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  • Truck Drivers and Capacity Estimates

    Posted by David Foster on May 2nd, 2010 (All posts by )

    This article suggests that the trucking industry may soon face a serious driver shortage…that although capacity to handle increased freight may appear to be there based on the number of trucks available, it isn’t really, because there is no one to drive them. Some laid-off drivers have certainly gone on to doing other things, and federal regulations for the qualifications of commercial drivers have become more stringent.

    This is interesting to me as a railroad investor since it suggests an additional factor helping to move long-haul freight from road to rail. More generally, though, it points to limitations in the accuracy of capacity estimates for the overall economy. When economists look at the available capacity of the trucking industry, as part of their capacity estimates for the overall economy, I doubt that they are looking at the impact of prospective driver shortages. This kind of thing matters, because these capacity estimates are used to project the potential for future economy-wide price increases.

    To manufacture and distribute any product, capacity has to be available in all elements of its supply chain…all the component parts manufacturers, all the raw materials suppliers that feed those parts manufacturers, and all the transportation links that interconnect the various parts of the process. It seems unlikely that the economic capacity estimates reflect this and-gate-like characteristic of actual manufacturing and distribution…it’s hard to see how they could, without an incredibly detailed model of the entire economy and the detailed manufacturing and logistics strategies of thousands of companies.

    The above reasoning leads me to think that in any serious recovery we would likely run into output restrictions more quickly than most economists tend to believe.

    Link via Railex, a very interesting company to provides west-coast-to-east-coast rail transportation for fruits and vegetables via unit trains.

     

    8 Responses to “Truck Drivers and Capacity Estimates”

    1. Tom Holsinger Says:

      We’ll just import Mexican truck drivers to drive American trucks. It’s the American Way!

    2. Shannon Love Says:

      I don’t think it would take a long time to train drivers for modern trucks. With computerized transmission these days, the hardest thing about being a trucker is learning all the laws and regulations. The commercial courses are IIRC 90 days long.

      The real delay is that we would have to encounter a shortage that would drive up the pay of truckers before people will try to be truckers. This might be true even after a long recession. People will also have the problem of scraping together enough money to get training so there will be that barrier to entry.

      We do tend to overlook the loss of talent in an area as a restricting factor. We just tend to assume that trained people will pop out of the woodwork when needed.

      Even if we overcame 40 years of political hysteria over nuclear power, I seriously doubt we could really ramp up its use in a timely fashion for the simple reason that no one but the Navy trains nuclear engineers and technicians anymore. Certainly, no sane person would plan a career in civilian nuclear power like they did prior to the 70s.

    3. Craig Says:

      The hardest part of hiring a truck driver these days is the dreaded, federally-required background check. It now can take 6 weeks for that to come through. Sure cuts down on hiring flexibility. But for Washington, I guess, just-in-time hiring isn’t very important.

    4. Mala Lex Says:

      Not to be that way, but can’t new drivers be trained? I suppose there’s a lag, but if it’s a 3-month delay that seems pretty insignificant in the grand scheme of things.

    5. david foster Says:

      Mala…there are probably analogous situations in many corners of the economy, and while the impact of any one of them is limited, the aggregate impact of these invisible capacity shortages could be significant.

    6. Michael Kennedy Says:

      I seriously doubt we could really ramp up its use in a timely fashion for the simple reason that no one but the Navy trains nuclear engineers and technicians anymore. Certainly, no sane person would plan a career in civilian nuclear power like they did prior to the 70s.

      We are in a situation a bit like the 1999 demand for COBOL programmers. Of course, that was temporary but Scott Adams had some fun with it in Dilbert.

    7. Bill Waddell Says:

      It is almost entirely a pay issue. There are lots and lots of trained over-the road drivers, but they went into other professions because the pay is lousy and the hours are worse. As soon as the pay ramps up they will very likely ‘come out of the woodwork’.

      To Tom Holsinger’s point, a provision of NAFTA was to allow Mexican trucks and Mexican drivers on the roads in the US, but intense lobbying by the Teamsters based on unsupported concerns over Mexican truck safety have been the rationalization used by the Dems to back out of our NAFTA obligations and take care of their union buddies. If the shortage is dire enough, it will most likely be resolved in part by living up to NAFTA and allowing Mexican trucks and drivers on US roads.

    8. foxmarks Says:

      My experience in the family trucking business aligns with Bill’s view. Younger people go into long-haul trucking for the freedom and romanticism of the road. Then they learn it is a hard life. And when they grow a family of their own, they’re not home much to see them. So they look for jobs that do not involve a steering wheel.

      But, for the past 30 years, there have always been more people coming up. I’ve been hearing about driver shortages for a decade, but the pay and working conditions never get much better. It seems more a function of what work is available outside trucking. Maybe 2007, when money was easy, drivers were in the best position I’ve seen.

      Driving a truck is about as productive today as it was 30 years ago, too. Same weight/cube over the same distances at essentially the same speed. Current hours of service regs keep drivers from burning themselves out, but also cap daily miles. Legitimate and political concerns prevent longer or heavier trucks. Wages can’t rise unless productivity rises first.

      In 1980, the holy grail for owner-operators was revenue at $1 per mile. In 2010, it is still a dollar a mile.