Executives and analysts for the freight industry said truck drivers' wages would have to increase from the current annual $40,000-$58,000 range to more than $60,000 if road freight carriers were to successfully compete for workers in a growing labor market.
updated 10/14/2004 10:49:34 AM ET 2004-10-14T14:49:34

Leaders of the U.S. freight transport industry have acknowledged that truck drivers' wages must rise by up to 50 percent if the acute shortage of capacity in the industry is to be eased.

Speaking at a conference in Atlanta, executives from several of America's largest road freight carriers identified the difficulty of recruiting drivers as the biggest cause of transport bottlenecks that have slowed down corporate supply chains in the U.S. this year.

Executives and analysts said drivers' wages — the industry's single biggest cost — would have to increase from the current annual $40,000-$58,000 range to more than $60,000 if road freight carriers were to successfully compete for workers in a growing labor market.

Scott Arves, president of transportation for Schneider National, a truck company, said the industry had reached a consensus on the need for higher wages but “lack of courage” was preventing freight carriers from swallowing such a sharp increase in costs.

A limited pool of drivers is one of the reasons why capacity in the U.S. road freight market has fallen by five percent over the past three years, according to Schneider, creating a severe shortage of freight transport in the U.S. as the economy has recovered.

Eric Starks, president of FTR Associates, a research firm, said demand for drivers was increasing by 3.4 percent a year, while supply was growing by just one percent annually.

Executives warned that freight companies were reluctant to absorb higher labor costs at a time when their businesses were under pressure from high fuel prices, rising highway tolls, worsening traffic congestion, increased regulation and growing litigation risks.

Against this backdrop, executives and analysts forecast that capacity shortages would continue for at least the next two years and that higher costs would be passed on to shippers and ultimately consumers in the form of increased freight rates.

“Consumers have to accept that they haven't been paying the true amount that it costs to ship goods from A to B,” said Jeffrey Burns, an advocate for truck drivers' rights.

Conference participants highlighted poor quality of life as another cause of the shortage of truck drivers. “They are away from home for a considerable amount of time. They eat truck-stop food. They take showers where who knows who else has taken showers. It's not a very glamorous lifestyle,” said Kirk Thompson, president of JB Hunt, a truck company.

U.S. railroads and ports have also struggled to cope with increased freight flows over recent months. Danny Garst, vice-president of logistics in the U.S. for Philips, the Dutch technology company, said his firm was “struggling to meet delivery times” because of the transport crisis.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.


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