F MI SUMMIT 20 12 Understanding the Trucking Labor Market Dr. Kristen Monaco
Agenda The Trucking Industry Deregulation s impact on industry structure Evolution of the labor market Labor Market Conditions and Challenges Safety and Hours of Service Discussion 2
How many trucking companies are there in the U.S.? 1. 118,507 2. 387,973 3. 726,928 4. It is typical of an economist to ask a question with no true answer. 3
Modal Share, 2007 Share of Value Share of Ton-Miles 1.6% 7.2% 3% 1% 9% 2.2% 13.4% 1% 6% 40% 3.7% 71.3% 40% Truck Rail Air (incl. Truck and Air) Parcel (incl. USPS) Truck and Rail Truck and Water Rail and Water Truck Rail Air (incl. Truck and Air) Parcel (incl. USPS) Truck and Rail Truck and Water Rail and Water 4
The Trucking Industry Trucking as a heterogeneous market How do we measure trucking? Who owns the freight? Employment relationship? Type of freight hauled? Length of Haul? Shipment Size? No singular source of data 5
Who Owns the Freight? Private Carriage vs. For-Hire For-hire: Primary business is hauling freight Private carriage: Primary business is not freight transportation, but have a fleet If we look only at trucking industry by SIC or NAICS code, we are missing a big chunk of trucking activity 6
Which of the following best describes your company? 1. We have a fleet of trucks that handles all of our transportation needs. 2. We do not have a fleet of trucks. 3. We have our own fleet and also contract with for-hire trucking companies. 7
Who Owns the Freight? Data Set Measure Share For-Hire 2007 Commodity Flow Survey By Value 59.5% By Miles 46% By Ton-Miles 78.6% MCMIS, 2007 Number of Firms 41% (plus 8% both ) ATA, 2005 By Weight 49% By Expenditure 45% 8
Length and Shipment Size? 2007 Economic Census (For-Hire Only) NAICS Code Segment Number of Establishments Annual Revenue (Millions) Paid Employees 484 Truck transportation 118,507 $217,895 1,478,343 4841 General freight trucking 65,414 $142,278 977,367 48411 General freight trucking, local 27,263 $21,147 179,670 4841101; 4841103 General freight trucking, local, truckload 19,652 $15,681 127,754 4841102; 4841104 General freight trucking, local, LTL 7,611 $5,467 51,916 48412 General freight trucking, long distance 38,151 $121,131 797,697 484121 General freight trucking, long distance, truckload 484122 General freight trucking, long distance, LTL 30,228 $83,471 509,220 7,923 $37,659 288,477 4842 Specialized freight trucking 53,093 $75,617 500,976 48421 Used household and office goods moving 8,513 $14,384 103,159 48422 Specialized freight, except used goods, trucking, local 48423 Specialized freight, except used goods, trucking, long distance 33,351 $30,911 220,364 11,229 $30,322 177,453 9
Length and Shipment Size? 2007 Economic Census, Concentration Ratios NAICS Code Segment C4 C8 484 Truck transportation 9.2 14.5 484121 General freight trucking, long distance, truckload 13.8 18.6 484122 General freight trucking, long distance, LTL 47.3 62.2 48423 Specialized freight, except used goods, trucking, long distance 8.2 12.5 10
Economic Regulation Motor Carrier Act of 1935 Primarily impacting for-hire trucking Entry restrictions Published rates Economic rents in for-hire industry shared with labor Firms tended not to specialize operations Motor Carrier Act of 1980 Entry of new, smaller carriers Dissolution of rents, impacting firms and labor 11
Number of Firms Class I Railroads Interstate Motor Carriers 1975 1980 1985 1990 1995 2000 2005 2009 73 39 25 14 11 8 7 7 NA NA NA 216,000 346,000 560,393 679,744 726,928 Source: Bureau of Transportation Statistics 12
Truck-Rail Comparison Productivity Index 120 100 Trucking 80 60 Rail 40 20 0 Source: Bureau of Transportation Statistics 13
Truck-Rail Comparison Labor Indices 160 140 120 100 80 60 40 RR Labor Compensation Index RR Employment Index Trucking Labor Compensation Index Trucking Employment Index 20 0 Source: Bureau of Transportation Statistics 14
Trucking Labor Market Heavy Truck Driver Employment By Industry Industry (NAICS Code) Employment Share of Total Hourly Mean Wage Mining (21--22) 30,210 2.0% 18.68 Construction (23--24) 81,960 5.4% 18.34 Manufacturing (31--34) 126,320 8.4% 18.13 Wholesale Trade (42--43) 195,500 13.0% 19.15 Retail Trade (44--46) 45,020 3.0% 17.11 Transportation and Warehousing (48--50) 872,930 57.9% 19.68 Truck Transportation (484000) 761,850 50.5% 19.57 General Freight Trucking (484100) 551,960 36.6% 19.83 Specialized Freight Trucking (484200) 209,890 13.9% 18.87 Administrative and Support and Waste Management and Remediation Services (56--57) 81,090 5.4% 18.03 Total 1,508,620 Source: Occupational Employment Statistics, BLS 15
Driver Demographics 1975 1980 1985 1990 1995 2000 2005 2010 Union 47.3% 40.6% 24.1% 20.5% 19.4% 17% 16.7% 12% Hispanic 4.9% 5.2% 5.1% 7.3% 7.7% 11.7% 11.1% 13.4% Black 9.8% 11.3% 11.5% 11% 10.7% 11.5% 10.1% 11.2% White 89.8% 87.4% 86.6% 86.6% 85.4% 85.7% 82.3% 84.7% Age Distribution 1975 1980 1985 1990 1995 2000 2005 2010 Mean 38 38.3 38.4 38.9 39.2 40.6 44.7 43.4 25 th Pct 28 28 28 29 30 31 36 34 Median 37 37 36 37 38 40 45 44 75 th Pct 48 47.5 48 47 47 49 53 53 Source: Current Population Survey 16
Trends in Earnings $840 Real Weekly Wages (in 2011 Dollars) $820 $800 $780 $760 $740 $720 $700 1975 1980 1985 1990 1995 2000 2005 2010 17
Labor Market Challenges Demographics Aging labor force Training? Churning/Turnover Problem Low levels of firm attachment, particularly in TL 2005: 135% 2007: 117% 2010 (Q1): 39% 2011 (Q1): 75% 2011 (Q4): 88% 18
Labor Market Challenges A perfect storm? Increased demand Economic recovery HOS changes Decreased supply CSA Other factors affecting margins Fuel prices 19
J-90 A-90 M-91 O-91 M-92 D-92 J-93 F-94 S-94 A-95 N-95 J-96 J-97 A-97 M-98 O-98 M-99 D-99 J-00 F-01 S-01 A-02 N-02 J-03 J-04 A-04 M-05 O-05 M-06 D-06 J-07 F-08 S-08 A-09 N-09 J-10 J-11 A-11 Challenges: Increased Demand 120 Freight Transportation Services Index 100 80 60 40 20 0 Source: Bureau of Transportation Statistics 20
Challenges: HOS Changes 1937-2003 2004-Present 2013 Driving time max 10 hours 11 hours 11 hours Total work time max 15 hours 14 hours (hard stop) 14 hours (hard stop) Off-duty min 8 hours 10 hours 10 hours Maximum total 60 in 7days or 70 in 8 days 60 in 7days or 70 in 8 days 60 in 7days or 70 in 8 days Rolling hours or restart? rolling 34 hour restart 34 hour restart with at least two periods between 1-5am and only once per week Old Rules: If start work 7am on a Monday, work 10 hours, and exhaust total work hours (60) by Friday at noon, then cannot start work again until Monday at 7am Present Rules: Same parameters, but eligible to start work again on Saturday at 10pm with a fresh 60 hours. New Rules: Would not be able to start again until Sunday at 5am since need two periods off between 1am and 5am. 21
Challenges: HOS - EOBR 22
Does your company use the Safety Measurement System (SMS) to evaluate the carriers you use? 1. Yes 2. No 23
Challenges: CSA Compliance, Safety Accountability, 2010 Attempt to coordinate information between FMCSA and state enforcement Data on several safety measures Safety Measurement System Used to determine which carriers should be focus of inspections/candidates for losing authority Publicly available 24
Trucking Safety 1.8 Fatalities Per 100 Million Miles 1.6 1.4 Cars 1.2 1 0.8 0.6 0.4 Heavy Trucks 0.2 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 25
Trucking Safety 700 Injuries and Crashes Per 100 Million Miles Traveled 600 500 Car Crash Rate 400 300 Truck Crash 200 100 0 Car Injury Rate Truck Injury Rate 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 26
Challenges: Margins 6 Ultra Low Sulfur Diesel Prices (Real 2011 Dollars) 5 4 3 2 1 0 Source: US Energy Information Administration 27
Summary Trucking is highly segmented, with limited competition across segments, but considerable competition within most segments. Low margins results in pressure to achieve efficiency Pay for long haul most often by the mile Drive more Safety implications Little/no reward for firm-level attachment Considerable churning 28
Summary Impending Challenges Increasing labor demand Decreasing labor supply Inevitably will lead to higher wage rates and higher freight rates 29
If trucking rates increased on the order of 10%, would your company rely more on rail for domestic shipments? 1. Yes 2. No 30
Questions? Kristen Monaco kristen.monaco@csulb.edu
Thank You! Up Next Aligning Fleet Strategies to Freight Markets Mike Eaton