While the economy continues to grow, businesses are struggling to meet demand for trucking services amid a persistent shortage of drivers, according to a Federal Reserve report.
Continue Reading Below
The central bank’s Beige Book, a collection of anecdotal reports from 12 U.S. districts, noted on Wednesday that six of those districts specifically cited limited trucking capacity as an issue that’s causing prices and wages to rise.
In the Richmond district, trucking firms experienced record demand for their services, but some of that demand was unmet due to a lack of available commercial drivers.
“Trucking firms continued to see strong growth and record-setting months,” the Fed wrote. “A Virginia freight hauler increased its fleet while other companies around the district said they would expand more if they could hire more drivers.”
Companies have hiked wages in hopes of finding and retaining truck drivers, which in turn has led to higher freight costs, according to the Fed. The American Trucking Associations (ATA) said the industry was short more than 36,000 drivers in 2016, and the shortage is expected to grow to 174,000 drivers by 2026. The ATA has also said trucking firms need to hire nearly 900,000 new drivers through 2026 to keep up with demand.
One trucking company in the St. Louis district said it offered the largest one-time pay increase in its history, while demand for railroad shipping increased as companies looked for transportation alternatives.
Retailers in the Richmond district noted that trucking shortages have led to long lead times and an increase in shipping expenses. In other districts, businesses said they were only partially able to pass those higher costs onto customers, which caused profit margins to shrink.
Business contacts in Boston told the Fed that higher freight costs continued to be an issue across different industries, citing the driver shortage.