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More long-haul drivers eyeing final mile

More long-haul drivers eyeing final mile

While the country shut down for the pandemic, the trucking industry shined. The current market was the light at the end of the tunnel: high volume, high rates and increased compensation for drivers.

The stars have seemed to align for the average long-haul driver, but ironically, trucking companies are having difficulty locking down new drivers.

In a recent Randall-Reilly study, truck driver job postings in 2020 rose by more than 300,000, but job seekers rose by only 70,000.

In the report, 33% of drivers said their top concern was paying their bills, while 68% agreed that they were not paid enough. Nationwide carriers like Knight-Swift, Cheema Freightlines and Forward Air have listened and recently raised pay for drivers.

Yet employment data from the Bureau of Labor Statistics shows after the dramatic decrease prior to the pandemic, trucking companies have not been able to increase their driver labor force back to pre-COVID highs.

SONAR chart shows comparison of long-distance trucking employment and unemployment rate data. Click here for more information on SONAR. (Photo: FreightWaves SONAR)

Recent unemployment data showing that individuals are going back to work raises the question: Where did these truck drivers go?

The response might be as simple as two words:

Final mile.

Long-haul drawbacks

With regard to over-the-road trucking, drivers have found many issues that go beyond driver pay. According to the Randall-Reilly study, the following are among reasons why drivers would consider changing jobs and driving for another fleet:

  • 21% want to choose their routes and hauls.
  • 14% want more time at home.
  • 6% want a clear career path.

On the subject of one thing that could attract and retain drivers:

  • 18% want guaranteed minimum pay.
  • 11% want more regional hauls to come home more.
  • 10% want a certain amount of home time each month.

Drivers are now realizing that final-mile delivery addresses these concerns. Expectations about its immense growth in the future make it even more appealing.

Final-mile delivery boom

According to McKinsey, e-commerce has experienced 10 years of expected growth in Q1 of 2020, with 60% of consumers expecting to integrate online shopping into their post-COVID lives. To keep up with this consumer demand, there will need to be an increase of final-mile drivers for on-time delivery.

Unfortunately for long-haul carriers, data suggest that qualified drivers are starting to make their moves toward this side of the industry.

There has been a significant increase in one section of labor over the past year: courier and messenger services. 

The SONAR chart below shows a continuous rise in these services, including elevated highs for seasonal increases in demand. While most employment sectors in transportation have stayed relatively flat, final-mile employment has shown a continual increase over the past five years.

SONAR chart compares employment data for long-distance trucking and courier services. (Photo: FreightWaves SONAR)

Final mile delivers answers

The final-mile transportation sector has a much lower barrier to entry than the typical medium- to heavy-duty truck driver faces.

In an interview with FreightWaves, David Olshansky, co-owner and chief operating officer of recruiting firm DriverSource, explained how the final mile is creating a new hurdle for recruitment.

“The Amazon effect is creating a shortage of drivers, and others like DoorDash and Grubhub are creating a new industry where drivers can make the same amount of income and they don’t have to get involved with DOT regulations,” he said.

Amazon, a leader in final-mile delivery, lists only a few requirements to become an Amazon Flex driver. This program allows drivers to use their own vehicles to deliver packages for the company, only requiring that its employees be 21 or older and have a valid driver’s license, a midsize or larger vehicle, and a smartphone. 

Many other final-mile services limit their requirements to these few items, and some, like DoorDash, drop the age to 18.

These programs allow drivers to make their own schedules, control their pay and limit their exposure from increasing costs, including insurance, that many owner-operators deal with.

Historically, final-mile carriers pay lower premiums because of the nature of their business due to the familiarity of their routes in a specific area of operation.

“Insurance is absolutely killing [trucking] companies right now,” Olshansky explained. “I have heard quotes of $30,000 or $40,000 per truck per year for motor carrier insurance.”

The barrier to entry is higher because of the need to obtain a commercial driver’s license to become a long-haul driver of medium- and heavy-duty trucks. The following conditions must be met:

  • Be able to safely operate a medium- to heavy-duty vehicle.
  • Be physically qualified to drive a commercial vehicle under Federal Motor Carrier Safety Administration standards.
  • Have a valid medical certificate, including a drug test, completed by a registered medical professional.
  • Obtain a valid road test certificate.

Olshansky thinks issues on both ends of the driver age spectrum arise from these standards.

“I am a firm believer that there are a number of younger individuals that are not wanting to be a part of a drug-testing type of industry,” he said. “Also, [veteran] individuals are wanting to get out of the industry because of it.”

How recruiters are confronting these needs

Olshansky explained that instead of just raising pay for drivers, trucking companies need to invest in different areas of driver concerns.

“We have been telling a lot of our clients to focus on upgrading their equipment and doing what you can to have a driver home every night.” he said.

In an interview with FreightWaves, Scott Smith, chief executive officer and co-founder of P&S Transportation, described the same difficulties of competing with last-mile logistics jobs that often get drivers home every night. 

Smith said this was the first time truck drivers are choosing local delivery routes over long hauls.

“We are mainly an over-the road company, and we struggle with work-life balance,” he said of maintaining his fleet of over 1,300 trucks, operating in 15 locations across the U.S. 

Olshansky suggested considering a different fulfillment process for customers to help get drivers home more often.

“We will work with over-the-road companies in an effort to change their route structures to where we can have ‘home every day’ positions,” he said. “Having different relay points to help turn it into a ‘home every day’ position can help open up a pool of potential drivers.”

He emphasized that trucking companies will need to become much more strategic about driver recruitment in the future, and those reluctant to invest in these areas will continue to struggle with finding drivers.

“One thing is for sure: Companies that are not willing to change their way of thinking in this industry are going to be the companies that don’t make it in the long run,” he said. “There are many challenges coming from different fronts, and things are not going to get easier.”

Click here for more articles by Grace Sharkey.

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16 April 2021, 13:00