
Truckers Reap New Riches - prostoalex
https://www.bloomberg.com/news/articles/2019-01-09/big-and-bulky-e-commerce-opens-new-road-to-riches-for-truckers
======
danans
Despite the article's attempt to establish a connection, Millenials'
purchasing habits (online vs showroom) have little to do with this beyond
their being the generation currently creating growth in demand.

Large items such as washing machines, ranges, sofas, were always delivered by
last-mile delivery companies, regardless of how they were purchased.

The real story here is about consolidation and standardization of the last-
mile delivery industry. That's a pattern that has occurred in other industries
for a long time. The consolidation reduces cost by reducing redundancies (==
laying off duplicative employees), and standardization of process and
marketing creates a recognizable brand, which reduces purchase friction with
customers.

This will probably continue until there are a few major nationwide white-glove
delivery companies left. And I doubt there will be consumer opposition to
preserve the local delivery company the way there is with the local
restaurant, boutique, or coffee shop. Appliance/furniture delivery isn't a
lifestyle service.

Another recent example I discovered: Automobile body repair shops. They used
to be mostly independent businesses, but sometime recently, a nationwide
corporation called Abra has bought up many independent body shops and turned
them into a network.

~~~
stcredzero
_A recent example I discovered: Automobile body repair shops. They used to be
mostly independent businesses, but sometime recently, a nationwide corporation
called Abra has bought up many independent body shops and turned them into a
network._

Perhaps the conditions for recognizing when an industry "needs" consolidation
aren't that esoteric? Aren't they all issues of scaling?

Another example is in refrigerated shipping containers. Even though those are
specialty items, prices have been driven down in that area to the point where
financing the construction of new stock is becoming an impediment to some
companies in remaining price competitive. Larger companies which have
manufacturing in-house have a huge advantage in that niche.

Nationwide chains can spend less per shop on advertising, but still out-
compete small shops in terms of advertising exposure. They're also more
convenient for other large companies to make deals with. Is last-mile delivery
like auto-body, in that the flow of information among consumers isn't so
great, and it takes considerable effort for delivery teams to maintain quality
of service even though the margins aren't always so great?

(Anecdote: I bought a portable dishwasher from Amazon. The UPS driver dropped
the box right on the corner, completely smashing the packing and the bottom
tray of the machine. I reported the damage and did the return. I got the
replacement item and the UPS driver dropped the box on its corner in exactly
the same way! I ended up keeping it, since the 2nd time, the water tightness
and the cosmetics from the front weren't compromised, then eventually sold it
on Craiglist.)

~~~
danans
> Perhaps the conditions for recognizing when an industry "needs"
> consolidation aren't that esoteric? Aren't they all issues of scaling?

I don't think they are esoteric either, but rather, pretty straightforward.
Modern communications and information technology have made it possible for a
single corporate entity to easily manage an enterprise spread over many
disparate geographic locations.

As a result, there are costs (basically, people) that can now be reduced
because they are redundant, and the remaining people can create some level of
standardization in process and branding.

This is an old story at this point - at least a few decades old. The only
surprising thing is that it took this long for the last-mile white-glove
delivery industry to get there.

> Is last-mile delivery like auto-body, in that the flow of information among
> consumers isn't so great, and it takes considerable effort for delivery
> teams to maintain quality of service even though the margins aren't always
> so great?

Sure, I'm not arguing that they don't have a strong incentive to merge. Quite
the opposite, in fact.

------
soniman
Bloomberg or WSJ rewrites this same "trucker shortage" article every month,
like clockwork. It's amazing. I've read this same article every few weeks for
the last twenty years.

~~~
verylongname
Indeed. And there is also a continuous shortage of farm workers, or at least
workers willing to do backbreaking seasonal labor harvesting crops for
substandard wages. Astonishing.

------
ericbrow
I know a few truck drivers. They're not getting paid any more than in past
years. Trucking companies may have increased demand, truckers are still
getting paid trucker's wages. Enough to get by on at the cost of having to
work 12+ hour days.

~~~
jhayward
Truck driver earnings today are roughly the same, in nominal dollars, as they
were in 1975. So over the past 40 years they've taken a 70% pay cut.

They are getting squeezed so tightly a lot of them don't even make minimum
wage.

~~~
adventured
They have seen a serious pay cut since the Motor Carrier Act of 1980, however
70% is a big exaggeration. That would imply the typical trucker was earning
the equivalent of $135,000 per year in 1975 based on today's BLS numbers. And
if it were accurate, I'm not sure how anyone could think that would be
sustainable across a field flooded with 1.7 million drivers. With the pay
decrease, there are dramatically more drivers today than in 1975 after
adjusting for population growth. It's now providing a lot more jobs at a lower
pay. The reason wages dropped was due to increased competition and
deregulation, the value of their services declined. The reason wages were so
high before was due to artificial labor scarcity and price controls via a
cartel system (which Jimmy Carter fixed when he signed the MCA bill), ie it
was fake.

Business Insider covered this extensively, they found the typical trucker has
seen a 21% pay cut since 1980 in real terms -

"Business Insider compared freight wages, adjusted for inflation, from the BLS
1980 area wage survey and location-specific wage estimates from the BLS'
Occupational Employment Statistics. For the five cities in which comparable
data existed in both surveys, wages decreased by 21%, on average."

[https://www.businessinsider.com/trucking-shortage-eld-
mandat...](https://www.businessinsider.com/trucking-shortage-eld-mandate-cdl-
truck-driver-salary-2018-6)

[https://www.businessinsider.com/truck-driver-salary-
decrease...](https://www.businessinsider.com/truck-driver-salary-decrease-pay-
cut-2018-9)

~~~
paulie_a
While a 135k sounds great, now consider they have to pay for their fuel, they
are independent contractors generally. Then taxes on top of that. when truck
drivers attempted to get a loan at a previous employer the conversation of
"but I make a 100k a year" happened several times. No you really make 50k.

------
temp-dude-87844
The transformation in the article is the usual one we've seen for the last
several decades in other service industries like foodservice, retail, home
system service, and even transportation. An uneven patchwork of limited-region
small businesses is being abstracted away, albeit not necessarily replaced, by
national middlemen with deep pockets, vast experience, consistent standards,
and powerful negotiating position. Those looking to hire them to perform a
service are pleased with the consistent standards, tailored solutions, and
their ability to keep costs predictable across the board. Those middlemen
often contract out to the exact crop of companies and people who were doing
the work before, but the standards are higher, the competitive price pressure
is higher, and a cut goes to the coordinator which didn't before.

With time, this will result in consolidation, as it has always has. The most
underperforming subcontractors will be shed, some will be directly acquired,
existing employees will be handed new responsibilities, geographic bases will
expand and redundancies will be identified. Both the job alarmists and the
capitalist extollers are right, because this is the path to efficiency among
whose chief instruments is reducing labor cost, but also because this process
has always played out for hundreds of years in the exact same way.

The silver lining here is that this particular transformation isn't based on
regulatory arbitrage (or simply ignoring the law), doesn't result in the sort
of homogenization that imperils an intangible heritage (like foodservice
consolidation did), but is actually about a middleman inserting real value
into the supply chain. It's exactly what it says on the tin, and that's quite
nice.

------
dreamcompiler
I'm still waiting for Ikea to take the friction out of home delivery. If they
could do that, their market would double.

~~~
faitswulff
They actually do home delivery in Japan for ￥3,000, or roughly $30 USD:
[https://www.ikea.com/ms/en_JP/customer_service/ikea_services...](https://www.ikea.com/ms/en_JP/customer_service/ikea_services/home_delivery.html)

~~~
notyouravgdoge
Ikea does delivery here in the United States, but their delivery service has a
bad reputation.

There are small businesses that have been created around this. I found a
business that would purchase, deliver, and assemble items from Ikea. All I had
to do was send them a copy of my Ikea shopping list.

In my particular case, they purchased items at the Elizabeth, NJ location,
which has a 3.3% sales tax [1]. If I didn't use their service, I would have
had to shop at Ikea Brooklyn, which has an 8.8% sales tax [2].

[1] [http://www.sale-tax.com/ElizabethNJ](http://www.sale-tax.com/ElizabethNJ)
[2] [https://www1.nyc.gov/site/finance/taxes/business-nys-
sales-t...](https://www1.nyc.gov/site/finance/taxes/business-nys-sales-
tax.page)

~~~
dreamcompiler
Yes, Ikea delivery is wonky in the US. Ikea themselves will deliver, but the
cost is based on how far you are from the nearest store, and it's not cheap.
Some of those third-party delivery services are good, but none of them are
cheap.

Ikea stores give me nightmares. You can get in, but you can't get out again.
What I really want is to be able to order stuff from Ikea online so I don't
have to set foot in their store, and have it delivered quickly for a low flat
fee. They probably should think about doing some kind of partnership with
Amazon to make this happen.

(edit: added link) [https://www.ikea.com/ms/en_US/service-
offer/delivery.html?ic...](https://www.ikea.com/ms/en_US/service-
offer/delivery.html?icid=iba|us|skdelivery)

------
seibelj
Honest labor made possible by the Internet that can’t be automated away, and
it improves the experience for the consumer. Some may criticize the user of
contract labor, but a lot of these contractors are independents who own their
own truck or small businesses that own a few trucks and employ their own
people.

Once again the free market finds new uses for labor rather than eliminating
the net total number of jobs. It’s a wonderful thing!

~~~
UweSchmidt
Not sure if sarcastic but looking at the "net number of jobs" is a shallow
analysis. Major trends are the appreciation of certain jobs for example in the
IT industry (a nonexistant/tiny field until recently) and the devaluation of
many others.

The next stage in automation is expected to make the work that most people are
able to do completely obsolete, that's why many visionaries discuss basic
income.

Another trend is the concentration of wealth, which may shape the economy,
e.g. by providing lots of lowly paid "servant" jobs.

Even today the "free market" is augmented by huge welfare systems pretty much
everywhere, including the US; suggesting that the free market alone can "find
new uses for labor" and automatically create a functioning system is imo wrong
and harmful.

~~~
seibelj
> _Major trends are the appreciation of certain jobs for example in the IT
> industry (a nonexistant /tiny field until recently) and the devaluation of
> many others._

This is the natural progression of jobs. Auto mechanics were a nonexistent /
tiny field that soon grew, devaluing the once noble buggy whip and horse-
related professions.

> _The next stage in automation is expected to make the work that most people
> are able to do completely obsolete_

This is where I and many others fundamentally disagree. Work may be made
obsolete, but new jobs will be created, just as they always have.

> _suggesting that the free market alone can "find new uses for labor" and
> automatically create a functioning system is imo wrong and harmful_

I am not only "suggesting" \- this is actually the what our economy does every
single day! The free market allocates labor, the government is not involved
except around the margins.

~~~
thechao
My great great grandfather was a Cooper. He had friends in the carriage
industry. When cars were starting to get big it was _obvious_ what to do: take
their years of experience making buggy cars, and now make automobile cars. I’m
not so certain that the current pattern of automation is the same as the last.
In the past, the automation shifted labor jobs around. The new automation is
of labor _itself_. Asking people to exit the labor market & move to a new
market is harder than I think your optimism merits.

------
ggm
If you want to assess the impact of truckers on economy, have a strike. Chile
1972 for instance.

