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TCA Fleet Panel Sees Drop in Driver Applications, But Positive Signs on Economy, Freight, Rates

March 6, 2013

By Deborah Lockridge

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Lana Batts, Max Fuller, Derek Leathers and Dan England during TCA's Tuesday General Session.
Lana Batts, Max Fuller, Derek Leathers and Dan England during TCA's Tuesday General Session.
The driver shortage is already intensifying, with the number of both new and experienced driver applicants down over the last couple of months, as economic signs lead to improved optimism about increases in freight and rates this year, according to a panel discussion of three major truckload executives Tuesday at the Truckload Carriers Conference annual convention in Las Vegas.

The session, titled "Repaving Truckload's Road to Success," was hosted by Lana Batts, co-president of Driver iQ and a former head of TCA, featured:

  • Dan England, chairman of C.R. England Inc.
  • Max Fuller, chairman and CEO of U.S. Xpress Enterprises Inc.
  • Derek Leathers, president and chief operating officer, Werner Enterprises.

Driver Applications Dropping

The driver shortage situation "is going to be probably the worst situation we've seen," Fuller said. "If you look at the last year it's continued to tighten. In the last four weeks, we've seen number of applicants drop by 20% to 25%." Calls to other carriers confirmed similar trends, he said. "We think with housing improving, a number of drivers have left the industry to go into construction."

Leathers said while Werner hasn't seen that much of a drop, its applicant count has been down on both new and experienced drivers, at double digit levels, and it started at the end of last year.

As always when discussing the issue of the driver shortage, the issue of pay came up.

"We've been a TCA member 35 years," England pointed out, "And the first convention I went to we had a panel discussion on driver turnover. It has worsened, no question about it, but we have talked for so many years about trying to get more money for our drivers and I think we've largely failed."

Leathers said in conversations with shippers about the need to get rates up to pay drivers more, "I'd like to say we see a sense of urgency in their eyes," but that's not often the case. "You often hear that other carrier aren't telling them about need to raise driver wages. But when you ask them what they pay drivers in their own private fleets, it's almost universally 20% to 30% higher. We have those very uncomfortable dialogues and we push them on that perspective."

England says compared to what we were paying drivers in 1980, if you adjust for inflation, drivers aren't even making as much money as they were then, yet drivers today are faced with far more regulations and responsibilities.

"We've failed on that front and haven't succeeded in pushing through enough increases to pass on increased compensation to drivers, so we're trying to find ways to make the jobs we have better, more compatible with home life, get them home more often," he said.

Leathers, similarly, said Werner works to develop better pay packages that are more specific to the type of work drivers are doing, and to get them home more often.

Fuller and Leathers both said they are seeing longtime, experienced drivers throw up their hands and leave the business because they are fed up with the increasing number of regulations.

Hours of Service Uncertainty

One of those regulatory frustrations, of course, is the uncertainty over the new hours of service regulations scheduled to go into effect July 1, if a court challenge being heard between now and then doesn't affect the start date.

"We're planning on the impression that it may very well be implemented July 1," Leathers said. Werner has been running a portion of its fleet under the new rules and trying to determine what the impact will be. He is expecting a productivity hit in the high single digits or worse.

The good news, Leathers said, it that HOS "will be the last nail in the capacity coffin" and will give carriers more leverage to raise rates.

Looking ahead, the three were fairly optimistic. 

"I think the next couple of years are going to be pretty exciting," Fuller said. "When you look at the truckload industry, we're really subject to the stocking, restocking, consumption that our country has. We've gone through the destocking cycle, and if you look at inventory to sales ratio, it's pretty low. You look at housing improving, unemployment improving, that's probably going to help the consumption side. I think in 2013 and 2014 we're all going to be a lot more excited about our industry and freight volumes."

England said there are some mixed signals out there. "If you look at year over year new truck sales, we've had 13 consecutive months of sales being down, and that obviously causes some alarm," he said. "However, if you look at new home sales, retail sales, consumer confidence, we're optimistic, and we're seeing some improvement in demand. It hasn't reflected itself in strong rate increase yet, but we're very optimistic."

"I think the market is tightening as we speak," Leathers added. "We're seeing more and more of that in conversations with customers."

Rates need to go up, Leathers said, because costs have gone up. "Even without a tonnage increase, this is a conversation we have to be having with our customers. When you look at new truck prices, we estimate on average you're purchasing those trucks at a 40% higher price. To not be out talking to customers about rates would be a difficult position to put your company in."

Fuller agreed. "I think you have to see rate increases. We've seen costs go up about 6% per year while rates have gone up about 3% per year the last couple of years. With capacity tightening the way we anticipate the rest of the year, we are going to see the ability to increase rates more so than at any point in the last three years."

Comments

  1. 1. Cliff Downing [ March 06, 2013 @ 03:46AM ]

    Compensation is probably the major factor. For those, like me, who have over a couple of decades driving, the new regulations are not that big of a deal. They can be overcome. But if the compensation is not commensurate with the challenge, then it just isn't worth the effort. I am a O/O leased to a TCA carrier. Compensation is my primary concern. I have more cost concerns as well as take home pay. There has to be a fair compensation for the increased effort in dealing with CSA and the new HOS. There comes a point where the the effort is not worth it. I would contend also, that this "one size fits all" style of compensation is antiquated at best. There needs to be improvement in adjusting compensation based on quality and performance. The best drivers at a carrier deserve premium pay. They are the ones that keep CSA scores low and customers happy. This rate per mile thing based only on longevity and a "union" mindset by carrier in how to compensate individuals is so old school and I think carriers do not realize how this affects their retention. If I have been driving for 3 decades, have a virtually non existent CSA score and clean DAC, then why should I get an entry level rate at a carrier or even their top rate? When a business looks at people who will do them the best job, they negotiate a contract. It should be no different when trying to attract the cream of the crop in drivers. You want quality, you have to pay for it. You will not get a Ferrari for the price of a Ford Escort. An executive at a bank does not start out again as a teller at another bank, why should an experienced driver with a solid record and reputation have to start over again with another carrier? And the carriers wonder why they have problems.

  2. 2. Cliff Downing [ March 06, 2013 @ 03:46AM ]

    Compensation is probably the major factor. For those, like me, who have over a couple of decades driving, the new regulations are not that big of a deal. They can be overcome. But if the compensation is not commensurate with the challenge, then it just isn't worth the effort. I am a O/O leased to a TCA carrier. Compensation is my primary concern. I have more cost concerns as well as take home pay. There has to be a fair compensation for the increased effort in dealing with CSA and the new HOS. There comes a point where the the effort is not worth it. I would contend also, that this "one size fits all" style of compensation is antiquated at best. There needs to be improvement in adjusting compensation based on quality and performance. The best drivers at a carrier deserve premium pay. They are the ones that keep CSA scores low and customers happy. This rate per mile thing based only on longevity and a "union" mindset by carrier in how to compensate individuals is so old school and I think carriers do not realize how this affects their retention. If I have been driving for 3 decades, have a virtually non existent CSA score and clean DAC, then why should I get an entry level rate at a carrier or even their top rate? When a business looks at people who will do them the best job, they negotiate a contract. It should be no different when trying to attract the cream of the crop in drivers. You want quality, you have to pay for it. You will not get a Ferrari for the price of a Ford Escort. An executive at a bank does not start out again as a teller at another bank, why should an experienced driver with a solid record and reputation have to start over again with another carrier? And the carriers wonder why they have problems.

  3. 3. John Mullen [ March 06, 2013 @ 06:38AM ]

    Re: Driver shortage, Bring it on ! We are a nation known to respond at our best in times of crisis. The refusal by major carriers, the fear that a change in the method of compensation will not be copied by smaller competitive carriers, will be overcome by necessity. Note: Private carriers not only pay more, they pay hub miles, delay time and motels.

  4. 4. Miles Long [ March 06, 2013 @ 07:45AM ]

    If these trucking companies would learn how to treat the drivers like humans instead of animals, then maybe the drivers would not be quitting or have a shortage on drivers or applications.
    I am sure they never thought of that.

  5. 5. Kurt [ March 06, 2013 @ 03:44PM ]

    There is no shortage. If there was freight that was not being hauled, rates would be increasing, not decreasing. But for these exploitation companies there is a lack of people willing to become their victims. Companies were paying into the $40,000 range in the late '70's, and today's pay is unchanged, but has not kept pace with the cost of living since then. When I read about tremendous pay hikes and freight sitting waiting to be shipped, then there will actually be a shortgae.

  6. 6. Troy [ March 06, 2013 @ 09:10PM ]

    Companies need to treat us drivers with more respect. Instead of assuming that were liars,thieves and cheats. DOT acts like every accident involving a CMV is automatically the Commercial Drivers fault. How some of these larger trucking companies spend some money and work with the DOT to implement a program /and or a requirement to have at 15-20 hours training for anyone getting their non CDL or renewing their non CDL training in how to drive with CMVs on the road. I've been in a lot of different industries and the trucking industry has by far stole more money out of my wallet then any other. This is America, you work you get paid for what you worked. If the other industries I've worked for ever held back wages or just plainly said that weren't going to pay for what I've worked for, there would have been major problems and you can call it barbaric ,hillbilly,ghetto,criminal or whatever but right is right, I work I get paid. And companies need to pay their drivers more and not in the way of bonuses that are sometimes very difficult to achieve, pay straight out , not from city to city but from exact location to exact location. Everybody says that us truck drivers move the economy , that we are the blood and the roads are the veins. Well if that's true then we all know what happens when there's no more blood.

  7. 7. Lorne [ March 10, 2013 @ 08:19PM ]

    Drivers have learned ONE makes $$$ to live better with their families.
    Not support the carriers.
    Common sense, Pay more $$$, better work.
    NOT GIVEN CEO'S BONUS for SCREWING employees so they get a big BONUS.
    Pay DRIVERS MORE $$$
    VERY SIMPLE, what part of simple does management not understand?

  8. 8. Mike Ragsdale [ March 19, 2013 @ 05:55PM ]

    You know, i have read the article and the comments. I just want to throw my two cents in. As a former driver, and a long time admirer of the industry. The biggest problem in getting the fair wage is not all upon the companies. We have too many cuthroats behind the wheel. Our industry is the backbone and life blood of American Commerce. Without us Commerce stops and businesses will suffer. I have said it a million times, WHEN DRIVERS STOP FIGHTING AGAINST EACH OTHER AND TAKE A STAND AGAINST THE COMPANIES, WE CAN GET BETTER PAY. It's too easy for a company to replace drivers with less qualified drivers and pay them anything. The struggling economy pushed many desperate individuals into trucking who were just trying to pay the bills and keep food on the table. So the complaints of the seasoned driver is going unheard and ignored................I can't express enough the need for a more unified front in the fight for better pay..............Why should a man be forced to be away from his home 3 wks a month to earn a mere 35- 40 k per year.............The big boys have the upper hand right now, because the veterans run away instead of getting the younger newbies on board with what needs to be done................Then they leave and go trash the new guys for trying to learn.............MEMO TO THE OLDER DRIVERS: YOU WERE NEW ONCE !!!!!!
    if CMV drivers don't get together and stick together, nothing will ever get better

  9. 9. stephen [ January 10, 2014 @ 07:10PM ]

    We should make $21.0 per hour plus overtime pay. The trucking co are not getting enough to pay drivers fairly and buy new equipment

 

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