National Average Van Rate Sets New Cost Record for July
The nationwide truck driver shortage continues to take a toll on freight costs for distributors, manufacturers, and any other business that relies on trucking companies to move goods. At $2.29 per mile, the national average van rate was the highest it has ever been in July, 51 cents more than a year ago, according to DAT, a truckload freight marketplace. Further, July’s rate was only 2 cents lower than June, which was the highest monthly average ever recorded by DAT Trendlines.
Those rising costs are likely to impact every foodservice equipment distributor or dealer in one way or another because trucks account for 70.6 percent of all tonnage moved within the United States, according to the American Trucking Associations (ATA).
Kevin Brink, director of client solutions for ReTrans Freight, says rate increases are a response to inequality between supply and demand. “Capacity is at a premium for a few different reasons, the main reasons being an over-abundance of freight in the marketplace and a shortage of drivers and hours that they can drive to haul said freight,” he explains. “This is essentially an Economics 101 scenario with supply and demand. Because demand (amount of freight in marketplace) is so high and supply (drivers, trailers, hours of service available) cannot keep pace, carriers have been reacting accordingly: rate increases and yield focus.”
The trend is not likely to subside anytime soon. A 2017 report from the ATA reported that the shortage of qualified truck drivers was expected to surpass 50,000 by the end of 2017. The situation will only become more difficult as current drivers reach retirement age. The ATA found that carriers will need to hire roughly 898,000 new drivers over the next decade, which is about 90,000 annually. Meanwhile, the driver shortage is projected to reach nearly 180,000 by 2026.
If that trend continues, the ATA report warns that there will likely be severe supply chain disruptions, resulting in significant shipping delays, higher inventory carrying costs, and shortages at stores.
“The rising cost of drivers and the shortage of them is certainly a contributing factor in carriers’ decision to alter rates to marketplace conditions,” Brink says.