Trucker shortage: There are almost '400,000 self-employed truckers,' Convoy research director says

Convoy Director of Economic Research Aaron Terrazas illustrates bottleneck and supply chain shortcomings in the trucking industry, where companies are finding labor shortages in despite an abundance of drivers.

Video Transcript

- And from one type of fuel to fueling controversy, truck drivers have been given a raw deal, being blamed for exacerbating supply-chain and shipping delays, affecting what we see on store shelves this holiday season. That is the contrarian viewpoint of our next guest, Aaron Terrazas, director of economic research at Convoy. Sir, thank you so much for being here. Make that case for us, if you will.

AARON TERRAZAS: No, thanks for having me. I think the main takeaway here is that a lot of the data and the metrics that we use to come to this conclusion that there's not enough truckers out there is based on a data set, kind of the BLS jobs data that we all know and love. But that data set doesn't include about 30% to 40%, 300,000 to 400,000 truckers who are self-employed. They're called owner-operators in the industry.

And that segment has been growing very quickly over the past year. It's been growing very quickly for a number of reasons. The freight market is tight. Prices are high. It's very attractive for experienced drivers to go independent right now.

On top of that, we saw a number of older drivers, drivers in the 50 to 60 age range, exit the market back in 2020. They are now starting to come back. You know, briefly, there was a moment in time when millennials surpassed boomers as the second-largest cohort of these independent truck drivers. That's no longer the case. Boomers have overtook them again over the past couple of months.

So, you know, I think the main point here to take away is, you know, there has to be a difference between a cyclical and a structural shortage. No doubt that it is a moment of strong demand. We're going to the holiday shopping season. No one believes that that demand is going to be permanent, and trucking companies are hiring. They're hiring, and they're growing in that owner-operator segment, and they're hiring to their long-term needs, not necessarily what they need at this particular moment, this particular day.

ALEXIS CHRISTOFOROUS: So, Aaron, this is definitely a contrarian way of looking at it. And you say that there are also-- there's data out there that suggests that trucker employment is actually back at or even higher than prepandemic levels. Which areas within trucking are you seeing that right now?

AARON TERRAZAS: That's right. So again, when you step away from the BLS data, you take into account all of these independent drivers that are not counted, self-employed drivers, 300,000 to 400,000 of them, total truck-driver employment-- that's the number of people sitting behind the wheel of a big rig. That doesn't include kind of back-office workers. That doesn't-- you know, it doesn't include kind of those independent drivers. That number is back where it stood in January 2020, perhaps slightly above that number.

- When you're talking to some of these drivers out there, what are the biggest frustrations and concerns that they have and that they're dealing with and that they feel, you know, maybe their message isn't getting across?

AARON TERRAZAS: Yeah, I mean, I think for drivers kind of the first and foremost issue top of mind is always am I going to be able to make a living? And when we think about how they're able to make a living, it surprises a lot of folks. Drivers, truckers out there, you know, they'll drive a load from point A to point B, but most people don't realize that at point A and point B, they are effectively waiting two hours for the trailer to be loaded or unloaded. That is time that these independent drivers are not getting paid. They are paid by the mile.

And so, you know, increasing their productivity allows them to earn more. And I think the industry is experimenting with a number of ways to help those drivers become more productive, things like detaching the trailer from the truck. That's a model called drop and hook. We do it. Lots of folks do it. And effectively what that does is it gives that driver an hour and a half back for them to be kind of driving, doing what only they can do for the time being and not wasting time sitting at a warehouse.

ALEXIS CHRISTOFOROUS: How do self-employed truck drivers get factored into all of this, Aaron? Are they part of those BLS numbers?

AARON TERRAZAS: They are not. So the BLS data are based on something called payroll employment. That does not include people who are self-employed. And as I said, 30% to 40% of truck drivers are self-employed.

And on top of that, there's a couple other unique features of the BLS data. For instance, they tend not to capture newly incorporated firms, job growth at new firms because of how the data are collected. And they tend to do a poor job at capturing workers between jobs. There has been a lot of churn, turnover between jobs in the trucking industry. And so I think all of those factors are a number of reasons that are weighing on the headline BLS data.

- And I wanted to ask you really quickly about something you said in your note. "It doesn't make sense for small or midsize companies to adjust to today's needs but to be more forward looking and think about future hiring needs." What do you mean by that?

AARON TERRAZAS: Yeah, as I said, kind of right now this is a moment of peak freight demand. We are going into what is expected to be a record holiday-- online holiday shopping season, all of the port congestion. That means truck demand is uniquely high for seasonal, for kind of reasons related to the pandemic recovery. I don't think anyone in the trucking industry believes that that is a permanent feature of the economy moving forward.

You know, come March, come April, come this time next year, I think it's fair to say that aggregate demand for trucking services will probably be lower than it is right now, and trucking companies are smart. They realize that, and they're planning for their future needs. They're going to take on a driver who they can support in the long term, not someone that they're just going to let go after a couple of months.

- OK, really interesting stuff there. Aaron Terrazas, director of economic research at Convoy, thank you so much for your time today, sir.