Life Insurance, Suicide Pills and TMS Software – Hedging Against the Inevitable

What do life insurance policies, the cyanide capsules carried by espionage agents and TMS software solutions have in common? They all work to help to lessen the pain inflicted by unfortunate, yet unavoidable circumstances.  Life insurance helps surviving family members cope financially with the loss of their loved one.  A spy’s suicide pill permits him a dignified demise should he be captured by the enemy.  TMS software offers shippers the ability to absorb the shock poised to ripple through the transportation industry via the worsening driver shortage.

Like the inevitable passing of a loved one, the writing is on the wall for trucking companies in the US.  The major factor fueling the shortage of drivers for long haul, over the road shipments is not higher fuel costs or onerous regulations (although these factors surely don’t help).  The truth the industry doesn’t want to face is that pay for drivers must inevitably rise.  It’s not that drivers don’t want to drive anymore.  It’s more that the next generation of drivers isn’t attracted to these grueling jobs for what trucking companies currently want to pay.

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“The writing is on the wall for trucking companies in the US.  The next generation of drivers isn’t attracted to these grueling jobs for what trucking companies currently want to pay. TMS software is transportation’s best bet when it comes to finding cost savings needed to offset increased driver compensation.”

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According to ATA data, US trucking industry revenue for 2012 reached $642 billion.  In that year, trucker compensation barely totaled $1billion or approximately two-tenths of one percent of overall revenue.  Truckers in the US earn an average of $47,000 a year – hardly an attractive sum for a job that keeps these workers away from home and family for extended periods.  Beset on all sides by new liabilities –Hours of Service rules changes, eLog and other equipment mandates, environmental regulations, rising fuel costs, etc. – the trucking industry has been disinclined to boost labor spending.  Yet, the free market principles of supply and demand will inevitably lead to rises in driver pay.

It has already begun.  This recent article in the Business Insider confirms large carriers Swift and Con-Way are preparing to offer higher salaries to attract more truck drivers (as is Maverick Transportation according to Trucker Classifieds). In the near term, this will likely only help them attract and retain a greater share of the available pool of drivers.  But as other carriers follow suit in order to remain competitive, we’ll see a wholesale increase in the baseline pay for drivers; the proverbial rising tide lifting all boats.  This will attract new entrants to the field, but these increased labor costs will be passed along to the shippers.

If shippers wish to remain competitive in their respective spaces, they’ll want to avoid having to pass any additional costs along to their customers.  Yet, the increase in driver pay will have to come from somewhere.  This is another place where TMS software fills a critical gap.  TMS software is lauded for its ability to squeeze efficiency savings out of the transportation portion of the supply chain.  Whether this is improved routing and scheduling (resulting in more efficient driver utilization) or non-driver related savings such as improved backhaul management, freight optimization or improved yard management, the TMS is transportation’s best bet when it comes to finding cost savings needed to offset increased driver compensation.  So if you’re a shipping organization, don’t chomp down on that poison pill just yet.  Instead, talk to a leading provider of TMS software solutions to see where your hidden savings lie.

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