When the fires in California sprang to life in 2018, Lagunitas Brewing Co. in Petaluma found itself armed with a new tool. It was just starting a pilot program with Uber Freight, a licensed freight broker and shipping platform that matches businesses with truck drivers.
The trial could not have come at a better time. The first driver who was supposed to pick up a load of beer from Lagunitas and bring it to Southern California had to abandon the trip because of fire. So Harrison Graham, Lagunitas’s senior logistics and transportation manager, turned to Uber Freight. “Within 15 minutes,” he recalls, “we had our customer service rep call and say, ‘Hey, we found another driver through the app—they’re going to be there in 10 minutes.’ That was our first taste of, ‘Oh wow, this is going to be great if we have the ability to not let our customers down by missing a delivery.’”
Graham had decided to give Uber Freight a try partly because of a severe truck driver shortage that has been plaguing the alcohol beverage industry—and many other industries around the country—for well over a decade. “Basically,” he says, “in 2018 we saw one of the toughest freight markets in the last 15 to 20 years. So everyone—all shippers across the industry—was scrambling to find brokers or carrier partners that had capacity and that could maintain service levels, and it was kind of a wild scenario.”
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Connecting the Freight Network
According to the American Trucking Associations (ATA), the driver shortage is a result of the combination of a tight labor market and an aging truck driver population. The ATA’s records show that the shortage reached a peak driver deficit of 60,800 in 2018, up nearly 20 percent from the deficit of 50,700 drivers in 2017. The ATA predicts that if current trends hold, the shortage of drivers could swell to more than 160,000 by 2028.
Services like Uber Freight—and others, such as Convoy—that match businesses with truckers, therefore come at a pivotal moment for the industry. Graham says that Uber Freight has helped Lagunitas reduce the length of time it takes to find a driver from a minimum of 48 hours to just a few hours. “I feel like they have a lot of great innovation that not only can help us get our amazing beer where it needs to get,” he says, “but can help us streamline our own operations and find areas for improvement.” It does the latter by also allowing the drivers to rate and provide feedback to their customers, just as the Uber ride-sharing app does.
Chris Pickett, the senior director of logistics at Anheuser-Busch in St. Louis, which uses Convoy, says his company has benefited in the same way. “A few years ago,” he says, “if someone had asked me which of our locations drivers prefer working with over others, we only had our internal data to tell the story. Now we can use Convoy’s driver-centric data and insights to get the answers to those questions and understand how those experiences are causing challenges for all our partners.”
Anheuser-Busch has used this data to reduce idle time at pick-up and drop-off locations and to help minimize empty miles, placing the brewer on track to hit its goal of reducing CO2 emissions by 25 percent by 2025.
Driver Shortage Remains a Concern
The extent to which beverage companies are being affected by the truck driver shortage depends on how dependent they are on long-haul trucking, where the driver shortage remains most acute. For example, Opici Family Distributing in Glen Rock, New Jersey, says it has stepped up the use of rail to guard against rising truck-shipping prices. “We’re certainly using a lot more rail to get product from the West Coast here,” says Chad Lapp, the company’s executive vice president of sales. “We’ve been using rail for a long time. I just think we’re seeing it as a more cost-effective way to buy, so where that opportunity exists, we’re trying to take advantage of it.”
Companies that rely on shorter delivery routes are not immune from the driver shortage either. “Getting new drivers has been challenging for a while now,” says Michael Epstein, the executive vice president and COO of Horizon Beverage Co. in Norton, Massachusetts. “A relatively strong job market makes it harder for employers to find talent no matter what the position is, but in the trucking industry, and warehousing more generally, it has been particularly challenging to find qualified, experienced drivers to fill open positions that we have.”
Epstein says that once drivers join the company, they usually stay. It’s getting them to join in the first place that’s the challenge. So Horizon constantly reaches out to its existing drivers to see if they know of anyone who wants to come on board. “Maybe they don’t show up as a commercially licensed driver,” says Epstein, “but they come in, they start working as a helper, or they work in the warehouse, and they get their CDL (commercial driver’s license) and can start developing a career for themselves here.”
Powers Distributing in Orion, Michigan, has also tried to mitigate the impact of the shortage by promoting and training drivers from within. Says Gary Thompson, the company’s general manager and executive vice president, “Since our drivers are paid more than the typical ‘over the road’ driver, and our drivers are home each night, we have a more attractive position than many companies do.”
However, Thompson expects that even his situation may worsen in 2020. He cites new rules issued by the Federal Motor Carrier Safety Administration (FMCSA) coming online in February 2020 that require CDL certification training only by an expert approved by that agency. “That will take away our ability to train a driver,” he says. “Then it will become more difficult.”
On the other hand, it was existing federal regulation that recently resulted in protection for gig-economy companies like Uber Freight and Convoy in California. The state’s new Assembly Bill 5 (AB 5) makes it harder for companies to claim that workers are independent contractors and do not have to be paid minimum wage and benefits such as workers’ compensation. A Los Angeles County Superior Court judge ruled on January 8 that AB 5 doesn’t apply to independent truck drivers, because it is superseded by federal law—a decision, however, that is currently being appealed.
Luckily for companies like Lagunitas and Anheuser-Busch, though, what could have amounted to a worsening situation has so far been mitigated by the new driver apps. They’ve helped keep the beverage industry’s shipments flowing for now. Still other technological leaps, such as self-driving trucks, could also one day alleviate the problem further. Although some trials have been made of self-driving trucks for long-haul shipping, the technology is nowhere near widespread use. A continuing driver shortage, however, could provide the incentive necessary to kick that technology into higher gear.
Andrew Kaplan is a freelance writer based in New York City. He was managing editor of Beverage World magazine for 14 years and has worked for a variety of other food and beverage-related publications, and also newspapers. Follow him on Twitter at @andrewkap.