THE TRUCKING INDUSTRY, the backbone of the U.S. economy, is carrying more weight than ever despite a critical shortage of drivers. And now this compression point is sending waves of pain through the supply chain from distributors and wholesalers to retailers and consumers in the form of fast-rising shipping costs. Even Amazon and its Prime members are feeling the pinch.
This predicament was a long time coming. An aging driver population that continues to dwindle owing to retirement—combined with a lack of younger workers coming into the industry—is a problem that has been festering for 15 years. The Great Recession and the years of recovery that followed largely masked the problem. But by 2012, with the U.S. economy strengthening, fissures began to show.
Trucks moved more than 70% of all U.S. freight and generated $719 billion in revenue in 2017, according to the American Trucking Associations (ATA).
“We could see the demographics, and now they’re finally hitting home,” says Brian Fielkow, president and CEO of Jetco Delivery, a trucking and logistics company based in Houston. “This isn’t something we just woke up to.”
The pain point is specific. The industry calls them “full-truckload, over-the-road nonlocal drivers,” jargon for drivers who haul goods over long distances, often days, if not weeks, before returning home. That lifestyle just isn’t attracting millennials and the incoming Gen Z cohort who place a greater emphasis on work/life balance.
The long-haul sector, which employs around 500,000, was in need of nearly 51,000 truck drivers by the end of 2017, the worst shortage it had ever seen.
The lack of qualified drivers—some trucking companies have complained only 1% to 2% of applicants meet their requirements—has businesses competing for the same pool of workers.
The shortage is creating a ripple effect. Companies vying for qualified workers are offering higher pay and signing bonuses. The median pay for drivers in this category is $59,000, according to the ATA. Experienced drivers who work for private fleets can make as much as $86,000 a year.
“I call it the free agency of trucking,” says Bob Costello, senior VP at the ATA, adding that the annualized turnover rate is 94%.
To keep up, shipping rates are rising. In 2017, the average revenue per mile, excluding fuel surcharges, increased 15% on a year-over-year basis. “I don’t think I’ve ever seen rates so high,” says Costello. But margins, which hover around 5%, haven’t budged because trucking companies pour that additional revenue into recruiting and retaining drivers.
Consumers are just starting to feel the effects: Amazon recently increased its Prime membership fee, which includes free shipping, from $99 to $119 a year.
The company, which saw shipping costs increase 38% in the first quarter compared with the same period last year, noted the rising price of transporting goods as one factor behind the decision.
Though the common wisdom is that self-driving technology will eliminate the need for human drivers, it could actually help in recruiting them and reducing costs, at least in the short term.
“It begins with driver assistance systems—that technology is here today,” says Ted Alling, a managing partner at early stage venture firm Dynamo and cofounder and former CEO of logistics company Access America. Major truckmakers like Freightliner and Volvo are rolling out technologies such as lane-keep assist and adaptive cruise control that are already found in premium passenger vehicles. Those technologies could lower the barrier to nonlocal trucking and increase the pool of drivers that fleets can recruit from.
“I do see technology as a way to bring driversback into the truck, not as a way to kick them out,” says Fielkow. “And the day will come when we have autonomous infrastructure and autonomous trucks. I just don’t see it happening in the next five years.”
A version of this article appears in the July 1, 2018 issue of Fortune with the headline “America: Who’ll Keep on Truckin’?.”