Novo Logistics, a Reno-based supply chain company, has recognized the importance of having a diverse customer base, said CEO Ryan Peirce.
You see them everywhere. Throttling up and down interstates, backing into warehouse loading docks, sidling up to grocery stores and retail centers, even snaking down subdivisions.
They’re filled with food, beverages, construction materials, raw materials, home appliances, cleaning supplies, toilet paper and more.
They’re semi-trucks, and they’re helping keep the U.S. economy up and running, now more than ever.
That’s especially true in Nevada, where 80% of the state’s communities depend exclusively on trucks to move their goods and stock their shelves. In all, trucks in the state are transporting 55,410 tons per day, according to the Nevada Trucking Association.
“Our folks are moving 95.3% of all the freight in the Silver State,” said Paul Enos, CEO of the association. “That’s much bigger than other states around the country. Nevada doesn’t have a Mississippi River or seaports or an extensive rail system or even an extensive pipeline system. So, trucks move the lion’s share of the freight.”
Truth is, a year ago, many people would have been hard-pressed to talk about the supply chain in Nevada or any state, for that matter.
But when the products used to combat COVID-19 like PPE and basics needed during quarantine like TP were in short supply last spring, the inner workings of transporting goods from manufacturers to consumers and businesses suddenly took on new importance.
So did the need for reliable truck drivers.
“I’m never going to say what my folks do is easy, but we’re probably the most resilient part of the supply chain,” Enos said. “We’re going to go where the freight is, we’re going to get it to where it needs to go.”
And as online shopping and e-commerce booms, and businesses look to make their supply chains more agile to meet shifting consumer demands, many trucking and logistics companies have been on a roll.
Take ITS Logistics, a third-party logistics company with dedicated fleet and asset-lite transportation services. The Sparks-based firm’s total revenue grew about 60% in 2020 compared to 2019, according to Patrick McFarland, the company’s director of marketing.
“2020 was a record year for our company,” McFarland said. “Logistics blew up. COVID caused all kinds of chaos across the global supply chain, and we were fortunate enough to be in an industry and a company that was able to do pretty well. It has really created need and opportunity to grow with our customers.”
DRIVER DEMAND
In an effort to keep up with the demand, ITS Logistics hired around 90 drivers from March to December last year, McFarland said.
“But,” he added, “that wasn’t nearly enough.”
In fact, throughout 2020, ITS Logistics was operating about 20% under its “ideal driver head count number,” McFarland said.
And the Sparks-based logistics company is not alone. Nationwide, the flow of new truck drivers is lagging far behind the roaring freight market. In fact, U.S. Bureau of Labor Statistics data shows that the number of for-hire truck drivers in October 2020 was 65,700 lower than October 2019.
A significant percentage of those drivers were pulled off the road by the CDL Drug & Alcohol Clearinghouse, which removed 40,000 drivers (about 1% of the driving force) from January to September in 2020 due to failed drug tests, most of which were from marijuana use.
Meanwhile, many older drivers left the industry because of the pandemic; a slew of aspiring new drivers couldn’t get their CDL training due to driving schools being shut down; and others opted for construction or energy jobs that offer more time at home and, in some cases, better pay.
“Between the aging workforce, the pandemic slowing down the number of new drivers, and the clearinghouse, it’s a tough market to get good drivers,” McFarland said. “Sadly, it’s a shrinking workforce, and all of our companies have this opportunity to grow. So, we’re all fighting over the same drivers.”
As a result, firms in Nevada are raising wages to recruit and retain personnel, said Enos, adding that he’s seen “a lot more incentives and a lot of companies paying a lot more.”
ITS Logistics, for one, recently released its largest ever driver pay increase in its 20 years, bumping pay 10 cents per mile for solo drivers and 6 cents for team drivers, depending on experience. Moreover, the company is offering an incentive program for drivers that work a six-day week, said Tim Aboussleman, ITS Fleet senior director of operations.
“We recognize that there are individuals who want to work more, who want to stay on the road,” he said. “And that helps the company overall when it comes to really getting every penny’s worth of our fixed assets and costs. It’s making us more profitable with the assets that we have, it makes us more sustainable with our customers, providing them that extra bit of trained experience. And then, lastly, it’s giving drivers that variable income when they want it.”
Aboussleman and McFarland said ITS has also doubled down on its “driver first” mentality. Specifically, the company has revamped its driver communications with a new newsletter, a private Facebook group, and more video messages to reach drivers.
“The one thing we’re constantly learning is when you deal with drivers, when you deal with warehouse individuals, they like that communication,” Aboussleman said. “And with social distancing, that makes it much more difficult to keep your driver happy and satisfied. I think one of the major takeaways is how do we leverage technology to make sure that the drivers feel like they still have an open communication?”
DIVERSIFICATION FACTOR
Over at Reno-based Novo Logistics, the pandemic has reemphasized the importance of having a diverse customer base, said CEO Ryan Peirce.
“As a supply chain company, we had certain segments of business that just took off and other ones that came to a complete standstill,” Peirce said. “You always want to be diverse, but it really drove that point home this last year.”
What’s more, Peirce said he feels many larger companies that previously did their own logistics in house will be outsourcing their supply chain needs as a byproduct of the pandemic. He noted that Novo Logistics primary focus is the warehousing and distribution side of the business, not transportation services.
“A lot of them stepped back and realized they need to focus on their core business and be able to react quickly in these types of situations,” Peirce said. “And by trying to handle their own supply chains and end-to-end needs, it was just one more layer of responsibility to handle versus, if they outsource that to companies that are versed in doing that.”
‘IT’S GOING TO BE STRONG’
The rising demand in supply chain needs has also kept truck dealers in Northern Nevada plenty busy.
“In Northern Nevada, the trucking industry is very hot, and it’s growing tremendously right now for truck orders, from medium duty to heavy duty,” said Mike Altimus, vice president and general manager of Peterbilt Truck Parts and Equipment and Silver State International.
So much so that the dealership has boosted its hiring to keep up with orders and demand in its service department.
“We’ve increased staff by upward of 12%,” Altimus said. “We’ve taken a lot of opportunities and we’ve really strengthened our recruiting process in the last year and a half, and even added to our human resource department.”
Altimus said he doesn’t expect the volume of truck orders to slow down anytime soon, especially with the “massive” increase in regional freight driven by e-commerce.
“Talking to our customers, freight in the entire western region is going to remain very busy just to keep up with your post-pandemic buying that is going to happen,” said Altimus, adding that the growth of Reno-Sparks also boosts trucking. “With more and more people moving to our little beautiful corner of the world, we need infrastructure to coincide with those homes and apartments and strip malls, and that’s just trucking. So, the industry’s going to be strong.”
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