Tags: Trucking | Crunch | Consumer | Wallet

Trucking Crunch May Take Bite from Consumers' Wallets

By    |   Wednesday, 02 July 2014 06:09 PM

A slew of issues are creating a crunch in the trucking industry that could take a bigger bite out of consumers' wallets.

Companies are having difficulty getting deliveries on time or at reasonable prices, USA Today reported.

Seventy percent of U.S. freight by tonnage is moved by truck, an estimated 9 billion tons, the American Trucking Association (ATA) reported. And at least another 30,000 truck drivers are needed to haul those goods across the nation.

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But getting and retaining truck drivers is an issue. Industry estimates put driver turnover last year at over 100%, CNBC reported.

Many drivers left when the industry struggled during the recession. But now, as transportation is rebounding, so is housing and construction jobs are luring away more drivers, says USA Today.

Truck drivers, often on the road for days or even weeks, earn a median annual salary of only $39,700, or about $19 a hour, says CNBC.

Aggravating matters are stricter federal regulations that took effect last year, slashing a long-haul driver's work week from 82 hours to 70 hours. After those 70 hours, a driver must “restart” his work week with a 32-hour rest period that includes at least two nighttime rest breaks from 1 a.m. to 5 a.m.

The transportation industry argues that these limits alone are enough to drive up consumer prices because it takes more drivers to move the same amount of goods.

And since the new rules require all drivers to “restart” their week with rest periods that end at 5 a.m., drivers are required to start work just during morning rush hour, says CNBC.

High gas prices are already an issue, and dealing with morning traffic congestion means even higher fuel costs.

With the economy improving, conditions are set to get worse, say industry insiders.

Production and consumer demand are rising, meaning higher demand to ship newly produced goods and raw materials to make them. But a ripple effect of the harsh winter is many companies already have merchandise sitting in warehouses.

“We're still seeing some rebounding occur since the winter caused some shippers to hold back on their business activities. We're seeing some of that come back in the spring,” Gary Frantz, spokesperson for Con-Way Freight told USA Today.

But the trucking industry has shrank, he explained.

“Companies either are exiting the business or cutting back on the size of their fleets. Remember, we had a recession. Business went down, freight volumes retracted and companies reacted.”

Conditions aren't in favor of the consumer because reliability is problem, explained John Taylor, chairman of Wayne State University's department of marketing and supply-chain management.

“Consumers wind up paying more, because it takes more truckers, there's less reliability, and there needs to be more inventory in the system — and inventory costs money. That means retailers, manufacturers, wholesalers are carrying more goods in warehouses than they otherwise would, and that inventory costs money to hold.”

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A slew of issues are creating a crunch in the trucking industry that could take a bigger bite out of consumers' wallets.
Trucking, Crunch, Consumer, Wallet
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2014-09-02
Wednesday, 02 July 2014 06:09 PM
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