associates has lowered its Shippers Condition Index (SCI) to reflect tightening carrier capacity, particularly in the truckload sector. The February Issue of FTR’s Shippers Update reported that the SCI in January stood at -8.8. The SCI sums up all market influences that affect shippers; a reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable. January’s reading is the most negative (unfavorable) reading for shippers yet seen during the current recovery.

Noel Perry, Senior Consultant for FTR, commented on the forecast for their Shippers Conditions Index “The SCI is our method for capturing the shipping environment in one, easy to understand figure.” He continued: “The downward progression of the SCI should serve as a warning signal to shippers. While trucking capacity is currently adequate during the normally slack winter shipping season, looking forward we expect things to tighten up dramatically as freight demand picks up beginning in March. A shortage of truck drivers, due in part to new government safety regulations, will be the key factor restricting the ability of motor carriers to expand capacity, resulting in higher rates and possible challenges in getting freight moved later in the year.” The February Shippers Update includes commentary on another new federal regulation – for Electronic On-board Recorders and how they are likely to impact carriers and shippers.

The Shippers Update, launched by FTR Associates during 2010 as a part of the firm’s Freight Focus Series, looks at conditions that will affect the cost and efficiency of shipping goods via all transportation modes. North American shippers will find in one reference the essential information they need on freight volumes, equipment capacity and transport costs and rates. The Shippers Update has both history and forecasts for four modal options: truckload, less-than-truckload, intermodal and rail carload. The analysis includes the breakdown of total truck and rail volumes into major commodity segments. It also provides historical snapshots of inland water and air freight markets. The freight data is augmented by an abundant collection of supporting data covering macro-economics and the fuel market.

FTR Associates, located in Nashville, IN, has been a leader in transportation forecasting for over 20 years. The company’s U.S. Freight Model collects and analyzes all data likely to impact freight movement and is based on specific characteristics for over 200 commodity groups. FTR Associates’ forecast reports cover trucking and rail transportation and include demand analysis for commercial vehicle as well as railcar. Specially designed reports are offered to participants in both industries to cover specific needs. For more information about the work of FTR Associates, visit www.ftrassociates.com or call Helen Lile at 888-988-1699 ext. 45.