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Approaching Peak Season, Motor Carriers Increase Driver Pay to Combat Driver Shortage

As we enter peak shipping season, truckload carriers once again are raising pay, increasing benefits, and offering bonuses and any other inducements they can think of to sign drivers. And to pay for all that, they continue to raise the rates they charge shippers.

"We're not in the trucking business anymore, we're in the business of providing driver services," said Brian Fielkow, CEO of Jetco Delivery, a Houston-based drayage and truckload carrier. He said driver pay has increased 15 to 18 percent this year, and that "may not be the end." Penny by penny, per-mile pay is rising to the point where more truck drivers will be able to earn average wages in the $50,000-60,000 range, and some even higher. Trucking executives have long admitted that driver pay would have to hit about $75,000 per year to end the shortage. "Paying $65,000 to $75,000 would get people interested," said Fielkow. "We spend a lot of time talking about culture but the money has to be there, too." Raising pay to $75,000 would be "a big leap," he admitted, "but spread that across the year and per load, and it's not that significant."

A good part of that money is coming from the low double-digit contractual rate increases truckload carriers reportedly are winning from shippers in 2018 as swelling freight demand breaks against inadequate supply. About one-third of rate hikes is estimated to go to drivers.  "We're having this conversation with shippers every day," Fielkow said. "It needs to be an honest conversation. Carriers can't end the driver shortage by themselves. It needs to be done through shipper-carrier collaboration, and it's up to the shippers to change." That means not only paying for increased pay, but becoming "driver friendly" by speeding carriers through their gates, offering them access to facilities such as break rooms and restrooms while they wait to be loaded or unloaded, and even overnight parking.

Closing the gap between what truck drivers are paid and what they should be paid is no easy task, partly because of the gap between driver pay and what the rest of US workers earn. The gap between the average annual pay for heavy-truck drivers and the rest of the working population climbed from 1 percent in 2001 to 12.1 percent in 2017, just a step down from 12.2 percent in 2016, according to US Bureau of Labor Statistics (BLS) data.

The American Trucking Associations (ATA) estimates the truck driver shortage in the United States to be as large as 50,000 drivers this year. Two years ago, there were 80,000 excess tractor-trailers, according to the Council of Supply Chain Management professionals, a sign of how things have changed.

And yet there are more drivers today than perhaps any year in this century. In 2017, the number of heavy-truck or tractor-trailer drivers rose 2.6 percent to approximately 1,750,000, according to the BLS. The total number of commercial drivers tops 3 million. The number of tractor-trailer drivers employed in the United States dropped 13.4 percent from its 2007 peak to 1,466,740 in 2010, following the 2008-2009 recession. Since then, the tractor-trailer driver pool has increased 19.2 percent, although it did not surpass the 2007 peak until 2016.

Using Federal Motor Carrier Safety Administration data, risk management company QualifiedCarriers.com estimates the total number of drivers has increased even more - by 27.9 percent - since 2012, to about 2,486,530 active drivers as of May 2018. The trouble with different sets of driver numbers is they don't all count the same drivers. The 1,750,000 drivers the BLS counts differs from the ATA's count of over-the-road drivers, and from its own for-hire trucking industry employment data. ATA chief economist Bob Costello has put the number of over-the-road truckload drivers in the Untied States at about 500,000, out of about 865,000 for-hire tractor-trailer drivers of all types. The new drivers counted by the BLS aren't necessarily joining this group of truck operators.

QualifiedCarriers.com sees increases in drivers among all sizes of fleets, which indicates recurrent rounds of pay increases since 2014, with a hiatus in 2015 and 2016, are working. But the biggest increase in drivers can be found among fleets with one to six trucks: 68.6 percent. There are many potential reasons for this trend, from entrepreneurial drive to dissatisfaction with large employers, but one likely factor stands out: small carriers and independent drivers can make a ton of money right now on record-setting rates in the truckload spot market.

Source: Journal of Commerce