Hub Group CEO David Yeager joins Yahoo Finance Live to discuss how his company is preparing for for this holiday season.
ZACK GUZMAN: Welcome back to Yahoo Finance Live. We've been talking a lot about the strains on the delivery network here in America as we approach the holiday shopping season. We've seen a lot of e-commerce orders coming through. That's led to some shippers restricting the amount of packages that some big-name retailers can ship.
But what about all the logistics behind it? Let's bring in the CEO of Hub Group here. David Yeager joins us now. Hub Group handles logistics for some big name retailers like Lowe's, Home Depot, and Target, just to name a few.
And David, I mean, we keep hearing so much about the strains here. What are you seeing behind the scenes in trying to work with some of these retailers to get those packages out the door? And what are your expectations as we approach the holiday season?
DAVID YEAGER: Well, 2020 has been really a year of extremes. In early 2020, early in the pandemic, we had a great deal of excess capacity in the market. In fact, our volume was down 18% in April on a year over year basis.
Since then, we've seen it come back to the point that the demand right now is far outstripping the supply of what transportation is available. If you look at the imports right now that are coming in from LA Long Beach, there were actually, in November, up 37%, versus last November.
And we had also, for November, or rather, October, it was about 17%. So a lot of imports coming in. But inventories right now are at a record level, as far as being very, very tight, very low. And with demand outstripping the supply, we're seeing right now a very tight capacity market.
We do work with our strategic clients, and you've named a few there, to supply them with all the equipment they need in order to get the products to their stores.
AKIKO FUJITA: Yeah, and no question, David, it does feel like that capacity is going to get even tighter as we get closer to the holidays, or to Christmas. What specifically are you doing at Hub Group right now to be able to meet that demand in terms of hiring additional employees, making sure that some of these pain points within your logistics are addressed? Can you speak a little more to what's happening behind the scenes?
DAVID YEAGER: Certainly. We did add approximately 10% to our container capacity this year. We were the only intermodal provider that, in fact, did add additional capacity. We're also working very closely with all of our retailers to understand what their forecasts are, what their expectations are with the number of imports, how long it's going to last.
And then we are empty repositioning trainloads back to the West Coast in order to we can pick up those imports, once again, to bring them inland so they can go to the stores.
ZACK GUZMAN: And I mean, we've been talking about the constraints here. One thing that was here, even before we started to think about the holiday shopping season, was just a constraint in terms of the amount of truck drivers in the country. I pointed out earlier in the show, we were talking about it with one CE on the trucking space, saying that you would need to see about a 20% boost in wages just to get the amount of workers there to get all these packages delivered here.
I mean, what does that look like in terms of the shortage? And what kind of constraints right now are you seeing when it comes to kind of filling out the demand for America's trucking?
DAVID YEAGER: There's no question the truck driver shortage, it's been ongoing. It's been very constant. There's a lot of issues with it. Part of it is pay. But honestly, the pay has increased pretty substantially over the last several years.
A lot of it is lifestyle, and an awful lot of it is, in addition, is just we're not attracting new drivers into the industry. If you look at the average age of a truck driver today, it's in the low 50s. If you looked at the average age of a truck driver 10 years ago, it was the low 40s.
So the truck driver lifestyle doesn't necessarily fit with what the younger people really envision as how they want to be. I would suggest that we're fortunate in as much as our drivers are not on the road for long periods of time. They're basically home every night. Because, again, we're delivering to railroad ramps. We're picking up at railroad ramps and making local deliveries.
So it's better from a lifestyle perspective. And I think that the pay is getting close enough to be attractive.
AKIKO FUJITA: On the issue of the trucker shortage, David, we've seen a number of newer tech plays coming into the space, whether that's over freight or a convoy, who are basically trying to disrupt the way these contracts used to be conducted, allowing for a little more flexibility with drivers. Do you anticipate some of those names taking even more market share moving forward, especially because of the constraints you've already seen in the supply for drivers?
DAVID YEAGER: They aren't really bringing any new drivers into the market. If you look at, I think, Uber Freight last quarter lost about $40 million, which is significantly better than what they've been doing in the most recent past.
So I don't think that they've gotten to a tipping point where they're going to be disruptive to the industry. Basically with what they're doing, with truck brokerage, what we focus on is being able to supply your customer with a truck when he needs it. Certainly, automation will help. And we're all investing in technology in order to make it a less labor intensive process. But I don't see any magic sauce thus far that Uber Freight really makes me concerned about the future of truck brokerage.
ZACK GUZMAN: All right, David Yeager, the CEO of Hub Group. Appreciate you coming on here to chat today, sir.
DAVID YEAGER: Thank you.