US truck driver shortage is slowing Amazon orders, upping retail costs




So
many deliveries, so few truck drivers.

Scott Olson/Getty

  • 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 a


2017 report

by 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 costs


jumped 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.

Amazon cited those increased
shipping costs as the reason for
boosting the price
of a Prime membership in April, Business
Insider’s
Akin Oyedele reported

“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.”


truck costsBusiness
Insider/Andy Kiersz, data from DAT Solutions

An undesired job 

Truck drivers earn an
average of $23.99 an hour, according to the
Bureau of Labor
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 realize 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 labor market has also
given rise to a shortage


in 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 $250 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 subsidize the increased freight,” Hayes said. 

Are you a truck driver with a story about the industry? Email
the author at rpremack@businessinsider.com.

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