Driverless Trucks Impacting Capacity

Think driverless trucks are a futuristic fantasy? Plenty of truckload carriers would tell you they have too many driverless trucks today — all parked against the fence for lack of drivers. Truckload carriers say the rising cost of putting drivers in trucks and keeping them is a major obstacle to expanding truckload capacity, even as freight demand and rates climb higher.

Covenant Transport’s recent financial earnings underscore how trucking is being short-seated and short-changed by a driver shortage. In the first quarter, 5.6 percent of the truckload carrier’s average fleet of 2,652 tractors was parked for want of a driver — nearly 150 trucks.

That’s up from 4.4 percent of 2,846 tractors, or about 125 trucks, a year ago. The number of unseated trucks increased, and increased as a percentage of the total fleet, despite a 6.8 percent reduction in the average number of tractors operated by Covenant.

Those unseated or “open” trucks contributed to a 1.5 percent drop for the quarter in freight revenue, to $126.3 million, at Chattanooga, Tennessee-based Covenant. With fuel surcharges also falling, the carrier’s total revenue declined 2.3 percent year-over-year to $161 million.

The drop in freight revenue came at a time when freight demand and the rate environment were favorable, Covenant said, but qualified professional drivers “remained in short supply.”

Covenant, the 15th-largest truckload carrier, lost $1.4 million in the quarter, compared with a $2 million net loss a year ago. The rollout of an enterprise management system at subsidiary Southern Refrigerated Transport cut operating profit by $900,000. Most of the implementation issues were resolved by March, the company said in its earnings statement.

Despite the drop in freight revenue, Covenant, No. 32 on the JOC’s list of the Top 50 Trucking Companies, managed to increase average revenue per tractor per week 1.7 percent to $3,284 and lift average freight revenue per total mile 3.2 percent, so the company is getting more money out of each tractor-trailer as it reduces the size of its fleet.

This year, the company plans to cull more older trucks and buy a smaller number of new ones, reducing its fleet size by 2 to 3 percent. “In the first quarter of 2014, we took delivery of approximately 125 new company tractors and disposed of approximately 300 used tractors,” Richard B. Cribbs, senior vice president and CFO, said in the statement. In 2014, Covenant plans to sell 1,250 used tractors and buy 950 new ones, he said.

Even if unseated trucks represent only a small portion of any one truckload carrier’s fleet, collectively they represent a significant amount of idle capacity that shippers can’t use, said Mike Regan, chief of relationship development at logistics firm TranzAct Technologies.

“We’re not bringing new drivers into this industry,” said Regan, who also chairs the advocacy committee for shipper group NASSTRAC. “I talked with one truckload carrier executive recently who said we’re not hiring new drivers, we’re getting drivers by poaching them.”

The number of heavy truck or tractor-trailer drivers in the U.S. increased 1.9 percent in 2013, according to the U.S. Bureau of Labor Statistics, but is still 6.4 percent below its 2007 peak. Trucking companies will have to raise driver pay by as much as 15 to 25 percent to attract more drivers, the chairman and CEO of Knight Transportation said last week.

“We are very aggressively taking a large portion of what we’re able to receive in terms of rates and making sure that we give that to our driving associates,” Kevin Knight said.