Whenever the term “shortage” is thrown around, people become nervous and for good reason. Food shortage, job shortage, wine shortage, etc can throw the masses into a tizzy because it usually means prices for goods and services are going to sky rocket. And this is no different than a driver shortage in the transportation industry.
A few years ago, auto experts began to warn drivers and trucking companies that they might soon be out of a job. Replaced by, you guessed it, robots. In 2017, experts stated that by 2030, an estimated 4.4 million drivers out 6.4 million would be jobless thanks in part to driver-less vehicles. As you can imagine, this caused some uproar because in recent decades, truck driving was the highest paid job for Americans who did not attend college. But as of recent, the logistics and transportation industry has been experiencing something scarier than robot-car takeovers: a driver shortage. This has everything to do with an increase in online shopping and a plethora of economic growth. And the fact that driving a truck over-the-road is not appealing to the majority of Millennials. Manufacturers have plenty of goods to move but not enough man power to move it. So just like we learned in Economics 101, the demand for drivers has increased but the supply of drivers has diminished, driving up the rates for third-party logistics companies.
One of the biggest problems that third-party logistics companies are facing is sourcing and securing capacity. Drivers know their services are valuable right now and they are using that to their advantage. Shippers and third-parties are being forced to pay rates double or triple what they would normally pay because they are desperate to get their freight moved. Right now, it’s a driver’s market so how will the shippers and third-parties be affected?
Stay tuned for next week’s post and find out.