Dive Brief:

• Sysco plans to open its own school for drivers, President and CEO Kevin Hourican announced during the company's earnings call Tuesday. He said Sysco is "likely to expand the program nationally, once we have worked through the learning curve of our first location," though he did not specify where the first location will be located.
• The Sysco Driver Academy training program is intended to boost recruitment, as well as the company's ability to turn its warehouse workers into drivers, according to Hourican. "The Driver Academy will enable us to recruit our own drivers and train them in the work we do at Sysco," he said.
• The company will pay trainees to attend the school, and it will cover all licensing and certification fees, Hourican said. In return, the workers will sign a contract to work for Sysco "for an agreed-upon period of time," he added.

Dive Insight:

Sysco's investment indicates just how fierce competition to hire drivers is, and how difficult it has been to fill up the talent pipeline.

For-hire fleets — including Yellow, CRST and Werner — have in-house driver schools. This strategy allows them to cast a wider net while recruiting, with the ability to fill their talent pipelines with new industry entrants.

The pandemic caused many schools and licensing bureaus to slow or shut down, as social distancing mandates begot business closures. Last fall, the backlog to get a commercial learner's permit was 30-90 days in 17 states.

Werner CEO Derek Leathers said last September there was a 40% decrease in driver throughput — the process in which a student goes from being trained to getting a CDL.

As the economy has opened back up, fleets have refocused on schools. Yellow President Darrel Harris said during the company's latest earnings call that applicants to its academy more than doubled in Q2.

"Our Driver Academy site expansion is well underway. We currently have 16 fixed locations across the U.S. with additional mobile academies that can support targeted hiring efforts," he said.

Capacity has been tight for months, but the boost schools can bring to fleet recruitment is better late than never. U.S. Xpress said it expects a tight truckload market to lead to higher contract rates this quarter, as the season for requests for proposals arrives. And it said driver supply "remains challenging," which will keep spot market rates above contract rates through 2021.

During an earnings call in February, Hourican mentioned Sysco was working to retain drivers, despite a volume decline the December before. The company was preparing for volumes to increase along with anticipated recovery from the pandemic.

"We plan to be ahead of the recovery curve, not catching up," CFO Aaron Alt said on the call.

That recovery is happening faster than Sysco modeled for, Hourican said Tuesday. He considered that "good news," but also a challenge.

"It puts pressure on our hiring. We absolutely have incremental drivers and warehouse selectors to be hired. We are working very aggressively to do that, removing any and all obstacles that get in the way," he said.

That includes offering recruitment and retention bonuses, and compensating sales consultants to help find drivers, he added.