Unemployed long-haul drivers have become an attractive new talent pool for last-mile delivery companies. The trucking industry saw a significant employment decline in February 2023, losing 8,500 jobs per the Bureau of Labor Statistics. This brought the total employed individuals in the industry to less than two million on a seasonally adjusted basis for only the third time in the last decade. These job losses have occurred as demand for final-mile delivery is expanding, presenting an opportunity to hire and reskill experienced truck drivers to deliver packages.
To address the high demand and perpetual labor turnover in the last-mile space, industry leaders must develop strategies to attract and retain experienced drivers. The right strategies can establish driving in the last-mile sector as a destination career option. This would serve as a preliminary step towards reshaping the industry comprehensively, facilitating better long-term decision-making, and benefiting businesses and customers alike.
Although long-haul truckers and last-mile drivers may appear to work in similar fields, their responsibilities significantly differ. While both professions entail prolonged driving periods, truckers are primarily concerned with traveling from point A to point B, whereas couriers have additional duties and multiple delivery times to meet each day. Last-mile drivers load and unload packages, which requires them to exit and enter their vehicles regularly, a task that truckers do not typically perform.
Additionally, company truckers receive considerably higher wages, are classified as W-2 employees, and are entitled to benefits. Conversely, last-mile drivers often are hired as independent contractors with low pay, a controversial practice that significantly contributes to labor retention issues.
It is more cost-effective to retain good employees than to consistently hire new ones. To attract and retain last-mile delivery drivers, businesses can offer benefits such as affordable healthcare and paid time off. By improving employee satisfaction, last-mile companies can garner positive reviews on platforms like Glassdoor, making recruiting easier.
Failing to offer employment status, compensation, and benefits to workers can result in higher long-term costs due to accidents and legal proceedings. Providing workers with adequate pay is a cost-effective business strategy that can prevent expensive claims and litigation down the road.
Pursuit of short-term profits at the expense of safety contributes to the rise of so-called “nuclear verdicts”— outsized jury awards that drive up last-mile delivery insurance costs for the entire industry. To avoid costly liabilities, delivery services must prioritize safety concerns and responsible practices.
While implementing regular safety training and integrating innovative technologies can be beneficial, the best solution is to ensure that new hires possess spotless driving records.
Additionally, establishing a career path for long-haul truck drivers entering the last-mile sector offers the possibility of recruiting skilled and experienced professionals who are well-versed in operating larger vehicles. Last-mile delivery businesses typically do not require a commercial driver's license (CDL). Someone accustomed to driving a sedan may not have equal success with a 16-foot box truck. Untrained drivers operating vehicles that exceed their proficiency levels can lead to preventable incidents, such as sideswipes. Engaging competent truck drivers with the necessary experience to operate large vehicles would reduce the likelihood of such minor accidents occurring.
Delivery methods, such as free two-day or same-day delivery, lack sustainability, are detrimental to the environment, and require more drivers. A more comprehensive implementation of the Amazon locker model, which consolidates multiple deliveries into a single location instead of distributing them to many separate addresses, represents a promising solution for improving the delivery process, particularly in urban areas. This model could reduce the number of vehicles on the road, thus mitigating the likelihood of accidents and litigation. Further, last-mile delivery businesses could accomplish their work with fewer drivers, solving the talent shortage while also reducing total cost.
It is imperative to shift customer expectations regarding free immediate shipping to a more sustainable delivery model that prioritizes the wellbeing of the final-mile workforce and the environment. A restructured and forward-looking last-mile industry would be advantageous to all stakeholders and eventually lead to reduced insurance premiums as a skilled labor force on the road would mitigate accidents and "nuclear verdicts." Improving working conditions for employees is the first step in paving the way for a brighter future.
Want to learn more about Risk Solutions for Last Mile Delivery?
Connect with the Risk Strategies Transportation team at transportation@risk‐strategies.com.
Brian Jungeberg specializes in developing innovative risk management and insurance solutions for the transportation and logistics sector. From freight forwarders and brokers to final-mile delivery, Brian understands the unique exposures in the industry and how to mitigate risks. He has been in the insurance field for nearly 20 years and invites readers to reach out on LinkedIn with questions.