How The Supply Chain Crisis Is Being Solved

The supply chain is volatile. There have been many problems of late, and we continually hear about overland trucking issues causing additional delays after merchandise finally gets unloaded from delayed cargo ships.

Christmas 2021 was a nightmare, and companies like Walmart
WMT
and Costco now have their own cargo ships to expedite merchandise to U.S. ports. Even with that extra effort to better control the flow of products, trucks have to expedite the merchandise to distribution centers and eventually to stores so it can be sold to customers.

Our dependence on reliable overland trucking is essential since we receive much wanted merchandise from Asian countries. A recent study shows heavy turnover of drivers, a huge percentage of which could have been prevented. In a study by WorkStep, a company that focuses on worker retention, the data found that 75% of turnover could have prevented. According to their survey, pay ranked 2^nd (up from 7^th rank) for drivers leaving their job. The top reason for driver turnover was career growth.

In 2021, the turnover of drivers was 55%; that prompted companies like Walmart to take action and respond to the problem. Today, Walmart drivers can make up to $110,000 a year. That is twice as much as the average truck driver takes home. Such salary levels can present a challenge for major companies, but it will pay off. This action by Walmart certainly will retain and attract new workers.

According to Andrew Keshner of MarketWatch, Walmart drivers made up to $87,500 in their first year on the job. Drivers with more than one year of service now have the potential to earn more than $110,000 according to the company. “We are seeing historic pay increases like this [Walmart action] industry-wide, as carriers look to recruit new drivers amid a national shortage that was exacerbated by the pandemic” according to American Trucking Association spokesman Jeremy Kirkpatrick.

Overall, the general freight trucking industry has about 940,600 drivers according to the Bureau of Labor Statistics’ preliminary data. That includes short and long-distance drivers, with the industry having added 40,000 more workers this year compared to the same period last year. However, Chris Spear, CEO of the American Trucking Industry, said that the industry needs another 80,000 drivers if it is going to meet consumer demand. “We are seeing unprecedented pay increases across the industry. Weekly earnings are five times the historical average and fleets are dangling sizable, five-figure sign-on bonuses and full benefits as they compete for the same limited pool of drivers,” said the American Trucking Association in a blog.

Walmart is creating a training program for prospective drivers and in some areas even paying for commercial driver’s licenses. There are already about 12,000 drivers in Walmart’s fleet, and Walmart is in a hiring mode for more drivers. Walmart said, “our transportation team will continue to grow with our business, and we will continue to invest in them along the way.”

Driver job concerns have changed in recent years. For instance, safety dropped as one of the driver’s main concerns, scheduling now ranks 11^th, but job expectations jumped to 3^rd spot, and the #1 reason for leaving remains career growth. Workers are looking for positions that offer a path for promotions and opportunities for advancement in their careers.

High driver turnover (as mentioned above) and the overall shortage of drivers prompted Workstep to act. WorkStep raised $25 million in a Series B funding this past January to combat workforce shortage by transforming how enterprises hire and retain workers. (The investment brings its total capital raised to $42 million.) Dan Johnston, co-founder and CEO of WorkStep, said to me: “Business cannot be successful without the right people on the frontlines – but for too long, workers were seen as dispensable. The pandemic changed things. Now companies see how essential supply chain workers are. Leading brands are trying to find ways to retain their workforce long-term – and it all starts with listening and driving change.”

Johnston continued, “Without listening to employee feedback, many employers assumed it is all about pay. This is an expensive assumption to make. The number one reason for supply chain turnover is the lack of career growth. The most valuable part of my job is knowing that we don’t just help people find roles, we help them find a career where professional development is at the forefront.”

POSTSCRIPT: We are living in uncertain times. Prices are rising as interest rates are being ratcheted up. Some merchandise remains in short supply as the supply lines are still clogged, and the conflict in Ukraine delays critical materials. Stores are telling their customers that they will deliver faster directly to their homes. A swift, reliable supply chain is critical in this environment, and WorkStep is a critical link to solve some of the logistics problems.