Supply chain economics and how local trucking companies are responding

Man driving modern truck on country road

One of the big business challenges of the last year can be summed up in two words: supply chain.

Defined as the network between a supplier and business before it reaches a customer, supply chains impact everything from retail items at the local grocery store to parts for manufacturers and numerous areas in between.

When supply chains work properly, items are readily available at your local retailer, shipped items arrive on time, and manufacturers have the necessary materials to finish assembly. But with the challenges of the past year-plus, which are multifaceted but most often related to the pandemic, many businesses are struggling to get product on time with customers feeling the impact.

As the word “chain” would imply, there are multiple components to the overall process of getting products from manufacturer to consumer. While the pandemic has resulted in slowdowns and backlogs in the manufacturing sector, experts are pointing to problems with the movement of finished product from the manufacturing facilities and warehouses to retail stores, service businesses and consumers as the biggest kink in the supply chain in 2021.

Of course, package delivery services are the final part of that process. And it’s the trucking industry that’s getting much of the attention.

The national impact

The American Trucking Associations, an umbrella organization representing state and local trucking association affiliates across the county, estimates a shortage of 80,000 truck drivers in an article published on its website, trucking.org, that featured highlights of ATA President and CEO Chris Spear’s Nov. 17 testimony before the House Transportation and Infrastructure Committee.

A shortage of drivers was connected by Spear to overall labor shortages related to the pandemic, noting the shortfall before the pandemic was 61,500.

But Nicolas Rivero, in a Nov. 10 story for Quartz (“There is no shortage of US truck drivers”), indicates the issue goes beyond the number of available drivers. Although about 2 million Americans work as licensed truck drivers, Rivero writes the issue is with retention.

“Many of those licensed drivers are no longer behind the wheel because they can find better working conditions and pay elsewhere,” Rivero wrote.

Driver attrition is not a new problem, Rivero posits, citing ATA’s own statistics showing an average annual turnover rate of 94% for drivers at big trucking companies between 1995 and 2017. In other words, for every 100 drivers hired, 94 will leave within a year — some to drive for a company with better pay, benefits or schedule and others for a new career outside the transportation industry. Still some drivers make the decision to retire altogether.

To fill the void left by drivers who have left their companies, carriers are offering substantial sign-on bonuses and other perks to attract new employees.

A review of truck driver job openings on hiremaster.com reveals companies are offering sign-on bonuses up to $10,000, referral bonuses, safe driving bonuses, guaranteed income and lease purchase plans that allow drivers to gradually buy their trucks and become more highly compensated owner-operators.

The local impact

Several local trucking companies indicated that turnover rates in this area are not as severe as other parts of the country. Still, these companies continue to aggressively recruit new drivers.

One local trucking company that hasn’t experienced the high turnover rate is Genesis Transportation of Cape Girardeau. Fleet manager Carrie Meystedt, who supervises an operation of 30 trucks and 27 drivers, said Genesis has hired four new drivers in recent months and hasn’t lost any during the same time period.

“Genesis has incredibly low turnover compared to the industry standard,” Meystedt said. “We’re at about 50% turnover.”

Like many companies, Genesis has increased its compensation for drivers in recent months.

“We’ve restructured the pay scale,” Meystedt said, which has resulted in a significant pay increase. “The owner of this company pays the health insurance premium 100% for employees.”

But Meystedt believes the reason the driver attrition rate for Genesis is bucking the industry trend goes beyond money.

“(Genesis) is a very small company. I think a lot of (drivers) like the one-on-one they get with us. They’re not just a number like they would be with a mega carrier.”

Genesis drivers, said Meystedt, have more home time than with many companies because a lot of their routes are “out and back,” bringing them home two nights a week and every weekend.

“They obviously could go to another carrier and make more money,” she said, “but what’s more important to the driver? Is it the money, or is it the home time?”

One of Genesis’s new hires, Jerren Dowd of Fredericktown, has a wife of 26 years and three kids. He started his career as a driver in 2010, and as a family man, he says it was the schedule that drew him to Genesis.

His most recent employer, Dowd said, “wanted to work you more than 70 hours if they could get by with it, and I had to work every other weekend.”

Ashley Adams is safety manager and also shares hiring duties at Semo Express, a Sikeston-based company that employs about 45 company drivers, along with 10 owner-operators and other “power only” drivers who are not employees but pull trailers and freight.

“We do have some empty trucks, but we’re no less staffed now than we were at this time last year,” Adams said, attributing company success to a good compensation package and continuous recruiting efforts. “We always advertise. We are always taking applications.”

For Semo Express the problem is not as much about a shortage of drivers, Adams said, but finding drivers who meet their insurability requirements.

“Our insurance requires two years of over-the-road experience,” Adams said. “We’re seeing more and more people that call that are right out of driving school or they have less than a year, and we just can’t employ them.”

Of course, in order to get two years of over-the-road experience as a truck driver, a driver has to qualify for a Class A Commercial Driver’s License and get hired. While companies compete for available drivers, some businesses are looking in-house to fill positions.

Mark Stojic operates Fast Track CDL, a driver training school in Sikeston that offers customized one-on-one instruction for students who already have a background that will allow them to qualify for their Class A CDL after an accelerated course, often just one day. He estimates that 80% of his new students are referred to by their employer.

“More than likely their employer is sending them through,” said Stojic. “Their course is being paid by their current employer so that they can be promoted from within that company from, say, a warehouse position to an actual driving position.

“Employers are always looking for opportunities to promote an individual within their company to that CDL position,” Stojic said, adding that the student’s tuition is often paid by the employer but typically with the stipulation they stay with the company for at least one year.

Fast Track CDL can get students qualified for their Commercial Driver’s License test by tailoring their training to their needs.

“We assess each person’s needs and then schedule them accordingly,” Stojic said. “We want everybody to feel like we set them up with the right course to (pass the test) on the first attempt.

“Our local demographic is a lot of farmers, the agricultural industry and construction — people who grew up around heavy equipment. They can afford to go through an accelerated program.”

For students with little or no training but who want to get into the trucking industry, schools like MTC Truck Driver Training offer a more comprehensive curriculum. MTC’s Scott City training center is one of five operated by the company. MTC’s representatives did not respond to requests to be interviewed for this story, but according to their website, students can qualify to take the Class A CDL test with three or four weeks of full-time training, which includes classroom and behind-the-wheel instruction. The website said that tuition assistance is available.