Communications

In a recent New York Times article, Madeleine Ngo and Ana Swanson report an shortage of 80,000 truck drivers in the U.S., which is a major contributor to the supply chain bottlenecks in this country. Moreover, the prognosis is for the shortage to intensify rather than abate, regardless of the course of the pandemic and its variants.

Driving long haul trucks for a living is a tough business. The hours are long and uncertain. The pay is generally minimal. The physical and emotional health hazards are high from interminable hours on the road and separation from families. As a result, there has recently been an acceleration in retirements and job changes leading to the present 80,000 shortfall in available drivers.

The ripple effects from the shortage add to the supply chain problems since the ports and warehouses cannot be cleared within the customary time lapses. Deliveries from ports to final destination have moved from days to months, contributing to pent-up demand and higher prices. Further, increasing wages in the industry in reaction to the departures have boosted delivery costs and added further to inflation while doing little, at this point, to stem the tide of resignations and retirements.

There are several possible paths to relief for the driver shortage. One is a sufficient increase in wages and benefits to attract and retain drivers, but that depends on trucking companies' ability to exert pricing power, to use automation, or to engage in shrinkflation. None of these appear feasible or effective, given the structure and competitive nature of the industry.

A second possibility is to lower the age requirements for drivers in interstate hauling. However, as several critics have emphasized, for safety reasons alone the focus should be on raising the minimum age rather than reducing it.

A third option is to focus greater attention on attracting women and minorities into the industry. Presently, only 7% of truck drivers are women while 40% are minorities.

In short, there is no quick fix to the truck driver shortage problem in the U.S. As a result, the impact of the shortage on supply chain problems and associated inflationary pressures is here to stay for the indefinite future.

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As The Economist contends in a recent commentary, the high resignation rates experienced recently in the U.S. and in several European countries are more permanent than transitory. As a result, management needs to recognize this emerging fact and alter its approach to three areas of activity.

First, management needs to focus on why employees stay rather than why they leave. The traditional exit interview should be replaced by a new retention interview with special focus on departments or divisions within an organization that have lost a considerable number of employees. That is, understand the causes of retention and work to reinforce those factors to assure higher retention in the future.

Second, recognize that different incentives apply to different groups of workers. Salary is a universal concern, but recent surveys indicate that the majority of resignations from workers without a college education was triggered by lack of health insurance. In addition, both white- and blue-collar workers are highly concerned about flexible schedules. For white collar workers, the issue is the time split between work and home whether they are working remotely or not. For blue collar workers and single parents, the issue is the scheduling of shifts.

Third, managers need to plan how they will find and attract workers to replace those who depart. The answer may well lie in more effective use of sources of potential job seekers such as LinkedIn. As The Economist noted, a quarter of managers recently interviewed assumed that LinkedIn contained more information about the job skills of their own workers than they had in their personnel files and records.

Because of the rise and staying power of remote work and the ease of job searches via the internet, the current churn will likely remain substantial, even in more normal times. Therefore, it may be wise to follow advice from The Economist and give serious thought to possible future developments in the job market and how to manage them.

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In a recent New York Times article, Ephrat Livni and Eric Lipton highlight the regulators' anxiety with the increasing role of cryptocurrencies. In response to this pressing concern, federal regulators are asking Congress to pass legislation that would place the providers of stablecoins under the same rules and regulations that apply to traditional banks and financial institutions in the U.S.

A "stablecoin" is, in effect, a digital currency issued by non-bank organizations such as Tether and Circle and pegged to the U.S. dollar. The issuers advertise that one stablecoin has a market value of one U.S. dollar. Therefore, business organizations and the general public can use either stablecoins in accounts with Tether or Circle, for example, or U.S. dollars in traditional bank accounts to satisfy payment requirements of any nature. Interestingly, under existing federal laws, retailers and other commercial companies are allowed to issue such cryptocurrencies as stablecoins.

In January of this year, approximately $28 billion stablecoins were in circulation. By the end of November that number had increased to $130 billion. The fear on the part of the federal regulators is that any hiccups in the stablecoin market could lead to runs on the digital currency, general payment abuses, and actual payment defaults that could ripple through the U.S. economy.

Janet Yellen, the Secretary of the Treasury and former Chairwoman of the Federal Reserve Board of Governors, has endorsed stablecoins as well designed. But she stresses that stablecoins must be subject to effective oversight to minimize the prospects of disruption to the U.S. financial system and larger economy.

If Congress fails to act, the Financial Stability Oversight Council could presumably intervene and declare stablecoins and similar cryptocurrencies as systemic risks subject, therefore, to federal oversight and regulation. But the more effective and certain resolution to the issue appears to be Congressional legislation.

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During the month of December, Shockproof! Training conducts its four-session Credit College Course on Credit Basics, which is designed to provide business development officers and branch managers with the key analytical tools necessary to determine whether to pursue a lending opportunity.

The four-session series blends soft data assessment with hard data assessment. That is, it reviews the importance of assessing:

• The personal qualities of a company's driving force and their relevance to business success.
• The origins of a company's competitive advantages and its ability to sustain those advantages.
• The company's success in managing both its income statement and balance sheet by reference to a few critical performance ratios.
• The likely course source of company debt service signaled by both cash flow proxies and actual cash flow statements.

Since the course kicked off on Wednesday, December 1, keep in mind that a recording is available for the first session that then allows participants to follow all four sessions in sequence. Please note that all sessions in Shockproof! Training's Credit College Courses and single topic Webinars are recorded and available for use and review, should participants prefer the flexibility of on-demand sessions and webinars.

If you would like more information about this Credit College Course, about one or more of our other five Credit College Courses, or about any of our 27 single-topic Webinars, please call us at 1-866-237-7228 or send us an email at inquiry@shockproof.com.

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