June 18, 2018
There is a worsening truck driver shortage in the U.S. which threatens to derail close to a decade of economic growth. As businesses struggle with supply chain and delivery issues, the crisis has created an opportunity for lenders.
America is facing an unprecedented shortage of truck drivers, which is also impacting major businesses. When a company can't get raw materials for production or ship completed goods to customers in a timely manner, commerce suffers. One bright spot is that this dilemma is creating some unique opportunities for lenders.
The U.S. continues to face a massive truck driver shortage.
The U.S. is Facing a Massive Truck Driver Shortage
The U.S. economy has been showing healthy levels of expansion for nine years, but that growth is facing a unique threat. A lack of truck drivers in this country threatens to grind that progress to a screeching halt. And the problem is only expected to get worse.
In 2016, the American Trucking Association reported that the industry was short 36,000 truck drivers. The agency now predicts that this shortage is going to skyrocket to 174,000 jobs by 2026. The association estimates that median salary for these positions is $53,000, but the federal government gives a lower figure of about $42,500.
Even though truck driver pay has increased 15% over the past several years, the turnover rate in this occupation is abysmal. Just last year, turnover of truck drivers was as high as 88%, and this was an improvement from rates that were well above 90%. These are difficult jobs, requiring as much as 10 hours per day on the road and significant time away from family.
These shortages are having a powerful impact on company supply chains. Businesses who haven't already done so will need to pay more for transportation costs, which are costs that are likely to be passed on to the consumer.
Even the Federal Reserve's recent economic conditions survey has commented on the truck driver shortage. The report noted that the scarcity of drivers, particularly in the mid-Atlantic region, has resulted in some companies turning away valuable business.
The same report from the Fed detailed ways that businesses are attempting to deal with the shortage. Some are attempting to use more rail services, which are inefficient and impractical. One trucking company has quadrupled its rates, which customers are willing to pay. Another company in Virginia reports investing in better equipment to help recruit more drivers, which is just one of the reasons that this crisis presents an opportunity for banks.
The shortage of truck drivers in the U.S. has presented a unique opportunity for lenders.
How the Truck Driver Shortage Has Created an Opportunity for Lenders
What does this truck driver shortage mean for lenders? The good news is truck drivers who do have loans for their big rigs should not have difficulty repaying them. These drivers are increasingly finding more profitable hauls and seeing a boost in their income.
Trucking companies are also offering bonuses and other incentives to attract new drivers into the business. This means there will be a continuing need for new truck loans and leases as there are more entries in the sector.
A Loan Sale Advisor Can Help Lenders With These Unique Opportunities
The trucking business is necessary to sustain this country's interstate commerce since there aren't many viable alternatives. Basic economics dictates that the pay for these positions and the cost of services will increase to the point that driving trucks becomes more attractive.
Banks who want to maximize their returns may wish to buy these types of portfolios. A whole loan broker from Garnet can facilitate these types of transactions. Sign up for our newsletter to learn more about how a loan sale advisory service can help your company take advantage of these opportunities.