Truck Driver Shortage Creating Supply Chain Challenge for US Businesses

Truck Driver Shortage Creating Supply Chain Challenge for US Businesses

The rapid growth of e-commerce, a strengthening economy, and a rebounding in consumer spending habits have caused a spike in demand in the US trucking industry over the past few years. At the same time as the need for their services is growing, however, the country is facing a shortage of truck drivers, Kirsten Korosec reports at Fortune, with an aging population of drivers exiting the workforce and fewer young Americans willing to sign up for long, lonely hours on the road:

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.

The truck driver shortage is not new: At CEB, now Gartner, our State of the Labor Market report for the US late last year showed that heavy and tractor-trailer truck drivers had the highest demand of all occupations, followed by registered nurses. Demand for trucking skills has been growing rapidly, but with experienced drivers retiring and not being replaced by new talent, the segment of the labor market with this skill is very small. (CEB Recruiting Leadership Council members can read the full report here.)

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Teamsters Seek Protection Against Automation in UPS Contract

Teamsters Seek Protection Against Automation in UPS Contract

In the round of contract negotiations that began last week between the Teamsters Union and UPS, one of the union’s key demands is a pledge by the parcel delivery company not to use drones, driverless cars, or other automated technologies to do their jobs, Paul Ziobro reported at the Wall Street Journal. Negotiations over the collective bargaining agreement, which covers some 260,000 UPS employees, come at a time when e-commerce has drastically increased demand for more, better, faster delivery services, and UPS and its competitors are trying to keep pace.

In their 83-page draft of the updated contract, the Teamsters are also demanding a ban on deliveries after 9:00 p.m. and a commitment to hire another 10,000 workers, as well as safeguards allowing employees to refuse to work in unsafe conditions or overloaded trucks. The union is driving a hard bargain, as the labor market is tight and delivery companies are already having a hard time finding the workers they need.

Indeed, even as technology drives up demand for new roles in high-tech fields like software engineering and data science, the explosion of online retail is also expanding the market for warehouse and logistics workers to fulfill all those orders. Our research at CEB, now Gartner, bears out this trend: Our 2017 State of the Labor Market report, which CEB Recruiting Leadership Council members can access here, found that tractor-trailer driver was among the fastest-growing jobs in the US between 2016 and 2017, even as the scramble for tech talent captured the headlines.

Given the widespread concern that new technologies will displace millions of workers in routine jobs like transportation, it’s not surprising to see this issue come up in a union contract negotiation—and this won’t be the only time it does.

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What Jobs May Come From AI and Driverless Cars?

What Jobs May Come From AI and Driverless Cars?

With AI and machine learning taking on an increasingly major role in the workplace, prognosticators are divided on whether these technologies will result in the mass displacement of human workers or create so many new jobs that their net impact on employment is ultimately positive. In his latest piece for the Wall Street Journal, Greg Ip, a member of the techno-optimist camp, uses an example from the past to illustrate why he’s not worried about AI taking everyone’s jobs:

Until the 1980s, manipulating large quantities of data—for example, calculating how higher interest rates changed a company’s future profits—was time-consuming and error-prone. Then along came personal computers and spreadsheet programs … The new technology pummeled demand for bookkeepers: their ranks have shrunk 44% from two million in 1985, according to the Bureau of Labor Statistics. Yet people who could run numbers on the new software became hot commodities. Since 1985, the ranks of accountants and auditors have grown 41%, to 1.8 million, while financial managers and management analysts, which the BLS didn’t even track before 1983, have nearly quadrupled to 2.1 million.

Just as spreadsheets drove costs down and demand up for calculations, machine learning—the application of AI to large data sets—will do the same for predictions, argue Ajay Agrawal, Joshua Gans and Avi Goldfarb, who teach at the University of Toronto’s Rotman School of Management.

Accordingly, Ip posits that AI and machine learning will make certain skills obsolete but open up new opportunities for more valuable and productive work that uses these technologies as tools to improve human decision-making. Deloitte US CEO Cathy Engelbert and managing director Scott Corwin recently advanced the same argument about self-driving cars and trucks at Quartz, dismissing fears that these technologies will kill jobs:

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How a Self-Driving Truck Startup Handles Its Cultural Divide

How a Self-Driving Truck Startup Handles Its Cultural Divide

Most of the conversation around self-driving cars has focused on how companies like Uber plan to use them to further disrupt the taxi market, as well as on the competition between legacy automakers and tech companies for AI and machine learning talent. Perhaps the most significant opportunity promised by autonomous vehicle technology, however, is the potential for automation in trucking—not to mention the most disruptive, as there are approximately 3.5 million truckers currently working in the US, according to the American Trucking Association. Automation would fundamentally change the nature of these truckers’ jobs, in some ways for the better, but could also put many of them out of work.

One San Francisco-based startup, Starsky Robotics, is currently working on developing a driverless truck, with the ultimate goal of enabling a single “driver” to manage several trucks remotely. In the meantime, however, the company’s trucks are in beta testing and earning revenue by carrying goods around the country with two employees in the cab: A trucker at the wheel and a software engineer riding shotgun to monitor the truck’s automated components.

These two sets of employees come from dramatically different cultures and differ greatly in their education, politics, life experiences, interests, and opinions, so getting them to work together effectively is naturally a challenge. In a recent profile of the startup, Starsky’s co-founder and CEO Stefan Seltz-Axmacher told Bloomberg Businessweek’s Max Chafkin and Josh Eidelson how he prepares them both for the inevitable culture shock:

This is a company that employs truck drivers, is how the talk begins. The coders are sometimes taken aback—this differs from the usual change-the-world spiel deployed in hiring meetings. Truckers have very different ideas and different experiences from people like you, Seltz-Axmacher continues. Statistically speaking, many of them are Trump voters. They will say things that you may find startling. Not in a malicious way, but because people from, say, rural West Virginia talk differently than people from San Francisco. Can you handle that?

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Can Big Auto Sell Millennials on Michigan?

Can Big Auto Sell Millennials on Michigan?

Last year, we looked at the changes legacy US automakers have been making to their corporate cultures and recruiting practices in an effort to lure talent away from Silicon Valley and into the increasingly high-tech field of automobile design and manufacturing. Bloomberg Tech checks up on what these companies are doing now to entice tech talent, particularly millennials, to choose Detroit over Palo Alto:

What Detroit has going for it is the ability to get innovative cars on the road relatively quickly. That can be appealing for young auto-techies bent on changing the world. Then there’s the cost of living, dirt cheap in Detroit compared with the Valley, along with modern urban lofts sprouting among the gritty downtown streets.

Still, Detroit remains a tough sell, given the Valley’s $1 million signing bonuses and fat equity stakes in promising startups. The car companies’ answer tends to fall in the work-life balance category, with features that have become almost cliches such as treadmill desks and “hoteling” stations for staffers passing through. …

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Did Alphabet’s Car Project Over-Compensate and Lose Top Talent?

Did Alphabet’s Car Project Over-Compensate and Lose Top Talent?

The race between Detroit’s legacy automakers and the tech visionaries of Silicon Valley to develop and market self-driving vehicles has been a major battleground in the war for talent with scarce skills in artificial intelligence and other cutting-edge technologies. The competition among major companies in this space has been heated, driving up the value of AI talent and potentially making it more difficult for smaller firms and universities to attract or retain these experts.

Ironically, however, the high salaries on offer may not be doing as much as you’d think to help the tech giants hold onto these stars. Looking at Alphabet’s self-driving car unit, Waymo, Bloomberg Technology writers Alistair Barr and Mark Bergen observe that with its unusual compensation system, the project may have driven key talent out early on by essentially paying them too much money:

Early staffers had an unusual compensation system that awarded supersized payouts based on the project’s value. By late 2015, the numbers were so big that several veteran members didn’t need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. …

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Ford Makes a Move in the AI Talent War

Ford Makes a Move in the AI Talent War

The automotive giant has entered the fray with a $1 billion purchase of a majority stake in Argo, a Pittsburgh-based artificial intelligence startup founded by former top engineers from the self-driving vehicle divisions of Alphabet and Uber, Recode’s Johana Bhuiyan reported on Friday:

This is the largest investment a traditional auto manufacturer has made in self-driving technology. General Motors acquired self-driving startup Cruise for $1 billion last year, and Uber bought autonomous trucking company Otto for $680 million, also last year. Ford will dole out the $1 billion over a five year schedule but will immediately become the majority shareholder. The company declined to disclose its specific stake, but the investment would value Argo at over $1 billion.

Ford says Argo will remain headquartered in Pittsburgh and operate with substantial independence. Both Ford and Argo elect two board seats, with a fifth independent position. Ford plans to install Raj Nair, head of research and development, and Vice President John Casea to the board.

Ford’s AI buy follows on similar moves last year by General Motors, as a talent war shapes up between Silicon Valley and Detroit for the scarce, precious resource that is AI talent. This race between the legacy auto manufacturers, tech giants like Google, and upstarts like Uber and Tesla to develop self-driving cars and beyond is part of manufacturing’s high-tech evolution. Factories, like all of us, are digital employers now.

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