ATA’s Shannon Newton dishes on industry challenges including worker shortage.
The shift to online shopping over the course of the pandemic magnified the role of truckers in the American economy. And as the trucking industry continues to navigate a landscape impacted by COVID, it faces some unique potential roadblocks.
Shannon Newton, president of the Arkansas Trucking Association, visited with Arkansas Money & Politics about some of those challenges including a shortage of available workers.
AMP: How is the shortage of drivers, and even other industry workforce positions like diesel technicians, impacting the industry in Arkansas?
Newton: Since the pandemic began, capacity in the industry has been as tight as it has been in years with demand being driven by a sharp increase in online shopping as well as retailers and shippers working to replenish depleted inventories. With more economic stimulus, the first six months of 2021 are expected to be a lot like the last six months of last year in terms of consumer demand and online shopping.
Complicating the demand for trucking are the ongoing national driver and diesel technician shortages. According to the American Trucking Associations, in 2018, the trucking industry was short roughly 60,800 drivers, which was up nearly 20 percent from 2017. The driver shortage is further driven by the strength of the U.S. job market overall with truckers and would-be-truckers having their pick of jobs and along with it, wages and benefits, forcing carriers to offer competitive wages to attract talent. The same goes for technicians; with more trucks on the road, there’s a greater need for people who are trained to keep them in service.
AMP: Can a renewed focus on workforce development and skills training — more high school graduates opting for technical schools over the traditional college path — help in the short term?
Newton: Yes, absolutely, which is why we are proud to offer a diesel technician scholarship for graduating high school seniors. For the fourth consecutive year, the Arkansas Trucking Association plans to award scholarships of up to $7,500 to students interested in pursuing a career as a medium- and heavy-duty truck technician. ATA established the Carl Tapp Memorial Scholarship Fund in 2017 to encourage growth in the state’s technician workforce and to unlock a career path for students.
Where drivers are concerned, we’re missing an opportunity to recruit straight out of high school. Currently, there is a requirement that professional drivers be at least 21 years old to engage in interstate commerce. We’re simultaneously pursuing a pilot program currently underway with the FMCSA and also legislation (DRIVE SAFE Act) at the federal level that would allow 18-year olds to enter the industry.
AMP: How do trucking companies balance a shortage of drivers with an increased demand for their services?
Newton: Demand for freight movement is quickly outpacing the availability of trucks and drivers. As with any demand-driven market, customers are going to pay more for the short supply. Additionally, carriers are able to be more selective about which shipments they accept.
AMP: How are rising insurance costs impacting the industry in Arkansas? Are lawsuits from injury lawyers driving much of this?
Newton: Each year, the American Transportation Research Institute (ATRI) conducts a survey of the trucking industry’s top concerns. The driver shortage has long been at the top of the list but in 2020, insurance rates and insurance availability came in at No. 5.
ATRI also pointed out that these large legal verdicts, or “nuclear verdicts,” have been rising sharply since 2006. Awards of $10 million and more can be leveraged against trucking companies, even when they’re not at fault. These nuclear verdicts are driving providers out of the market, putting continuing pressure on insurance rates, and impacting all carriers bottom-lines, even forcing some to shut their doors for good.
Over the course of the 93rd Arkansas General Assembly, we supported legislation to help businesses recoup costs from claims where the employer was not at fault. The bill ultimately failed, but we were able to heighten awareness of high insurance rates, unfair judicial practices and the negative impacts on all employers.
AMP: What about the transition in Washington, D.C.? Do you anticipate any changes in regulations or policies?
Newton: The new administration has made it clear that infrastructure is a priority, and we are pleased they recognize the need to modernize and revitalize our nation’s aging transportation system. But the American Jobs Act as laid out is untenable, and there is still a lot of work to do when it comes to working out the details. We need to focus on establishing a true infrastructure-funding mechanism that is equitable and sustainable to address the Highway Trust Fund shortfall.
Additionally, the Protecting the Right to Organize (PRO) Act would upend the independent contractor model on which so much of trucking is built. It imposes the same controversial language included in California’s Assembly Bill (AB5), which would mis-classify some 350,000 small business owners as company employees, forcing many to close up shop. Even if the PRO Act ultimately fails in Congress, it’s pretty clear that policies and guidance from Department of Labor will reflect the Biden administration’s position on independent contractor versus employee.
AMP: Issue 1, passed in November by Arkansas voters, will continue to dedicate revenue from a 0.5 percent sales tax to state and local highways, roads and bridges. Just how important was its passage for Arkansas’ infrastructure, and what are the state’s most pressing needs right now?
Newton: The total revenue that will be generated for Arkansas roads as a result of Issue 1 is $290 million annually — $205 million goes to the Arkansas Department of Transportation and the remaining $85 million will be split between Arkansas cities and counties. Arkansans understood the need for this vital funding in their cities, counties and all across the state and voted in favor of Issue 1.
The trucking industry relies on all types of infrastructure throughout the state, which is one of the great things about Issue 1. Whether you are talking about farm to market roads, delivering commerce to communities in rural Arkansas or safely and efficiently passing through town, every corner of the state will benefit from this permanent funding mechanism to maintain our highway system.