Now four firms have settled in this big case. It is interesting reading, even though amounts of damages are not revealed. Didthe trucking firms conspire not to hire certain drivers from one another?
That would amount to restraining the worker’s right to take another job. It’s probably illegal. But it is also involved with charging drivers for taking a safety course.
Trucking firms have made many attempts to manipulate work rules to reduce the wages paid to drivers.
One of the most egregious is to require truckers to lease a truck through the company, on terms dictated by the company. This is often not a good deal for the truckers. But that’s not the question here.
You think we have a driver shortage in the US? In the UK it is even worse.
When we can’t get milkshakes, maybe we can get carriers to pay more to drivers, or change work rules so they can be fairly compensated.
In short term economics of the situation, shippers are always working out on carriers for lower prices. It’s the single factor they care about most. Whether that is what they should be concerned about is a different question; it’s reality. Carriers (trucking companies and owner-operators) have only limited control over their expenses– fuel, which is proportional to distance and delay time), labor costs, and relatively longer term costs such as truck lease payments and insurance. Note that truckers can often get the shipper to pay trailer or container chassis costs; otherwise those are also short term.
The only one ofthese within easy control is labor costs– wages for the driver and any benefits they get. Employee drivers usually get an hourly wage and some benefits like medical insurance, retirement benefits etc. Owner-operators get a piece rate for theload they carry, and must pay their benefits themselves out of the receipts.
So the easy short term way for carriers to squeeze cost out is to keep wages low for employees, or negotiate lower piece rates for owner-operators. They are likely to resist raising rates to drivers, even if they can raise prices to the shipper for hauling their cargo.
How can drivers earn more? They can jump to a different firm. Owner-operators can refuse low-paying loads,and in the extreme simply park their truck, taking themselves out of the labor market for trucking logistics. This is called job mobility in the language of labor economics. That results in fewer people seeking this kind of job. In the US, over half the drivers are owner-operators rather than employees, but the fraction varies in different segments of trucking. In the UK, more drivers are employees.
How can trucking firms react to the shortage? It’s actually simple– pay more! Drivers do a difficult job, that requires some skill and a reliable attitude. Maybe it’s worth more than carriers are currently paying.
It’s not possible to book shipments anymore with some LTL carriers. Their capacity is full, and they don’t care if they get new customers. OnTrak (which delivers my vitamin pills) and Fedex recently said they were refusing new customers. The claims are that they are out of capacity– not enough planes, trucks and drivers— to deliver everything. There are other less visible bottlenecks, also, such as a shortage of trucks for sale due to the semiconductor shortage. There’s been a sort of crisis in drivers for trucks for quite a while, exacerbated by the recent enforcement of rules to prevent people who fail drug tests from getting commercial driver’s licenses. We wonder why employers don’t pay drivers more, and take more care to create working conditions more favorable to drivers.
Still, common carriers have an obligation to carry the freight presented. It will be interesting to see how far this goes, and when regulators will start crawling through these carriers’ records to see if they are unfairly denying carriage.
Eric Kulisch, Air Cargo Editor Thursday, August 19, 2021
Supply Chain and Logistics 