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Higher pay may help solve US trucker shortage

CHICAGO (Reuters) - U.S. trucking companies have been enjoying a boom period, but executives say it's never been harder to find people to do the driving.

In fact, the driver shortage has become so serious that some experts are proposing moves like raising pay by 30 percent or inviting workers from Mexico to do the job.

But even those solutions might not be enough to meet demand in the industry, which moves more than 80 percent of domestic freight cargo. Some analysts see shippers turning to the railroads, which need fewer staff and charge lower prices.

The problem for the trucking business is that young Americans are more focused on quality of life, executives say. Many people would rather work for less money than sit behind the wheel of a tractor-trailer on journeys that can keep them away from home for days on end.

"Business is very good right now," said Randy Marten, chief executive of refrigerated truck operator Marten Transport Ltd.. "But the personnel situation sucks."

Marten and other trucking executives said they had tried repeatedly to boost flagging driver recruitment with better benefits and incremental pay rises, but with little effect.

Although drivers at Mondovi, Wisconsin-based Marten Transport are among the highest-paid in the United States, the 60-year-old company finds it more difficult than ever to recruit them.

Like many U.S. trucking companies, Marten Transport has seen business increase rapidly in recent years. In its case, growth stemmed from a shift by U.S. consumers from canned goods to fresh foods, which must be refrigerated.

Many truck operators have also benefited as U.S. manufacturers outsourced production to developing nations like China -- and then needed to transport the imported products to warehouses across the United States.

But rather than enjoying the increased demand, trucking executives are worrying about how to meet it in light of the driver shortage.


According to a May 2005 study by Global Insight for the American Trucking Associations, the industry was short 20,000 drivers. The Boston-based consulting firm warned that as the U.S. population ages, that shortage could hit 111,000 by 2014.

Worst hit are truckload, or long-haul operators, which moved more than two-thirds of the estimated $610 billion in U.S. freight in 2003, according to the latest ATA figures.

Phoenix-based truckload company Swift Transportation Co. Inc. highlighted the impact of the driver shortage when it reported second-quarter results last week, saying it had nearly 500 trucks unassigned at the end of June.

Net income rose "despite an extremely tight driver market that is as challenging as I have seen in my career," CEO Robert Cunningham said in a statement.

Marten and others said that sooner or later trucking companies would have no choice but to raise salaries up to 30 percent to attract American drivers.

John Wiehoff, CEO of Minneapolis-based truck brokerage and logistics company C.H. Robinson Worldwide Inc., said such a pay increase could make a difference.

"To be honest, it's a crappy living," he said, "and a big pay rise would not be unreasonable."

According to May 2005 data from the U.S. Bureau of Labor Statistics, truck drivers earned average annual wages of $35,460, but the top-paid in the industry made more than


Others in the industry say money is not the only problem.

A big pay rise won't solve the lifestyle issue, said Jeff Cook, vice president of Future Truckers of America, an Asheboro, North Carolina-based school that trains about 350 drivers a year.

"Long-haul driving is hard," said Cook, who spent nine years as a driver. "And when people weigh lifestyle against the dollar sign, lifestyle often wins."

Logistics expert John Vande Vate of Georgia Tech suggested allowing Mexican truck drivers access to the U.S. market as a way to alleviate the personnel shortage.

He added, however, that U.S. drivers would probably oppose such a measure as it could push pay levels down. With immigration a contentious issue in U.S. politics this year, Vande Vate said any moves to allow in Mexican drivers would be a long time coming.

Some analysts look to railroads to pick up any slack from long-haul trucking companies, which have been losing share to them over the past two years. Trains provide a cheaper alternative because they are more fuel-efficient and need fewer workers to haul more goods.

This has led trucking operators to partner up with the railroads with intermodal services, using standardized containers interchangeable between different modes of transport. Schneider National Inc., the largest private U.S. trucking company, in June launched such a service between Marion, Ohio, and Kansas City, Missouri, with railroads CSX Corp. and Kansas City Southern.

"Generation X and Generation Y don't want to haul goods long distance over the road," said CSX CEO Michael Ward. "We expect more business like this in the future."

Analyst Peter Smith of research firm Morningstar said a major pay rise for truckers, combined with high fuel prices, would push more goods off the roads and onto the rails.

"In the long run," he said, "railroads stand to gain even more from the driver shortage."

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