Pay trends, part 2: Various segments rewarding performance
Following is Part 2 in our pay trends series. If you missed Part 1, with owner-operator income numbers by segment and the near- and long-term mixed forecasts, find it via this link.
Gordon Klemp, reporting results of the end of 2012’s second quarter from his National Transportation Institute’s National Survey of Driver Wages reflected in the above chart, noted a measure of growth in driver and leased owner-operator pay since the recession ended. Base per-mile rates in pay packages across the carriers he surveys are averaging slightly higher than prerecession levels in both dry van and flatbed applications, where they saw a significant recessionary dip. For operators pulling refrigerated units, levels are up as well — the recession had little downward pressure on those rates.Looking at the numbers for individual carriers, however, today company driver “take-home pay is plus or minus 5 percent of what drivers were making in 2007,” Klemp says.The owner-operator package breakdown in the chart above does not include a significant group of percentage payers in the flatbed segment that offer 70-75 percent of the load’s gross on average. As rates increase for carriers with owner-operators under a percentage scheme, operators see a built-in pay raise. Some carriers have been raising the percentage, too, says Klemp, who’s seen “some as high as 83 percent.” It could go higher because many drivers are still underpaid, and there could be “some economic recovery after the election.”
Putting upward pressure on pay in today’s environement is carriers’ increasing need for the highly qualified driver, as management of new dynamics like CSA rankings becomes more important to maintaining freight levels and getting new business.
Says Melton Truck Lines’ Safety Vice President Angie Buchanan, “We’ve struggled with how to pay for a higher qualified driver. How do you pay for a good CSA score?” The 1,000-power-unit, company driver-dominated flatbed carrier has tossed around numerous different ideas but ultimately settled on what Buchanan calls “rewarding drivers for doing the right thing.”
Among other boosts in the Melton pay package — an added cent to 2 cents a mile for all drivers, two increases in detention pay over the last two years and other perks — a new fuel-mileage-performance bonus for high-efficiency operators is delivered in the form of a base pay bonus of up to 4 cents a mile.
Melton’s not the only carrier encouraging efficient performance. At Nussbaum Transportation in Illinois, too, new perks delivered to high-performing drivers “better affirm a driver for his performance,” says company head Brent Nussbaum. “A driver typically hears from a company when he’s doing wrong – we want him to hear positive feedback” on fuel, safety and operational performance. With the company’s “Driver Excelerator” program, it monitors “the driver’s improving performance in all these areas.” The company then delivers a quarterly performance bonus.
Driver managers with the company work with operators on increasing fuel mileage, decreasing idle time and fuel performance — likewise things like buying for discounts. “We want their productivity to be high,” Nussbaum says. “We want them to be here and not out sick. And on CSA scores, we want those to be good as well — in those areas they can build points for each item. … Based on the amount of points they’ve built during that quarter they can get a bonus.”
Drivers and owner-operators, Nussbaum says, have appreciated the opportunities for more money. When the fleet started the program in early 2011, there were just 18 drivers at gold level. Today, the company has “70 drivers at gold, with another 30 percent that are silver, and a lesser amount that are at bronze,” he adds.
“I’m happy with the pay,” says Nussbaum-leased owner-operator Homer Kaiser, “that and the fact that I’m home every weekend.”
Leading the pack
Nussbaum and other carriers making significant upward movements in driver pay are filling a vacuum they hope may lead to a better future for the industry. The carrier didn’t raise pay “out of what I would call necessity,” Nussbaum says. “We’ve always felt that driver pay should be higher than what it is – everybody thinks it ought to be $75,000 a year, but nobody seems to want to take the lead.”
Attracting the true professionals among owner-operators is what motivated Spokane, Wash.-based TWT Refrigerated to boost its base per-mile pay to an even dollar this year. Generally, says Personnel Vice President Jeff Benesch, TWT’s survey of the industry noted a average of 90 cents a mile base, not counting fuel surcharges and accessorial items. That level was where TWT had hovered for quite a while for paying their nearly 50 owner-operator units. The company also runs 150 company-owned trucks.
The 11 percent pay boost, Benesch believes, sends a message not only to prospective recruits but to those already leased on. “Owner-operators are the backbone of our company,” he says, which launched as the one-truck operation of Jim Williams in 1972 and grew organically from there. “We want to show that we appreciate their efforts. We want to attract the cream of the crop.”
The company is looking for teams to run the I-80 corridors West to East and back, as well as solo drivers for their high-traffic lane along the I-5 corridor into California and back.
Like the operators at Nussbaum, equipment owners with TWT have benefited from recent additions of side skirting equipment on TWT reefer trailers, and the operations team has been involved every step of the way to make certain that the pay increase is accompanied by higher efficiency in delivering operators quality miles.
“When we sat down and came up with this pay package,” says Benesch, “we also looked at our customers and lanes. Our operations team is focused on ensuring that our drivers are getting the miles that they demand.”