The news has been pretty good lately. Record low unemployment. U.S. economic growth is up.
But it’s not all rainbows and unicorns. Along with the trade war with China, the U.S. is facing a major driver shortage. According to Bloomberg, that shortage is as high as 296, 311 (2nd quarter of this year). New federal regulations on when time starts and the requirements for digital books have led to drivers being able to drive less, increasing the requirement for drivers to cover more time. With a shortage in drivers comes an increase in transportation costs as there is more demand than there is supply. And it’s affecting both [full] truckload and less than truckload.
It doesn’t help that Union Pacific has announced cuts of up to 475 jobs, with more cuts to come up to at least 2020 in order to more closely align its operating model with the Hunter Harrison Model (CSX). While the goal is to maintain similar service level with fewer personnel, it has yet to be seen how this will affect freight costs from railroads that are already able to charge a premium.
But business goes on – it doesn’t stop just because there’s a driver shortage or a railroad restructures.
It does create challenges. The industrial gas supplier that serves the company I work for has missed some deliveries, or lead times for some gasses are longer. They have the gasses availble, but no qualified drivers to deliver them. Attracting drivers continues to be a challenge for them.
So what’s the solution?
Some companies, such as Uber and Tesla, are working on autonomous trucks to drive freight across the U.S. In fact, Uber was running autonomous trucks in “stealth” on Arizona’s highways for a while before ramping up overt operations. While many regulations right now call for a driver behind the wheel, regulations could change that would allow a driver of an autonomous vehicle to sleep while it’s driving, or to eliminate the driver altogether.
When will some of these solutions roll out to the rest of the United States? Hopefully soon. The company I work for has quite a few lead times they’d like to shorten, and freight costs we’d like to drive down.
What can be done in the interim?
This is where the procurement and supply chain professional comes in.
- Can materials be ordered further in advance? And in larger shipments?
- Can more orders be consolidated into larger orders?
- Can a supplier hold more stock at their warehouse closer to your location?
- Does Just-In-Time not make sense right now, and does the benefit outweigh the cost of your organization holding more stock at your location?
- Does your organization have drivers? Does it make financial sense to use them to go and get supplies from the supplier?
- Are you able to use more materials and services that manufactured and/or readily available locally?
These are just some of the questions you and your organization will have to ask themselves.
You and your organizations still have mountains to move, regardless of the driver shortage. It’s up to you to find out how.
What solutions have you worked on in light of the driver shortage?