Industry News

| December 12, 2008

“I don’t believe you can pat a driver on the head and put candy in the terminal and draw in
- Kirk Thompson, CEO of J.B. Hunt

Trucker pay must increase substantially before fleets will have enough drivers to meet demand, said fleet heads at a forum for shippers and carriers in Atlanta. Covenant Transportationfounder and CEO David Parker said his fleet expects to raise driver pay again in the first quarter of 2005, as many fleets did in 2004, but per-mile incremental pay raises may not be enough to draw the tens of thousands of drivers that the industry needs.

“Should we go up to $65,000 tomorrow?” Parker asked at the Oct. 11-12 forum organized by Schneider National. “I don’t have the guts to do it.”

While the national average pay for drivers currently hovers around $40,000, Parker and Duane Acklie, chairman of Crete Carrier Corp., speculated that salaries between $60,000 and $65,000 would be needed to fill the current shortfall.

“LTLs are paying $65,000 and have less than 20 percent turnover,” Parker said. “We’re paying $42,000 and have 100 percent turnover … I think you’re going to see driver pay increase over the next few years, 5 or 6 cents a year for the next five years.”

“We don’t have a shortage of drivers,” Acklie said, “just a shortage of drivers willing to work for what we pay.”

The discussion of driver pay is being driven by a torrid freight market, more restrictive operating regulations and a limited pool of qualified drivers. The industry is theoretically at 100 percent capacity, said Jim Meil, an Eaton economist. Still, few carriers are expanding their fleets, and because railroads are just as burdened by the freight increase, shipping rates are shooting upward.

Trucking companies compete for the same laborers as construction and manufacturing, which offer fewer hours and more home time, carriers and economists said. But pay is still the dominant motivator.

“Even if things ease back, we will still have a driver shortage, and demand for drivers will still outpace supply,” said Erick Starkes of Freight Transportation Research. “This problem is putting a strain on the industry’s ability to add capacity in a hurry.”

“We have to take an abnormal share of the labor pool,” to meet the demand, said Scott Arves, Schneider president. Arves said the only way to grab that share is to significantly raise wages, something fleets are reluctant to do. “Most people have focused on $60,000 or more to attract new entrants to the driver pool,” he said.

President Bush signed legislation that keeps the current hours-of-service regulations in place until Sept. 30, 2005, or until the Federal Motor Carrier Safety Administration completes a new rulemaking as ordered by a federal court, whichever comes first.

The measure was part of a new law that extends highway development and safety programs for eight months.

On July 16, the U.S. Court of Appeals for the District of Columbia declared that FMCSA had failed to consider the effect of its final rule on the health of drivers, as required by Congress in 1995. The court also expressed strong skepticism of the agency’s rationale in other respects, including the additional hour of driving time, the 34-hour restart of cumulative hours, the retention of split rest using sleeper berths and the failure to test and consider a requirement for electronic onboard recorders.

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