SPAN Blog

Wednesday, August 12, 2020

Something We Need Is Facing Enormous Challenges

Edward Dzialo 8/12/2020

 



Maybe people won’t realize the sheer importance of the trucking industry until its too late. Our reliance on truckers is not up for debate: truckers move 70% of all the freight in the US, 80% of all US communities depend on this industry to provide everyday goods. Look around your house, your office, your kitchen, and there is little to no chance that something you’re looking at wasn’t—at one time—delivered by a truck.

If you’re still on the fence about just how vital the trucking industry is, think about what our economy would look like without it. For instance, there would be no fuel at gas stations. Grocery stores would be empty. The days of clicking on a product with your smartphone and seeing it on your doorstep days later would stop. And trucks don’t just deliver goods. Think of garbage trucks, cement trucks, trucks that deliver cars, cement, building materials.

When we talk about the economy, indirectly, we are talking about truckers too. One can’t thrive without the other. If there’s a threat to the trucking industry, it’s something we all need to pay attention to. Two things we must take note of are truck driver shortages and nuclear verdicts.

Shortages

This pandemic has not caused a shortage of truck drivers, but it has exacerbated it. The American Trucking Association determined there was a shortage of 60,800 truck drivers in 2018, which was the highest it has ever been. There was a slight dip in the shortage in 2019: 59,500.

The most alarming thing they stated was that the shortage would increase to 160,000 by 2028. That’s a 166% increase from the highest shortage we’ve ever had. 

Why There’s a Shortage


To point to the coronavirus would be too simple. 21 states (22 if you include Washington D.C.) have shut down their Department of Motor Vehicles.

Why is that an issue?

In those states, there is no way for a new driver to get their Commercial Driver’s License (CDL). This equates to roughly an 85% decrease in new drivers. Instead of 20,000 new truckers a month, the numbers have dropped to less than 3,000.

Recall that at the beginning of this article that we talked about how important the trucker is to the US economy. How many times have you heard someone talk about the economy? How often does that conversation follow with a concern about the trucking industry? I’d be willing to guess it would be seldom, if ever.

Trying to improve the economy without getting more truckers is futile at best. To lessen the impact, our government has extended the deadline to renew CDLs. So if you already have one, they don’t want it to lapse.

But there still needs to be a way where we get more CDLs into the hands of new drivers if we want to stop this massive shortage.


Nuclear Verdicts


There are a few ways to define what a nuclear verdict is. One such definition says it is when the jury awards the plaintiff (in this case, the person or persons suing a truck driver or company) more than $10 million.

For our purposes, and when it is applied to the trucking industry, we are talking about lawsuits that follow driving accidents. Particularly ones where the verdict is so large that it shuts down the company.

Of particular importance is how these cases are increasing in both the frequency and the size of the verdict. In 2006, there were four such cases with awards that were higher than $1 million. By 2013, there were 70. SInce 2005, there has been an increase of 235% increases in cases, and between 2017-2018 the average size of the verdict increased by 483%.

The direct consequence of this is that the cost of insurance has increased. And some providers have left the industry altogether. As small as the margins are within the business, the cost of insurance is only going to tighten that space. 

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