The Economic Factors Fueling the Trucker Shortage

The produce industry could be short of some 89,000 truckers annually over the next decade. The time to act is now.

By Bobby Samuels

North America’s trucking lanes are running low on drivers. In 2023 alone, the industry faced a crushing shortage of more than 60,000 drivers, according to The American Trucking Associations (ATA). Still, things could get worse before they get better. 

By the end of 2024, this gap could widen to 82,000 and potentially hit 160,000 by 2030, also according to the ATA. The fact that the industry could need nearly 890,000 new drivers over the next decade—about 89,000 each year—to keep goods moving is alarming. 

If things don’t start to improve soon, this critical chokepoint threatens the smooth operation of the U.S. economy and the steady supply of everything from fresh produce to electronics. With 37% of industry leaders already wrestling with severe workforce shortages, according to Descartes & SAPIO Research, the impact is already tangible—delayed deliveries, dwindling stock and rising prices. So, what’s causing this shortage, what does it mean for the present and future, and what solutions might help steer it back on track?

Demographics and Industry Challenges

First, ATA surveys reveal that the average truck driver age is significantly higher than that of the broader workforce; about 57% of drivers are over 45, and 23% are over 55. With such an aging demographic, there’s a looming retirement wave; nearly a quarter of truckers could retire within the next decade. The timing couldn’t be worse, with the demand for goods continuing to rise, placing immense pressure on an already strained workforce.

What compounds the issue are the trucking sector’s substantial barriers to entry and retention. New drivers face a gauntlet of challenges, from stringent licensing requirements—including the need for a commercial driver’s license and a clean driving record—to the job’s physical demands. 

Moreover, the U.S. is still dealing with significant backlogs in licensing due to the Covid-19 pandemic, as many Department of Motor Vehicles (DMV) offices are still recovering from reduced services or closures. There’s also a stigma behind the actual job; truck drivers confront high stress, physical tolls and loneliness, which hamper efforts to attract newcomers and affect driver retention. 

Jason Conrad, director of sales at Carrier 911, a logistics crisis management company that provides 24/7 expedited freight transportation services, including airfreight recovery, hotshot trucking and logistics for aerospace, industrial and automotive sectors, has a unique perspective. 

“It boils down to a strong focus on improving working conditions, while also making the industry more attractive to younger demographics to incentivize new talent by further enhancing the automation and tech side of the industry. Better pay, benefits and working hours are what these drivers deserve,” says Conrad.

Financial and regulatory shifts further complicate the landscape. The trucking industry is reeling under economic uncertainties that affect freight demand and operational costs. For instance, the recent fluctuations in the price of truck parts and increases in driver salaries have heavily impacted the sector. 

On the regulatory front, changes like California’s Assembly Bill 5, which reclassifies independent contractors as employees, pose new compliance challenges and financial burdens on companies. Additionally, rising insurance premiums, driven by escalating litigation costs, act as another barrier for new entrants and squeeze the margins of established operators.

Rising Costs and Supply Chain Disruptions

The ongoing trucker shortage in North America is not merely a logistics issue; it’s a significant economic disruptor affecting everything from delivery timelines to consumer prices, especially with the widening gap between supply and demand for freight services. The Covid period may have provided temporary relief with an initial surge in carrier numbers. But the subsequent decline in these numbers has yet to align with still-rising demands. Such an imbalance exacerbates freight shortages, delivery delays and inventory challenges across industries while dramatically driving up shipping costs.

Worse, these escalating challenges directly correlate to rising expenses for maintaining and operating truck fleets as the advanced technology and complexity of modern trucks increase the cost and time needed for repairs in the face of a critical spare parts shortage. Longer downtimes for repairs mean higher rental costs for replacement vehicles, further inflating operational expenses. Additionally, still-sticky inflation has pushed the prices of labor, parts and materials, squeezing the trucking industry’s already thin profit margins. The fierce competition for skilled mechanics, also in short supply, adds another layer of difficulty, with companies vying to attract and retain talent in a dwindling labor pool.

The repercussions of these increased operational costs ripple throughout the economy, directly impacting consumers. As transportation expenses climb, the supply chain inevitably takes on these costs, leading to higher retail prices. Not only does this strain consumer wallets, but it also dampens overall economic activity by reducing disposable income and suppressing demand for non-essential goods and services. Strikingly, the U.S. Bureau of Labor Statistics notes a 1,780% hike in transportation prices since 1935, a stark indicator of the inflationary pressures fueled by the trucker shortage. 

Strategic Responses

“I’ve heard about a driver shortage every day of my life for the last decade,” says Adam Robinson, founder and chief executive of logistics and supply chain marketing firm The Robinson Agency. “At the end of the day, those drivers are important, and it’s vital that we compensate them fairly and consider their work-life balance.” This simple reason is why many companies are pulling out all the stops to attract and retain trucking talent. 

With the byproducts of economic instability and rising operational costs, the industry is urgently adjusting wages and benefits packages to maintain an edge. Base salaries only scratch the surface of what truckers can expect now; these include more performance incentives, safety bonuses and longevity awards to attract new drivers and retain existing ones. 

“If there is a so-called driver shortage, then those companies who treat those drivers as important as customers will do fine in any environment,” says Robinson. “It’s no longer a zero-sum game where brokers and shippers can beat up on carriers. It will take people acting like humans and treating each other like business partners.” Perhaps that’s why UPS’s salary packages, including benefits, for top-of-the-scale drivers could now reach $170,000 by 2028, according to the company.

On a broader scale, both governmental and private sector investments are intensifying efforts to address these shortages. The U.S. Department of Transportation, through its Federal Motor Carrier Safety Administration (FMCSA), is injecting more than $180 million into the sector to support innovative projects and safety training programs, advance technological capabilities, and promote safer commercial motor vehicle operations. Simultaneously, the private sector prioritizes investment in driver well-being and comprehensive training programs to keep drivers well-prepared and happy in their roles to address both skill gaps and wellness.

Furthermore, to nurture the next generation of truck drivers, programs like the New Entrant Safety Assurance Program focus on upholding high safety standards for new entrants in the industry. The Next Generation in Trucking Association, bolstered by grants, is developing a standardized truck driving curriculum for U.S. high schools, which promises to make training accessible and appealing to younger individuals as a more attractive and sustainable career choice. 

The Role of Tech

Amid these strategic responses, logistics and trucking technology advancements are also pivotal in reducing reliance on traditional trucking methods and enhancing overall efficiency. Technologies like artificial intelligence (AI) and machine learning (ML) are at the forefront, revolutionizing the industry by optimizing delivery routes in real-time and providing predictive analytics for demand forecasting. McKinsey & Company research reveals that AI-powered demand forecasting can improve accuracy by up to 20%, logistics costs by 15%, inventory levels by 35% and service levels by 65%.

Integrating Internet of Things (IoT) technology allows for unprecedented real-time monitoring and tracking of truck fleets, offering enhanced visibility and control over logistics operations. With the trucker shortage, identifying potential disruptions early and rerouting shipments to maintain continuity is paramount. Similarly, blockchain technology helps create a more secure and transparent record-keeping system, which enhances trust and efficiency by verifying the authenticity and quality of goods.

Further innovations include using digital twins to simulate and optimize logistics operations, reducing potential downtime, and enhancing operational readiness. Autonomous vehicles and drones could also transform goods transportation by operating continuously, drastically reducing delivery times and costs while minimizing human error. In warehouses, robotics and automation streamline operations by handling tasks such as picking, packing and sorting, thus reducing the need for manual labor and increasing efficiency. Lastly, cloud-based logistics platforms equip companies with sophisticated tools for better inventory management, order tracking and route optimization for a more agile and responsive supply chain management system. 

Future Outlook 

It would be nice to be wholeheartedly optimistic. However, the facts are that the North American trucker shortage crisis could deepen in 2024. Demand for goods continues its growth surge. The workforce keeps aging and approaching retirement, and none of this will change anytime soon. 

Yet, there is a wave of cautious optimism. Diverse initiatives aim to widen the pool of trucking professionals, and we’re already off to a good start. Women increasingly take the wheel, now representing 12.1% of all drivers. And to keep this momentum towards inclusivity, the industry could look to recruit more foreign, younger and minority demographics to expand the labor pool and stabilize the sector.

Technological advancements could also redefine the industry and impact operational efficiency and cost management. AI and IoT should continue to become increasingly prevalent and reduce the reliance on an overstretched human workforce. Additionally, emerging trends in fleet management and trucking analytics are optimizing performance and fuel usage, which could mitigate some immediate impacts of the driver shortage.  

Looking even further ahead, the economic implications of the ongoing driver shortage are severe, influencing not only the trucking industry but the broader economy in the U.S. and Canada. Increased shipping costs and inflationary pressures could also reshape consumer spending patterns and economic health. 

With the shortfall of truckers throughout North America expected to continue spiraling, the alarm bells are ringing loud and clear. The crisis goes beyond empty driver’s seats, and could be a looming economic disaster if the trend continues. Good first steps would be for industry leaders and policymakers to invest in training, improve driver conditions, expand registered apprenticeships, reduce barriers to entry and introduce technological innovations. The time is now to steer efforts toward a future where trucking remains a vibrant force and ultimately helps to drive the economy forward.