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Celadon chairman sees mixed future for trucking with driver shortage

Steve Russell, chairman and chief executive officer of Indianapolis IN-based truckload carrier Celadon Group, foresees many challenges clouding the trucking landscape in the near future. This is despite strong earnings posted and projected by the industry for the balance of 2005.

“In our view, there is clearly a capacity shortage, largely the result of an overall shortage of competent drivers, partly the result of the hours of service (HOS) changes that took place in early 2004 and partly due to the demographic characteristics of the industry,” he said during a press conference recently.

“(Our) aging driver population is not being replaced by young people, and the industry (is) anticipating that we are likely to face an almost alarming shortage of drivers in the years ahead,” Russell said. “It does not appear to be a pay issue, but more of a lifestyle one — and continuing changes in HOS regulations exacerbated the problem. Further, the ATA (American Trucking Associations) indicates that (driver) turnover among large fleets is now averaging approximately 125% and about 90% in the smaller fleet segment.”

Despite strong third quarter earnings reports from most major truckload and LTL carriers and a lack of capacity that is pushing up rates, the trucking industry isn't growing, he said.

“Anecdotally, Class 8 truck manufacturers are indicating that their customers are simply replacing older units, and not growing their fleets,” Russell said. “Companies that finance the industry, including such as GE Capital, are indicating that they are seeing no growth among existing fleets and virtually no start-ups. Higher fuel prices are impacting this, but the core issue still appears to be a lack of drivers.”

Russell stressed that opportunities remain for carriers to both strengthen and diversify their freight mix to better insulate themselves from economic ups and downs in the future.

“This is an industry where capacity is short, so we can make the decisions necessary to strengthen the financial performance of our company,” he said.

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