7.12 End-of-Chapter Case: Turbulence In Trucking: Dealing With A Driver Shortage

The impending driver shortage caused Rick more than a few sleepless nights. Recently, Rick visited a colleague at Schneider National, the world's largest truckload carrier, to share benchmarking notes. As they talked about the future of the industry, his friend had remarked, "Rick, I just don't see an easy answer to the driver dilemma." Then for emphasis, he motioned as if lifting a little child to his knee, and said,

Rick knew that his friend was right. The young people he met were fascinated with technology and entrepreneurism. They romanticized about being the next Steve Jobs or Mark Zuckerberg. Few seemed to think that sitting behind the wheel of an 18-wheeler 11 hours a day and hanging out at truck stops was hardly the image of a glamorous or successful life.

Rick knew that a trucker's life is not easy. As a result, the industry had long been plagued by high turnover rates. PAM, despite its best efforts to improve retention, currently suffered from 110% turnover. Turnover not only threatened to disrupt day-to-day operations but it was also expensive! Internal studies showed that it cost at least $5,000 to hire a replacement driver. Personally, Rick felt the real cost—finding, hiring, and training—was at least double the estimates. Many explanations for the high turnover were bandied about the industry. Even so, the results of most studies coalesced around three root causes:

1. Time Away from Home- Over-the-road drivers spend most of their time behind the wheel or in a sleeper cab. If they are lucky, a driver's employer might occasionally cover the cost of a hotel. At PAM, the average length of haul was 850 miles—the equivalent of two days on the road. But, that is just the start of a routine trip. After unloading, a driver picks up a new load and heads to the next destination. This process is repeated over and over for four to six weeks before the driver is routed back home. Once home, drivers have one day off for each week on the road.

2. An Irregular Schedule- Almost as bad as being away from home is the fact that drivers don't know when they will be home—or anywhere else for that matter. The result: Drivers can't plan for family activities or other special events. This level of uncertainty makes it difficult to "have a life." After a while, drivers tend to wear out and walk away.

3. Hard Work- By law, drivers are limited to 11 hours of driving per day. But, driving is just part of the job. Drivers often work 14-hour days when wait times, loading, unloading, and other tasks are included. At worst, a driver might be forced to sit for an hour or more (and, in some cases, overnight) idly waiting for a dock to open and then have to physically unload 40,000 pounds of floor-stacked freight by hand. Such work isn't just backbreaking but it keeps a driver from making money since drivers are paid on a per-mile-driven basis. Fortunately, at PAM, the sales team managed to designate 90% of all loads as "No driver touch." But, that might not prevent a driver from having two or more driver-touch loads in a row—a situation that had pushed more than one driver across the line and to a new line of work.

Rick had to admit that trucking really is less romantic than the old country ballads made it sound. Worse yet, given the economics of the industry, most of the things that made the job unpleasant were beyond the control of a trucking company's leadership team.

Rick stopped for a moment to release a 12-inch rainbow back into the river. Watching the fish swim away, Rick wished someone would set PAM free from the demographic trap it found itself caught in. The average age of PAM's drivers had eclipsed 50 years old. The baby boom that had provided the industry a steady source in drivers over the previous twenty-five years was now about to punish the industry.

The problem was simple: Far more drivers would be retiring in the next few years than were likely to enter the industry. At one time—not that long ago—trucking was perceived to be a pretty good way to earn a living. A serious driver could log 110,000 miles per year. At a starting pay of $0.38 per mile, a driver could earn about $42,000 per year—a tidy sum for the typical driver who had chosen not to pursue a college education. But, upward earning power was marginal. Experienced drivers earned only a few cents more per hour. At PAM, the top rate was $0.42 per mile, which meant drivers maxed out at about $46,000 per year. Of course, drivers could augment their income through safety and fuel efficiency bonuses. But, only one person would win the Harley Davidson touring bike being offered to this year's fuel efficiency champ.

Suddenly, Rick felt doubly frustrated. He had failed to come up with an insightful response to the driver shortage and he had only caught the one fish all morning. Rick turned to his tackle box, searching for a more attractive lure to help him catch a few more and bigger fish. As he did so, Rick said to himself outloud, "What kind of lure could he and PAM introduce to attract people into a career that most considered to be less than desirable?"

1. What options do Rick and PAM's leadership team really have? Be sure to consider both likely and truly out-of-the-box ideas.

2. How might a total-cost perspective alter Rick's view of the driver-shortage challenge?