News on the job market and employment outlook is mixed. While unemployment rose slightly to 7.4 percent in May, jobless claims dropped slightly in the first week of June. Reuters reported the number of Americans filing for unemployment benefits dropped significantly, nearly reaching the lowest level seen in five years.
While many industries have an uncertain future in regard to job growth and demand for new workers, the transportation industry does not appear to be one of them. Demand for new drivers is strong, as many current employees are approaching retirement age and not enough young people are entering the field to replace them, causing many large fleets to implement route planning software to optimize runs. This problem is expected to be exacerbated as new federal regulations limit the amount of hours current drivers spend on the road, which will require many transportation companies to increase their hiring rate to complete scheduled deliveries and pickups on time.
HOS regulations, driver shortage could impact productivity
According to estimates from the American Trucking Associations (ATA), there is currently a driver shortage of 25,000, a significant number, especially considering the high unemployment numbers and still-precarious economy. The ATA revealed late last year that the driver turnover rate was higher than 100 percent, which puts carriers in a tight spot, and things aren't projected to get much easier on them in the coming months.
Hotly contested new hours-of-service (HOS) regulations take effect July 1 and will have significant repercussions for carriers across the U.S. Transportation companies fought the adoption of these new mandates, but failed to have them overturned. According to Bloomberg Businessweek, drivers can currently log 82 hours per week on the road, but new federal mandates will force them to stop after 70 hours. While employees will be able to "reset" a week-long work time frame, they must first get 34 consecutive hours of rest over the course of two nights.
Mitigating the effects of the current environment
Because drivers will be forced to spend more time at rest, their employers may see a significant decrease in company productivity and drivers' ability to make deliveries and pickups as scheduled. As such, they may need to increase staff levels to ensure all runs will be covered and that limited driver hours will not significantly impact business operations.
Transportation companies are facing many difficulties, when it comes to both hiring and dealing with lower productivity as a result of the new HOS regulations. As a result, carriers may find it beneficial to implement the use of route optimization software. Such technology will make it possible for them to best allocate resources and determine which trucks are best suited for certain runs. This allows drivers to ensure they are taking the most direct route and adhering to a set delivery and pickup schedule, and guarantees businesses can cut fuel spend and meet their obligations, despite facing new challenges.