The need for workers is weighing on the trucking industry, where freight operators are struggling to raise wages fast enough to find drivers.
Eric Fuller, the CEO of U.S. Xpress (USX), said that his company has doled out 30% to 35% in total pay increases over the last 12 months — but suggested more may be needed.
“The driver situation is about as bad as I’ve ever seen in my career,” Fuller told Yahoo Finance on Monday.
Data from the Bureau of Labor Statistics showed that in the depths of the COVID-19 pandemic, the truck transportation industry lost 6% of its pre-pandemic labor force of 1.52 million workers. As of July, the industry had recovered about 63,000 of those lost jobs but still remains about 33,000 jobs short of employment levels in February 2020.
Fuller said the expiration of unemployment benefits in some states have brought back some workers, but still worries that it may only get harder to recover the remaining shortfall.
Drivers have shown a stronger preference for jobs that allow them to spend more time with their families, meaning that jobs in manufacturing or construction may poach talent from U.S. Xpress and other trucking companies.
“Maybe it will change things permanently,” Fuller said, adding that the pool of prospective drivers may have morphed “structurally.”
Fuller said another 20% to 30% in wage increases may be needed to keep prospective drivers from taking other jobs, but said his company can’t afford to make further pay raises in that range at the moment.
Higher costs for everyone
Still, U.S. Xpress ramped up spending on efforts to find prospective drivers, noting in its most recent earnings call that it had increased recruiting costs by about $3.5 million.
The increased expenses associated with higher wages and recruitment costs is bleeding down to companies and consumers who pay for shipping.
U.S. Xpress said spot rates, which are real-time quotes for the fee to move a shipment, remain high and look unlikely to abate anytime soon.
Data from DAT Solutions showed flatbed rates rising 42% year-over-year, a trend that U.S. Xpress doesn’t expect to last forever.
“Without a doubt, a drop in the spot market is going to come. What remains to be seen is whether it’ll happen in the winter, spring, or summer of 2022,” the company noted in its third-quarter industry forecast.
Still, Fuller said spot rates over the last seven to eight months have been priced at premiums as high as he’s ever seen.
“Rates and prices are definitely being passed along to the shipper,” Fuller told Yahoo Finance.
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.