Drivers

Driver Pay Analyst: No Silver Bullet to Solve Driver Shortage

March 2016, TruckingInfo.com - WebXclusive

by Steven Martinez, Web Editor - Also by this author

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With a subdued economy, high turnover at large carriers and looming regulations, there is unlikely to be a single solution to the driver shortage problem.

In a conference call hosted by Stifel and the National Transportation Institute, analysts discussed how some carriers are addressing driver wages to improve recruiting and retention.

Of particular importance was pay stability, which was seen as a major factor in why smaller carriers had much lower turnover than large truckload carriers that incur an average of 100% turnover.

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“A lot of drivers operate paycheck to paycheck,” said Gordon Klemp, president and CEO of NTI. “That tends to create a lot of turnover.”

Many drivers have "lumpy pay," meaning their earnings are often affected by unexpected events such as weather, breakdowns or slowdowns in loading and unloading.

Any time they are unable to stay on the road or take on more work, they are effectively working for free, or losing money. Additionally, drivers are subjected to inconsistent home time or non-guaranteed home time.

As a result, many carriers have resorted to offering guaranteed pay to offset these unknown factors and reduce driver turnover. While some fleets may not want to spend the extra money, Klemp noted that in the long run it was a relatively inexpensive way to combat driver turnover.

Private fleets gain an edge by paying drivers 20% to 50% more than over-the-road truckload carriers do. Coupled with better schedules and home time, this gives some private fleets turnover as low as 14%.

The most recent cycle of driver pay ran for 19 months, during which driver pay increased by 14% in a relatively short amount of time. By contrast, driver pay decreased by 25% during the recession. This short cycle was well below the average length of a pay cycle at 33 months.

“We had a pay cycle that was very unusual this time,” said Klemp. “At 19 months, it was the shortest pay cycle we’ve ever seen by a lot.”

While there is still a shortage of drivers, the situation is in a lull right now, though analysts contended that it will become a bigger issue again as the aging driver workforce retires and regulations put a squeeze on the pool of qualified potential drivers.

"It’s not that there is a lack of applications; you get a lot of applicants," said Klemp. However, many of these drivers are not nearly qualified, he added, with some fleets having to go through as many as 2,300 applications before finding a qualified candidate.

New government regulations coming down the line in the near future could have an adverse effect on that qualified pool of drivers. These regulations include electronic logs, speed limiters, and hair testing, all of which target different segments of qualified drivers for differing reasons.

While ELDs will be a good thing in the long run, in the short term, smaller fleets and owner-operators will need to catch up on using electronic logs. This could leave a gap in the freight capacity model until they can match large fleets that already use ELDs. NTI estimated that gap alone could have around a 5% impact on driver supply.

Speed limiters may have an adverse effect on independent drivers, requiring drivers to slow down and reduce their ability to make more money. There may also be a contingent of drivers who drop out altogether because they are having a hard time accepting new technology.

Lastly, hair testing could affect capacity by as much as 6%. NTI’s research found that test failures increased by an average of 11.6% among carriers that adopted hair analysis as the standard testing procedure – up from the traditional failure rate of around 5%.

Ultimately, NTI found that more than anything, the best way to recruit and retain drivers ia to offer them consistent pay, home time and respect. It found that fleets that managed to provide all three had significantly lower turnover.

“It’s really expensive to turn your fleet over, especially at 100%,” said Klemp.

Comments

  1. 1. John [ March 12, 2016 @ 09:57AM ]

    Silver Bullet solutions are in short supply and to date the obvious answers to the growing driver shortage and retention remain unacceptable to management. Abandon the archaic practice of driver compensation by mileage. Hourly pay for ALL on duty time reduces the on board monitor to a system of time card recording. Create a retirement fund for drivers which would follow them when changing carriers. A fund to be managed by a non governmental agency selected by ATA. Regulation reform will take place under a new Administration.

  2. 2. russell barrow [ March 15, 2016 @ 11:29AM ]

    right on target-consistent pay-home time on time and some respect-love trucking-yessir

 

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