Across the country, trucking companies are scrambling to find drivers, particularly for long-haul routes. Not only is this forcing wages and rates higher — it’s beginning to hurt small businesses.
The effects of the trucking shortage on the economy make it more expensive to ship goods and raise retail prices. Here’s how the current trucking shortage is costing small businesses.
How Bad Is the Trucker Shortage?
The American Trucking Associations (ATA) found that the truck driver shortage reached approximately 50,000 drivers by the end of 2017. Unfortunately, the problem is only getting worse. ATA believes increased demand for shipping and freight services will create an opportunity in which the growing U.S. trucking industry will need to hire 898,000 new drivers over the next decade. That averages out to almost 90,000 new jobs each year. While the demand is strong, capacity is constrained.
The shortage is driven by a variety of factors. However, most experts point to a few common issues across the industry:
• Difficult working conditions.
• Shifting truck driver age demographics.
• Challenges achieving work-life balance.
• Reputation issues associated with the industry.
These issues are limiting the number of people interested in trucking as a career. They’re also creating high turnover rates. At the same time, growing e-commerce delivery demands are creating an influx of new shipping challenges. The result is a major lack of truckers and strain on the U.S. economy.
Impact on Small Businesses
Faced with a severe shortage of truck drivers, efforts are being made to improve worker conditions in the industry. Government regulations are protecting drivers from working excessive hours, shipping companies are increasing salaries, and improved technologies are fueling efficiency and safety gains.
While these factors haven’t been enough to stem the driver shortage, they have led to high operational expenses. These inflated costs are being placed on the businesses that rely on trucking to obtain and transport their goods.
Citing government data, Barron’s reported that trucking costs grew nearly 8 percent during the month of June. While some of these expenses can be pinned to higher fuel costs, they also highlight the growing impact of the lack of drivers.
Causes of Business Disruption
We’ve reached a point in which the trucking shortage is costing small businesses. With trucking costs rising, businesses are in turn forced to spend more on shipping, and consumers more on their products. Here’s a look at areas where increased expenses could be particularly noticeable:
E-commerce deliveries. Today’s e-commerce world isn’t just defined by demand for rapid shipping and transparency into deliveries. Customers also expect extremely flexible and consumer-friendly return policies. As retailers struggle to keep up with customer requests, small increases in shipping costs for each asset could add up to substantial expenses for both businesses and consumers over time.
Shipping timelines. Strict guidelines on driver schedules and a lack of available drivers make getting items to their destination a more time-consuming process. Businesses and consumers must be prepared for more delays and less flexibility due to the lack of resources available in the sector.
Long-distance shipments. Long-distance shipments are bound to take longer, with drivers expected to work more controlled schedules and fewer drivers available to split routes between them.
Heavy freight deliveries. Organizations that rely on specialized freight shipping for heavy equipment or machinery could face dramatically escalated costs, as trucking companies struggle with the growing complexities of moving specialty goods and equipment over long distances.
Delivery services. Many small businesses offer delivery in some form or another. If your company falls into this category, be prepared for challenges finding qualified drivers and a potential need to increase employees’ wages and benefits.
How Working Capital Can Help
These are just a few ways that the trucking shortage is costing small businesses. The influx of new expenses due to high shipping costs can heavily impact a small business’s cash flow. While you might be able to adjust your prices and practices over time, you could need financial help in the interim. Supplementary working capital can be used to hire drivers, cover payroll costs, and refine your business operations.
Ben Gold is president of QuickBridge, a privately held financial services firm providing loans and short-term working capital funding to small-to medium-sized businesses.