Infrastructure of People
Open the business section of any newspaper, or turn on your favorite news TV program and chances are the discussion is about the economy or our nation’s infrastructure. From the stock market, to political views, to transportation funding bills in congress, these are certainly important topics for discussion. However, there is one specific piece of “infrastructure” that needs significant investment, attention, and is too often not part of the conversation… this is our human infrastructure.
In logistics, no matter the scale of your operation, your “human infrastructure” should be, and can be a key asset in separating you from the competition. Especially for companies enabled by trucking, where in large fleets annual driver turnover rates for many years now has topped 100 percent per year, and complex federal regulations are fundamentally changing how and when truck drivers can operate.
Many of these changes are not unique to logistics or trucking alone. Programs such as the Affordable Care Act (ACA) and the increased attention being given to the classification of workers (independent contractors vs. employees) are certainly making companies of all types throughout the country stand up and pay attention. The challenge is that nearly 70 percent of all the freight tonnage moved in the U.S. goes on trucks, and with over one-million for-hire and private trucking fleet operators employing three-million drivers, it is a huge slice of our economy and is usually not on the radar of most Americans… but it should be. Trucking companies move more than 9.2 billion tons of products to the stores we shop in, the places we buy our food, and to manufacturing plants all over the nation. Logistics and transportation are really the common denominator of the entire U.S. economy. Without an effective and cost-efficient logistics ecosystem, nothing moves and the economy stands still.
The Human Challenge
These volumes are expected to continue to increase every year, and could grow 29 percent over the next 11-years. This is great news for all businesses, if it were not for the challenge the “human infrastructure” the industry is facing. The American Trucking Association expects a shortage of 100,000 truck drivers every year, and there is no short-term solution on the horizon. The average age of a truck driver today is 55 and trends show this average age actually on the rise. Meanwhile, the available U.S. workforce is heading in the other direction. Research from the Pew Center indicates one-in-three workers today are millennials (adults ages 18 to 34 in 2015), and this year they surpassed generation X to become the largest share of the American workforce. An ongoing study by the American Trucking Research Institute shows in 1994 about 30 percent of the trucking workforce were these younger workers (ages 25-34) but had steadily decreased and was below 15 percent of the total in 2013.
Attracting these younger workers is a critical factor in fixing the shortage the industry faces today and will be even more important tomorrow. Younger workers are usually found in low-wage industries like restaurants and retail while logistics related and trucking jobs pay significantly higher wages in many locations with just a high-school degree.
So what is the logistics industry need to do? First, the biggest issue is a problem of perception. We need to start earlier in the educational process (like in middle school) and make students, and their parents, aware of career opportunities available in logistics and transportation. Not everyone will go to college, and those that want to enter the workforce after high-school need to know there are options other than just working in retail or a restaurant.
For those interested in pursuing a college degree, another potential long-term solution to the logistics labor shortage may include earlier logistics visibility in high schools and colleges, increased internships providing real-world experiences, better coordination and support for technical colleges, reduced or eliminated hurdles for military personnel transitioning into civilian life, and enhanced marketing of logistics education. Educational institutions must rise to the occasion. We need the education community to acknowledge that supply chain management and logistics are critical to so many industries. Then, they need to help connect students to private industries to gain critical real-world experiences.
Educational institutions and companies can’t do it all on their own; millennials or new grads need to take on some responsibility, too. Students should take it upon themselves to find resources and get educated on current industry trends.
State government also has a role to play. States need to do a better job preparing employees to keep up with the demands of the industry. Georgia, for example, is working to increase the number of available trained workers by extensively investing in logistics programs from the high school level to Ph.D. programs.
Second, is the deeper integration of technology into logistics and trucking operations. Millennials were almost born with an iPhone in their hands and they expect a certain level of technology to be leveraged in the workplace. They expect employers to provide access to tools for efficiency. In today’s logistics landscape, it’s becoming more crucial to integrate technology into the workplace and use it to give workers more flexibility and increase efficiency. This use of technology is unfortunately not as prevalent in the trucking industry as it should be.
For example, the paper log books that truckers have been using for some time are now being replaced with electronic logging devices or ELDs. An ELD is a device that enables professional truck drivers and commercial motor carriers to easily track their hours of service (HOS) compliance.
By 2017, all CDL drivers required to keep a Record of Duty Status (RODS) must use an ELD to document their compliance with HOS rules. The new ELD rule will add certain technical and performance specifications that define exactly what the device must feature, and has drawn a wide range of excitement and also concern. However, at the end of the day ideas and technology like the ELD are again the kinds of changes younger potential truck drivers will expect to have at their disposal. To attract and engage this younger generation, businesses must understand what this generation value. If a company takes the time to understand what millennials want and how they illustrate career success, then a company has a great chance of employing promising young talent.