Understanding the Difference Between a Driver Shortage and a Capacity Shortage
To understand a problem, you need to know the reasons behind it. The freight industry has an abundance of problems, including one of shortages ― namely driver and capacity shortages. The two problems sound similar, but they’re actually quite different. They have unique roots and impact the industry in different ways. Understanding each is key to recognizing their effects on the freight industry as a whole.
Looking at the differences
Drivers and capacity are related terms, but unique in their own right. That means a driver shortage and a capacity shortage are two distinct problems.
A driver shortage is representative of a lack of qualified CDL holders. During a driver shortage, there aren’t enough “pilots.” This is in contrast to a capacity shortage, which signals a lack of trucks to dispatch. The confusion often comes from assuming a 1:1 driver-to-truck capacity. In reality, trucks and drivers are independent variables constantly in flux.
Driver shortages are easy to understand. Usually, a lack of qualified CDL holders means a lack of drivers. Across competitive fleets, driver shortages may also be the result of poaching or a diluted pool of freelancers. It’s also possible to have a driver shortage when appropriately staffed. Hours of service limits may make drivers unavailable, despite being qualified.
Capacity shortages are subject to many more variables. Drivers may be priced out during seasons and cycles, reducing the total pool of available trucks. Inclement weather can subdue large portions of a fleet. Lack of compliant vehicles in an aging fleet may cause shortages, just as accessibility to proper trucks (reefer, flatbed, etc.) may limit capacity. Even general logistics can create artificial shortages as trucks are rendered unavailable due to time or geography.
In the future, driver shortage is likely to be the biggest hindrance to the industry. CDL requirements push potential new drivers from age 18 back to 21, when they’re more likely to have enrolled in additional schooling or a trade instead of a career in trucking. Similarly, fewer drivers are willing to take long-haul runs, preferring to stay local and regional. Pay is also a major factor – the tenure of drivers is down due to perceived lack of competitive pay and benefits.
How is the industry suffering?
Driver shortages aren’t easy to deal with, but there are options. Rail transport and other forms of intermodal transport are possibilities. Bringing freight operations in-house is also becoming commonplace for larger companies, heralded by the likes of Walmart and Amazon.
Capacity shortages are a real obstacle, with no great answer. Fleets gain pricing power, driving up the cost of transport for companies, ultimately eating margins. With competition for available trucks higher, many companies opt for staggered supply chain. Instead of cross-country haulage, regional moves are easier to negotiate and more affordable, but slow down fulfillment dramatically.
Both problems cause headaches for 3PLs and shippers, and both will become more prolific as U.S. supply chain operations continue to evolve.
As both shortages loom heavy over the freight industry, shippers are doing what they can to keep costs low. One of the simplest ways to pinch pennies and avoid unnecessary costs is to maintain steadfast auditing and payment practices. nVision Global can help. Visit our website at nvisionglobal.com.