Driver shortage leading to higher pay
Driver pay will rise an average 3 cents to 5 cents a mile for company drivers and 4 cents to 6 cents for owner-operators over the next 12 months, predicted Gordon Klemp, president of the National Transportation Institute.
Klemp spoke Monday, March 14, to Truckload Carriers Association members at TCA’s annual meeting in San Diego. Klemp’s firm surveys medium- and large-sized fleets quarterly.
In addition to the expected mileage pay hikes, he predicted:
• Pay hikes tied more closely to freight rate increases.
• Driver pay more closely tied to performance measurements, including driver scores under the new federal Compliance, Safety, Accountability program.
• More use of sign-on and referral bonuses, which virtually disappeared during the recession. Klemp said 40 percent to 70 percent of fleets now offer one or the other.
• Pay more closely tied to regions of the country.
• Premium pay for teams.
• Expanded in-house driving training programs.
• Expanded truck lease-purchase programs.
Klemp also outlined developments that created today’s driver shortage and that will cause it to worsen over the next few years:
• Carriers have downsized their driver force to deal with the recent recession.
• Unemployment benefits have been extremely generous for laid-off drivers.
• Many drivers retired, in some cases earlier than planned, or took part-time work and don’t need to drive full-time.
• Many have found work in the underground economy, which has expanded far beyond what most people realize.
• Many drivers are unqualified for the new, tougher safety standards, such as CSA.
• Many carriers have severely reduced recruiting and orientation staff during the downturn and have no plans to quickly restore that.
• Many carriers have closed in-house driver training programs and gone to other models for bringing on new drivers.
Among fleets using Vigillo’s CSA services, 52 percent are over the federal intervention threshold in at least one Behavior Analysis Safety Improvement Category. Consequently, “Some of their drivers may not be part of the driver force long-term,” Klemp said.
Carriers using hair follicle testing for drugs are finding it removes 13 percent of the driver applicants because it reveals positive results over a term longer than that of urine testing, Klemp said. At $150 per test, it’s expensive, but if the federal government made it mandatory, the price would fall and it would remove many more potential drivers.
The proposed hours of service revision could reduce productivity as much as 15 percent, which would create demand for more drivers, Klemp said.
“Supply’s not going to get better,” Klemp said. “Retention management, I think, is going to be huge.”
That will require not just good pay rates, but also finding new ways to recruit new drivers, to train them well, and to do a better job of explaining their total compensation package to prevent them from mistakenly leaving a good carrier during periods of high turnover, Klemp said.
One example of the latter is a driver’s “hidden paycheck,” explained by Barry Pottle, president and CEO of Pottle’s Transportation, who spoke with Klemp. The carrier keeps a record for each driver that shows the value of all pay and benefits, as well as costs for insurance and other things the carrier bears, Pottle said.
Drivers appreciate seeing the full accounting, he said, and the program helped reduce turnover to 17 percent in 2010. The company has other progressive practices, such as guaranteeing drivers $150 for detention pay regardless of whether the fleet collects it.
“We spend more on retention than we do on recruitment,” Pottle said.