July 24, 2006

Higher pay may help solve US trucker shortage

By Nick Carey

CHICAGO (Reuters) - U.S. trucking companies have been
enjoying a boom period, but executives say it's never been
harder to find people to do the driving.

In fact, the driver shortage has become so serious that
some experts are proposing moves like raising pay by 30 percent
or inviting workers from Mexico to do the job.

But even those solutions might not be enough to meet demand
in the industry, which moves more than 80 percent of domestic
freight cargo. Some analysts see shippers turning to the
railroads, which need fewer staff and charge lower prices.

The problem for the trucking business is that young
Americans are more focused on quality of life, executives say.
Many people would rather work for less money than sit behind
the wheel of a tractor-trailer on journeys that can keep them
away from home for days on end.

"Business is very good right now," said Randy Marten, chief
executive of refrigerated truck operator Marten Transport Ltd..
"But the personnel situation sucks."

Marten and other trucking executives said they had tried
repeatedly to boost flagging driver recruitment with better
benefits and incremental pay rises, but with little effect.

Although drivers at Mondovi, Wisconsin-based Marten
Transport are among the highest-paid in the United States, the
60-year-old company finds it more difficult than ever to
recruit them.

Like many U.S. trucking companies, Marten Transport has
seen business increase rapidly in recent years. In its case,
growth stemmed from a shift by U.S. consumers from canned goods
to fresh foods, which must be refrigerated.

Many truck operators have also benefited as U.S.
manufacturers outsourced production to developing nations like
China -- and then needed to transport the imported products to
warehouses across the United States.

But rather than enjoying the increased demand, trucking
executives are worrying about how to meet it in light of the
driver shortage.


According to a May 2005 study by Global Insight for the
American Trucking Associations, the industry was short 20,000
drivers. The Boston-based consulting firm warned that as the
U.S. population ages, that shortage could hit 111,000 by 2014.

Worst hit are truckload, or long-haul operators, which
moved more than two-thirds of the estimated $610 billion in
U.S. freight in 2003, according to the latest ATA figures.

Phoenix-based truckload company Swift Transportation Co.
Inc. highlighted the impact of the driver shortage when it
reported second-quarter results last week, saying it had nearly
500 trucks unassigned at the end of June.

Net income rose "despite an extremely tight driver market
that is as challenging as I have seen in my career," CEO Robert
Cunningham said in a statement.

Marten and others said that sooner or later trucking
companies would have no choice but to raise salaries up to 30
percent to attract American drivers.

John Wiehoff, CEO of Minneapolis-based truck brokerage and
logistics company C.H. Robinson Worldwide Inc., said such a pay
increase could make a difference.

"To be honest, it's a crappy living," he said, "and a big
pay rise would not be unreasonable."

According to May 2005 data from the U.S. Bureau of Labor
Statistics, truck drivers earned average annual wages of
$35,460, but the top-paid in the industry made more than


Others in the industry say money is not the only problem.

A big pay rise won't solve the lifestyle issue, said Jeff
Cook, vice president of Future Truckers of America, an
Asheboro, North Carolina-based school that trains about 350
drivers a year.

"Long-haul driving is hard," said Cook, who spent nine
years as a driver. "And when people weigh lifestyle against the
dollar sign, lifestyle often wins."

Logistics expert John Vande Vate of Georgia Tech suggested
allowing Mexican truck drivers access to the U.S. market as a
way to alleviate the personnel shortage.

He added, however, that U.S. drivers would probably oppose
such a measure as it could push pay levels down. With
immigration a contentious issue in U.S. politics this year,
Vande Vate said any moves to allow in Mexican drivers would be
a long time coming.

Some analysts look to railroads to pick up any slack from
long-haul trucking companies, which have been losing share to
them over the past two years. Trains provide a cheaper
alternative because they are more fuel-efficient and need fewer
workers to haul more goods.

This has led trucking operators to partner up with the
railroads with intermodal services, using standardized
containers interchangeable between different modes of
transport. Schneider National Inc., the largest private U.S.
trucking company, in June launched such a service between
Marion, Ohio, and Kansas City, Missouri, with railroads CSX
Corp. and Kansas City Southern.

"Generation X and Generation Y don't want to haul goods
long distance over the road," said CSX CEO Michael Ward. "We
expect more business like this in the future."

Analyst Peter Smith of research firm Morningstar said a
major pay rise for truckers, combined with high fuel prices,
would push more goods off the roads and onto the rails.

"In the long run," he said, "railroads stand to gain even
more from the driver shortage."