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German Trucker Shortage Swells Transporters’ Wage Costs
Freight companies are struggling to raise the appeal of commanding a heavy truck along Germany’s highways as an increasing shortage of drivers pushes up the cost for transport in Europe’s biggest economy.
The perks of the open road are fading fast as bureaucracy and regulation mount, journey times lengthen and inhabitants of the world’s second-largest export nation prefer to pursue careers outside the solitary confines of a 10-foot lorry cab.
“There’s a serious driver shortage in Germany,” said Gerard van Kesteren, chief financial officer of Kuehne & Nagel International AG (KNIN), which operates 10,000 trucks and trailers and counts BMW AG and Airbus SAS as customers. “It means we have to pay somewhat more to get drivers, and because the margins are so thin we have to pass this additional cost on to clients.”
Demographic trends are set to deepen the squeeze, with 40 percent of Germany’s professional truckers due to retire in the next decade, according to a study by ZF Friedrichshafen AG, a German car-parts supplier. One ready source of labor has also dried up with the suspension of compulsory military service, which had provided one in five of the country’s commercial vehicle operators with their licenses.
The increase in personnel costs comes with margins already under pressure after diesel spot prices rose more than fourfold over the past 10 years, and increasingly prevalent road tolls.
At Schindellegi, Switzerland-based Kuehne & Nagel, the world’s No. 1 sea-freight forwarder, which counts Germany as its largest market, the rail and road transport business was the only unprofitable one among four operating units last year.
German rail company Deutsche Bahn AG’s DB Schenker unit, the largest supplier of overland transport in Europe, has resorted to a radio campaign to attract new truckers, while also approaching high school graduates as potential “captains of country roads,” emphasizing both the demanding nature of long-distance driving and what it calls the “romance” of trucking.
Recruitment has been complicated by German laws introduced in 2009 that compel would-be drivers to garner qualifications in areas such as customs formalities and fuel-efficient driving, as well as in traffic laws and road safety, according to Schenker spokesman Peter Sauer. Total costs for gaining a license can reach 8,000 euros ($10,700); people caught working without the necessary certificates can be fined 5,000 euros.
“It takes three years of training to become certified, and our guys are not stupid truckers,” he said. Drivers required to transport dangerous goods must pass further tests.
The situation has been exacerbated by the decision to halt conscription in 2011, Sauer said, with the military previously issuing as many as 30,000 trucking licenses a year and veterans being admitted to the profession with minimal extra coursework.
Berlin-based Schenker, which had 2012 sales of 6.42 billion euros, employs more than 17,000 truckers, about 10,000 of them in countries where advanced qualifications are required.
At Kuehne & Nagel, the road and rail division’s losses have totaled 148 million Swiss francs ($161 million) over seven years before interest and tax, even as it boosted sales 66 percent and more than doubled its headcount to about 8,400 people.
Quitting road transport is not an option since it’s central to an integrated service, with most containers moved by truck at either end of maritime and air travel, according to the company, whose rivals include Deutsche Post AG (DPW)’s DHL Global Forwarding and Dachser GmbH of Germany, Panalpina Welttransport Holding AG (PWTN) of Switzerland, Denmark’s DSV A/S (DSV) and Geodis SA of France.
The dearth of German drivers has prompted an influx of foreign competitors, with European Union companies able to operate throughout the bloc since a law change in 2007.
While that has pared the labor shortage, it has also cost Germany the equivalent of 15,000 trucks, depriving it of 75 million euros in annual tax receipts. It also undermines wage structures and professional standards, according to the BGL industry association, which says contracts are now often awarded via Internet auctions with less reference to quality than price.
Labor costs in some eastern EU nations average one-fifth the level in Germany, where they can amount to 50 percent of haulage companies’ expenses. Drivers from countries including Bulgaria and Romania are working in the region’s No. 1 economy “under nomadic conditions like migrant workers in China,” BGL Executive Director Karlheinz Schmidt said at its Frankfurt base.
In a knock-on effect, truckers from the Ukraine are working in Slovakia and companies in Latvia are hiring drivers from the Philippines in what amounts to illegal employment, he said. The BGL has responded with a pilot project to train 12 young people from Spain -- where unemployment stood at record levels in the first quarter -- to fill driving jobs in Stuttgart.
The truckers’ plight is spreading beyond Germany, according to a report from the European Transport Workers’ Federation, which conducted interviews on the working and living conditions of 1,000 non-resident truck drivers in Europe.
Foreign drivers are paid mainly according to distance and delivery times, incentivizing them to ignore rest periods, the study said. Drivers tend to live in their cabs at weekends, with little access to sanitation, and spend as many as three months on the road working an average 57.5 hours a week, it said.
“Illegal, inhuman practices tend to become the rule, and the bad players set the benchmark,” the report said.
BGL President Adalbert Wandt, who runs Braunschweig, north Germany-based trucking company Wandt, said there’s no easy way to turn the wages tide without a decline in standards.
“There are some scandalous practices,” he said. “So far we have a demographic problem, but if we don’t pay our drivers more we’ll also have a quality problem in the long run.”
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