- Thanks to the US truck driver shortage, it’s taking longer than ever for retailers to ship by truck.
- It cost retailers up to 30% more to ship goods in April than it did last year.
- Certain brands are passing these costs and delays along to consumers.
There’s a reason your Amazon orders are taking longer to arrive and retailers are charging you more for your usual selections.
There’s a critical shortage of truck drivers in the US right now, and it’s only getting worse.
The US was short some 36,500 drivers in 2016, according to a2017 reportby the American Trucking Association (ATA). The shortage was projected to bloom to 174,000 by 2026 if current trends hold, according to the report.
Nearly 900,000 drivers will need to be hired in the next decade in order to keep up with demand, according to the ATA report.
As a result, the cost for retailers to move goods is “among the highest rates we’ve ever seen,” Mark Montague, senior industry pricing analyst at DAT Solutions, told Business Insider.
It cost retailers up to 30% more to ship something via truck in April than it did last year, according to DAT. Amazon’s own shipping costsjumped by 38%year-over-year in the first quarter of 2018, though its sales increased by only 18%.
“If retailers want to keep goods on schedule, they either have to be buying premium transportation or they have to wait longer,” Montague told Business Insider.
“The value of Prime to customers has never been greater,” Brian Olsavsky, CFO of Amazon, said in a quarterly earnings call. “And the cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs.”
An undesired job
Truck drivers earn an average of $US23.99 an hour, according to the Bureau of Labour Statistics. And the job can be demanding. Drivers are alone for most of the day, can be expected to work as many as 70 hours a week, and live away from home for weeks.
“I don’t have a personal life,” Wayne McLaurin, a 46-year-old truck driver from St. Louis, told The New York Times. “I don’t have a girlfriend. And it sucks, it really does. I think about that. When I was a little younger, I always had a relationship. Now doing this, I’m like, why? I realise I’m never in one place at one time.”
As the economy improves, many would-be truck drivers have pursued jobs in construction or energy, Montague said. Those jobs pay more than truck driving from the get-go, while allowing workers to live at home.
The tight labour market has also given rise to a shortagein fast food– another industry that’s low pay and not highly-desired.
Companies across the board have been affected by the truck driver shortage
It isn’t just Amazon that’s reckoning with the truck driver shortage.
Trucking is how most of the goods in the US get to your grocery store, convenience store, and everywhere else you buy things.By revenue, trucks move 82% of the freight in the US.
As a result, many retailers are either boosting their prices or having to delay shipments.
Manufacturers like oil driller Halliburton, paint maker PPG Industries, and paper producer International Paper Co. are all reporting bottlenecks at trucking, Oyedele reported.
Coca-Cola, toy maker Hasbro, Procter & Gamble, and Nestlé also reported that their freight costs are increasing, The Wall Street Journal reported last month.
Many food manufacturers plan to pass the cost onto customers.
General Mills, the owner of brands like Häagen-Dazs, and Betty Crocker told MarketWatch in March that they will raising prices on some cereals and snacks to offset high shipping costs.
Hormel Foods, which owns Skippy, Muscle Milk, and other food brands, also said they may need to raise prices, Reuters reported in February.
Tyson Foods, the largest meat company in the US by revenue, will need to spend an additional $US250 million for shipping this year, Chief Executive Tom Hayes said on a conference call earlier in May, a cost that will be passed on to consumers.
“Product prices must reflect the true cost because we cannot subsidise the increased freight,” Hayes said.
Are you a truck driver with a story about the industry? Email the author at [email protected].
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