Trucking Companies and LTL Freight Rebound/Intermodal Shipments Rise

Trucks are a standard means of freight transportation around the world, and in the U.S., they serve the entire nation. Running along the vast web that is the Interstate Highway System, trucking companies about a 70% market share of freight transport, by tonnage, with railroads getting most of the rest of the market. The trucking industry in America employed 1.49 million people as of 2021, and general trucking brought in about $387.3 billion in revenues during 2021, according to the Census Bureau. Meanwhile, the dependability and extremely high fuel efficiency offered by railroads means that trains are very competitive for certain types of freight, but they are unable to compete on deliveries to most final destinations. Demand for delivery by trucks is soaring along with the e-commerce boom.

This is making the usual problem with driver recruitment into a true crisis. At the end of 2018, the American Trucking Association (ATA) reported the need for almost 60,800 new truck drivers to keep up with demand. The driver shortage increased in 2020 as government financial support due to the Coronavirus made it profitable for many drivers to stay home. In a similar vein, the average driver age in the U.S. is 46, with growing numbers of drivers opting for early retirement or careers outside of trucking due to Coronavirus health concerns. The shortage of drivers in the U.S. reached a record high in 2021 of 81,258. In 2022, the shortage eased slightly, down 4% to nearly 78,000. However, concerns over driver shortages remain for the long term. Wages are on the rise and hiring bonuses of between $5,000 and $10,000 have become the norm. In early 2022, Walmart made headlines by offering up to $110,000 per year sting pay for truck drivers.

Trucking firms continue to face multiple challenges. Rising insurance costs, combined with more stringent safety and emissions regulations, in addition to Coronavirus safety protocols, mean that successful management of a trucking firm today requires intense focus on costs. U.S. drivers must use electronic logging devices (ELDs) to track speed, location and driving times. When maximum limits on driving hours are reached, drivers must pull over and rest, even if they are within a few miles of their destinations.

Truck drivers are known for working long, hard hours. Long-haul drivers must be away from their homes and families for days at a time. Driver fatigue is a big concern. Trucking companies of all types struggle to attract new workers and retain the drivers already on the payroll. At some firms, annual turnover can be as much as 100%. The industry is having trouble attracting young drivers who, as truckers, would have to limit smartphone use and would rarely have much time at home.

Some of this can be traced to the difficulty of entering the trucking profession. On the surface, truck drivers are offered a package which requires only a few certification classes. However, insurance companies are loath to insure young, inexperienced drivers. Consequently, many trucking companies are unwilling to hire drivers without experience. Federal law states that no one under 21 years of age can be an interstate driver. The ATA hopes to change that and is lobbying Congress to lower the minimum age to 18.

Potential Solutions for the Truck Driver Shortage in the U.S.

1) Increased pay and bonuses

2) Reduce the minimum driver age from 21 to 18

3) Improve working conditions, provide more breaks and time off at home

4) Eventually, partly self-driving trucks will reduce driver stress and fatigue

Source: Plunkett Research, Ltd.

Long-haul trucks that are partly self-driving will eventually revolutionize this segment. Startup TuSimple, which has offices in the U.S. and China, is working with artificial intelligence (AI), laser sensors and cameras to safely navigate highways, driving far longer than the 11-hour day imposed upon human drivers for safety reasons. The firm expanded its autonomous freight-hauling program with UPS in early 2020 to 20 trips per week between Phoenix and Tucson, Arizona and Phoenix and El Paso, Texas. Startups Embark and Peloton Technology, Inc. are working on similar technology.

Meanwhile, Tesla is working on a $180,000 electric truck called “Semi,” and Nikola Motor is building electric as well as hydrogen-powered (fuel-cell) trucks. These trucks feature advanced software and may be launched with significant self-driving capabilities. Nikola has a major focus on its hydrogen trucks. In 2023, it launched a new HYLA brand of hydrogen production, distribution and filling centers, with a goal of making it convenient and efficient for hydrogen trucks to fuel up nationwide.

Embark Trucks, Inc. (embarktrucks.com) is an autonomous truck company that held a successful IPO in late 2021. The firm plans to launch its first self-driving trucks in Texas and California in 2024. The trucks will self-drive on highways, but loads will be transferred to human-driven trucks for final deliveries in cities.

While trucking and rail freight compete against each other, they also can work together very effectively to provide the best possible solutions for shippers. The fact that trains operate at a low cost per ton-mile helped lead to the development of intermodal shipping—the placement of movable (intermodal) containers of freight on trains (and/or ocean-going ships) for part of their journey. The same containers are moved on and off flatbed trucks as needed for highway transport.

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