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England announces pay raises, eCommerce impact on trucking, TCA announces best fleets 2/8/2019 Is a guaranteed minimum pay the solution to the driver shortage? 2/6/2019 Long CDL testing wait times cost economy billions of dollars; not helping driver shortage 2/4/2019 Friday Short Haul -- Walmart hiring, Uber Freight App, Speed-limiter Law, America's Road Team 2/1/2019 Cranking -- The Good, The Bad, and the Ugly 1/30/2019 California survives challenge to its low-carbon fuel standards 1/28/2019 Friday Short Haul - Highway robbery ... autonomous trucks ... new trailers 1/25/2019 LithiumHub enters jump-starter market with Jumpbooster JP30 1/23/2019 2019 Looks Good For The Transportation Industry 1/21/2019 Raymond Burt named TMC Trainer of the Month for February 2018 3/28/2018 TMC Transportation Announces Recipient of Prestigious Wheel Master Award 3/7/2018 TMC Transportation Named The Home Depot’s Flatbed Carrier of the Year For Fourth Straight Year 2/28/2018 Pay Raises & New Peterbilts for PAM Drivers 2/26/2018 New DOT Drug Testing Rules Effective Jan 1, 2018 1/11/2018 Amtrak Derailment: Trucks Haul 270,000 Pound Locomotive Engine During Cleanup 12/21/2017 Pepsi Places Largest Order Yet For Tesla Electric Trucks 12/12/2017 Kavin Hallett named Trainer of the Month for October 2017 12/8/2017 Over 100,000 Truck Drivers Likely Have Undiagnosed Sleep Apnea And More Testing Is On The Way 8/10/2017 Drivers Share Their Best Tips, Tricks, And Secrets For Life On The Road 7/18/2017 Drivers Are Losing Money By Taking The Wrong Approach 7/13/2017 Truckers and Guns: What Is and Is Not Legal 7/6/2017 Preparing To Go Solo For The First Time? Experienced Drivers Share Their Best Advice 6/29/2017 The Truck Stop Survival Guide: Advice From Experienced Drivers 6/15/2017 The Worst Cities For Traffic In The U.S. For 2017 6/8/2017 We Ask Drivers How They Would Make The Logbook Rules Better 5/30/2017 Self Driving Trucks Are Not Coming Anytime Soon 5/25/2017

Retailers blame driver shortage for price increases

Dave Wickenhauser on Wed, March 6, 2019

Last Updated: Tue, April 16, 2019

At what point is the American public going to stand up and take notice of the truck driver shortage?

According to spokespeople for the retail industry, that time is right about now.

Faced with higher shipping rates because truck companies are passing on increased costs to their freight customers many companies prominent in the retail and fast-food industry are passing those higher fees right on to consumers.

According to recent news from Material Handling & Logistics, these companies, many of which are household names, like Proctor & Gamble, Hasbro, and McDonald's are raising prices, focusing on productivity improvements, seeking alternative shipping or looking into opening new distribution centers to try to close the distance gap in the distribution chain.

Procter & Gamble, maker of many ubiquitous household items like Tide detergent, Bounty paper towels, Crest toothpaste and Pampers diapers, is feeling the pinch from a 25-percent increase in shipping costs, and raised prices last year on some products. They say it is too early to announce prices for 2019.

TJX's HomeGoods furniture is opening more distribution centers in the United States, while Hasbro is opening a new hub in Joliet, Illinois, due to an increase in shipping costs in 2018.

MacDonald's franchisees are at the mercy of company headquarters for setting prices on their menu items, but the company is facing increased shipping rates by its distributor, Martin-Brower, that ships to more than 12,000 restaurants in the United States. Fans of MacDonald's fast food can expect to see an increase in prices.

Even online ecommerce giant Amazon says freight costs consistently outpace online sales growth. Prime customers have already felt the pinch by experiencing a 20-percent Prime membership fee to $120 last year, the first increase since 2014.

Rail might be an alternative shipping solution for some in the industry, but it won't be for everybody. Bloomberg Intelligence analyst Lee Klaskow said rising rates are even spreading to rail. And rail is not as flexible as shipping by truck directly from point to point.

This problem of increasing prices to consumers is in large part the flip side of what the trucking industry considers a solution for the ongoing shortage of drivers – to increase driver pay and to offer better (and more costly) working conditions.

The lack of drivers prevents trucking companies from adding capacity to their fleets in order to meet the increase demand for shipping. The end result is that because of increased wages, and not enough equipment to move freight, carriers are raising shipping prices. It's the law of supply and demand.

Klaskow sees this as a no-win situation, however. He told MH&L that pay bumps haven't alleviated the driver shortage, that autonomous trucks are still in the future and even lowering the interstate driving age to 18 won't help much.

According to a recent Consumer Affairs article the government's Producer Price Index reports that transportation and warehousing costs have gone up 6.8 percent in the past 12 months. Not all that increase can be attributed to trucking costs, but shipping rates are a significant factor.

The article stated further that driver pay and perks will continue to increase for the foreseeable future, according to American Trucking Association Chief Economist Bob Costello.

On the positive side, Brittany Weissman, an Edward Jones analyst, told Bloomberg that companies are in a better position to deal with freight cost issues now that when the problem first surfaced.

“Last year, the higher transportation costs caught a number of companies off guard versus this year, they were expected,” she said. “Plus, many companies have the benefit of price increases to help offset input cost like higher transportation cost.”

Sources: MH&L, Consumer Affairs, Zero Hedge. Bloomberg, Supply Chain Digest

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