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Produce Driver
Driver Shortage Is Seen As Becoming Worse In 2008
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| Richard Metzler predicts major changes involving cold chain security will occur, although when, is hard to determine. This will include produce trucking and other sectors of the distribution chain. |
Metzler is the chief commercial officer for a company which does $200 million annually in truck load brokerage, with about one-half this amount being in fresh fruit and vegetables.
I met with this financial wizard at the Texas truck show to gain some insight into what he sees happening in the coming year in regards to trucking. His pulse of the trucking industry dates back to his native Pittsburgh, where his grandfather had a trucking company and warehouse operation. He joined Greatwide nearly three years ago and has been involved in areas ranging from mergers and acquisitions, to strategic planning, marketing and research.
Metzler cites several reasons for concern about a driver’s shortage becoming much worse. Among those is an increasing number of drivers reaching retirement age.
He’s right. Beginning next year an 18-year cycle begins where 7.2 million baby boomers will start retiring. Then there is a study commissioned by the American Trucking Associations carried out by Global Insight Inc. where approximately 54,000 drivers a year will be needed due to the country’s expanding economy. What is estimated to currently be a shortage of 20,000 drivers could increase five-fold or more within the next six years.
Metzler believes the driver shortage is coming sooner rather than later. He points to the economy of the United States the past year, noting its “softening” has adversely affected freight rates, demand for freight, etc.
“We are trying to prepare for this expected change. We are developing plans and programs,” he says. “We didn’t have a booth (at the Dallas show) because we have enough drivers, with a few exceptions.”
However, the executive is convinced it is only a matter of time before the driver shortage worsens. In the meantime he likens the situation to the hit movie The Empire Strikes Back, saying many shippers are currently “extracting their pound of flesh” when it comes to beating down freight rates. Although in a supply and demand economy, Metzler says in a way he cannot blame those shippers.
Yet, he is quick to add that shippers doing this are short sighted, because the tables will eventually turn. He sees this change coming during the first half of 2008.
Not only is there not enough replacement drivers to cover those that are retiring, Metzler says the change in hours of service regulations is “huge.” With an hour less to drive a day it results in trucking operations being less efficient. This efficiency also has been hurt by the increasing gridlock, or traffic congestion. This results in big rig operating costs going up, and declines in productivity.
He notes some drivers are seeking jobs in other industries because the economy has been soft. Two examples of a wimpy economy is the housing market and the automobile sector. However, both of these are capable of turning around quickly, resulting in great demand for freight movement.
Through all of this, Metzler observes the refrigeration transportation business has remained fairly steady, in large part because people still have to eat.
While he has noticed small growth in the both refrigerated and dry van shipments, there has been a 6.9 percent drop in flatbed and heavy loads. This is where rate declines have primarily occurred. He sees this area of transportation coming back, with a stronger economy, particularly if diesel fuel prices remain steady and do not make substantial increases.
Part of the Greatwide business strategy is to sit down with customers with whom it does business and become as well prepared as possible for an increasing driver shortage.
Otherwise, Metzler says, “It could be a tsunami. It could change the supply and demand faster than we’ve ever seen it,” he states.
Over the past 33 years this writer has seen a pattern of produce shippers beating down the rates during the winter months as produce volume and loading opportunities decline. By spring the produce haulers are more than ready for revenge to get back freight rates they were losing during the slower periods. Shippers and transportation entities that tend to work together to remove the roller coaster rates have found these partnerships beneficial for everyone.
Metzler says produce trucking faced a double whammy in 2007 between a softening U.S. economy, combined with freezes in both California and Florida, which reduced crop volume and available loads. He described last June and July “as horrible” as weather factors continued to keep produce shipments less than normal.
On a final note, Metzler predicts major changes involving cold chain security will occur, although when, is hard to determine. This will include produce trucking and other sectors of the distribution chain.
“The produce department in stores is the only place where everything is not packaged. There will be controls all the way from the time it is picked in the field to when it goes in the shopping cart,” he states.
Packaging requirements for food safety purposes will reduce cube space in trailers. However, Metzler says it “will take an event” such as some type of contamination of produce at the store level before these changes will take place.
November Hauling Outlook
Shipments of russet potatoes from Colorado’s San Luis Valley are projected to be down only one percent from last season…North Dakota is the nation’s largest shipper of red potatoes. Steady loadings and good quality are reported. North Carolina ships more sweet potatoes than any state and good volume is seen.