Pay trends, part 1: Near-term forecast mixed
Owner-operator pay has improved a good bit since the recession, though a sluggish economy is producing mixed results for 2012, say experts who track compensation.
Income for owner-operators showed a 7.5 percent year-over-year boost in the 12 months that ended in June 2012, said Todd Amen of owner-operator business services firm ATBS, speaking at the Truckload Carriers Association Independent Contractor Division meeting last month. On average, ATBS owner-operators clients earned $50,896 in that period.
Much of that income boost came in the first half of this year, when owner-operators both independent and leased saw the benefit of the brief fuel price decline between April and July, Amen said. Better yet — particularly for the long-term, he adds — for operators not in a percentage pay environment, close to a majority of per-mile-pay carriers have begun to pass along the rate increases they’ve been seeing since late 2010 to drivers and contractors.
However, that’s likely to level off in this last half of 2012, says Amen. “The fuel increases will hurt these guys in the short term.”
Also on the downside, carrier/shipper “leverage on negotiating prices [is] at an equilibrium right now,” said the National Transportation Institute’s Gordon Klemp in an Overdrive webinar this past summer. “We’re not seeing rate increases.” However, if the economy rebounds after the election, Klemp suggested carriers can get higher rates, which should readily translate to boosts in driver pay next year.
Many carriers have begun to raise pay and take other steps to improve retention, Klemp says, but “pay will have to continue to improve to keep the good people.”
All the carriers Overdrive talked to agreed with that sentiment. Drivers and leased owner-operators with Trimac Transportation, Dart Transit, RWI Transportation, Fikes Truck Line, Marten Transport, America’s Service Lines, Old Dominion and D&T Trucking, among others, report relatively recent pay increases.
Supply is on your side
With per-mile pay generally stagnant until recently, there haven’t been a huge number of new people coming into the trucking business, Klemp says. And “a tremendous number have retired over the past decade,” he adds. Of the year 2000 driver pool, “36 percent will be retired by the end of this year,” representing “a huge number to be replaced.” From 2007 to 2010, he says, the industry in aggregate “essentially replaced none of them.”
Reacting to this dynamic, carriers in a position to do so have sweetened sign-on deals and boosted pay. Klemp reports a $12,000 sign-on bonus as the highest outlier in his carrier pay package data. Other anecdotal reports have shown figures of $15,000 in the recent past.
At Illinois-based Nussbaum Transportation, says CEO Brent Nussbaum, “five years ago our turnover was 60 percent a year. Today it’s 30 percent.” He attributes that not just to company culture at the 210-truck dry-freight carrier, but to action on one of the biggest problems in the industry: “We’ve always felt that driver pay should be higher than what it is.”
The company increased owner-operator per-mile base pay 3 cents in 2011 “and another penny this year,” Nussbaum says.