When Charles “Shorty” Whittington was chairman of the American Trucking Associations a decade ago, the founder of Grammar Industries called for the industry to look at paying drivers by the hour, he recalled last month during a panel discussion at the ATA’s annual Management Conference & Exhibition. “And I was about tarred and feathered.” Trucking companies told him to do so would be “business suicide.”
But things are changing.
Seriously evaluating how we pay drivers is something trucking needs to do as the industry faces its worst shortage of drivers since ATA first started keeping numbers. The shortage is projected to hit 50,000 by the end of the year. One Northeast fleet manager I talked to said he’s 15-18% short of where he needs to be on drivers.
Grammer Industries is one of a number of fleets — many in the tanker and bulk business — who have been quietly experimenting with hourly pay. Some of Whittington’s friends in the industry who have done so, he says, have seen their driver turnover drop to 20%.
Admitting that getting customers to accept the rates they’ll need to pay in order to make that happen is just one challenge in making this transition, he said, “but I think this industry has done a terrible job in communicating with the shippers.”
With the upcoming electronic logging device mandate, however, many in the industry have agreed that this kind of communication is going to be vital. And it also could mean that moving to hourly pay would make sense, at least in some situations.
It’s understandable how the mileage rate became the standard and accepted pay structure for the industry. With drivers out on the road for days and even weeks at a time, with no way to know much of anything about what they were doing other than the miles you could be reasonably sure they were traveling from origin to destination, mileage was the one number you could use to make calculations.
But with ELDs, that’s all changed. Used properly, you’ll know how many hours they’re driving, how many hours they’re sitting at the dock waiting to load or unload, and how many hours they’re off duty.
And for drivers who are leery of electronic logs, wouldn’t that be a lot easier to swallow if it meant they were actually going to get paid for every hour they worked?
Whittington said his company enjoys low turnover and spends very little on advertising for drivers. While he said the company culture values drivers, and that’s part of it, the hourly pay is a definite draw.
Louisiana-based Dupre Logistics has been paying drivers by the hour for years, and notes that it positively affects driver safety — when drivers are paid based on mileage or a percentage, it can push them to work when tired.
Not that such a move is easy. As Whittington said, “it puts a lot of strain on dispatch when you start down that path.” During the recent hurricanes in Texas, Louisiana, and Florida, “we paid out over $200,000 to truck drivers who didn’t move during those storms,” he said. “Was that tough? It was damn tough. But we’ve got people coming to work for us because we treat them right.”