Does less equal more?

| January 01, 2011

If FTR is correct, the industry will be near 130,000 drivers in the hole. It all “leads to a shortage in the neighborhood of twice what we had in 2004” into 2012, Perry contends, holding possibilities for both new hires and drivers already in the system.

“Right now the supply/demand situation for drivers is in equilibrium,” Gordon Klemp, principal of the National Transportation Institute, said in November. “While it’s getting hard to hire a qualified driver, everybody’s still getting by. But if we get a significant increase in freight tonnage, there will be a scramble for drivers like we’ve never seen,” holding positive implications for driver pay.

 

Outlook for pay

OOIDA’s Todd Spencer is skeptical of carrier claims of near-future gains in rates and pay: There “may be some long-term economic benefits,” he says, for owner-operators who run a tight ship from CSA’s identification and punishment of “carriers that have pretty shoddy safety practices.” But, he adds, “the same people have been saying driver pay needs to increase by 50 percent all the way back to 1990. If that were anything more than giving lip service to the problem, we wouldn’t still be talking about it.”

Less does equal more “Everything out here is going to constrain capacity,” Avondale Partners economist Donald Broughton told a trucking industry gathering in November about the near-future industry landscape. “When supply is constrained and demand’s improving, what will that do to pricing?” he asked, then pointed to the ceiling.

It’s hard to see the future with any certainty whatsoever without understanding the past, Spencer notes, detailing a long erosion of the wages and benefits an over-the-road driver could expect over the years since deregulation brought about carrier consolidation and a much greater degree of competition to the truck rate picture.

It’s a dynamic Truckers News examined in its 2007 30th-anniversary issue, showing that inflation-adjusted pay for non-management employees in the truck transportation sector (including company drivers) began declining in the late 1970s and didn’t stop until it leveled off in 2000.

Spencer recalls how he directly experienced the $10,000-Cadillac dynamic Jeff Clark notes. “Carriers were talking about a driver shortage back in the 1970s,” he says, “and I can remember a company president telling me and a group of other owner-operators at one time, ‘Look, if you guys don’t want to haul these loads [for a particular rate], we’ll bring some people in that will.’ And they did. They brought in about 20 new trucks and hired drivers, and they lasted about a year.”

Furthermore, deregulation brought about the new phenomenon of the national truck carrier from the formerly largely regionalized, unionized trucking world. “The rising stars rejected the mold that trucking had evolved to,” Spencer says. “Everyone was going to be a national carrier, and they weren’t interested in hiring drivers who only wanted to work in regional areas with good pay. They brought in a lot of untrained or poorly trained people who didn’t expect to make a lot of money — the other requirement was that you had to be willing to be away from home” for long periods of time.

In some ways, many carriers have learned the lessons Spencer hints at — average length of haul has been falling since the last “driver shortage” period of 2004-05. Today, the number of owner-operators moving one-way loads of average length shorter than 500 miles well exceeds those involved in 500-mile-plus hauls, according to data compiled by Truckers News sister magazine Overdrive. As owner-operators and others have found opportunity in more regional/local operations, what Spencer calls “the predictability of the job” increases, making trucking more attractive. “But even in those operations,” he adds, “driver pay needs to go up.”

Riverside, Calif.-based owner-operator Thomas Blomberg, leased to Marten Transport, agrees. “I’d be really content with this new business model,” he says, “if there was not so much waiting time between loads,” if operations were streamlined for better coordination of short haul drop-and-hook. Furthermore, he says, Marten does “have a detention pay program, but a lot of times it’s not available because it was not part of the contract” with the shipper, he says, but he’s hopeful for a rate increase in the coming months as he surveys the carrier landscape, where like everybody else he’s seen the ads touting mileage pay premiums.

Some suggest that, in spite of the shifting legal landscape governing relationships with independent contractor workers, carriers need to examine their owner-operator/carrier relationships with an eye on providing more assistance to help owner-operators more effectively manage their businesses. Blomberg, for one, has been a client of owner-operator business services provider ATBS since he became an owner-operator eight years ago. Blomberg says his ATBS advisor, Chris Harrington, makes it his business to get not only into accounting and finance issues but reach deep even into equipment maintenance considerations. “For what ATBS charges,” Blomberg says, “they’re being overworked and underpaid.”

No hands went up in the large main conference room at the Hilton Downtown Nashville in November when ATBS President Todd Amen asked TCA/ACS “Perfect Storm” recruiting/retention meeting attendees if anyone had all the leased owner-operators they needed. “The last two years, 30,000 owner-operators went out of business,” Amen said. “And if that hadn’t happened, and they were smart and nimble enough and had the ability to stay in business…maybe you would now have plenty of capacity. Our job is to help them the best we can to stay in business” to avoid future post-recession capacity issues.

The National Transportation Institute routinely tracks the pay landscape in its National Survey of Driver Wages. Most recently, says NTI’s Klemp, anticipation of regulatory challenges and other factors led to striking results to a particular survey question. NTI asked whether carriers expected to raise pay for drivers in the next year. Around 80 percent of fleets said yes.

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