The battle to recruit and, just as important, keep truck drivers is getting fiercer among truckload carriers as freight demand steadily increases.
Although that competition has yet to result in sizable increases in driver pay, motor carriers are offering a truckload of incentives and programs to attract drivers.
Trucking industry hiring rose 4.1 percent year-over-year in January, according to preliminary seasonally adjusted figures from the Bureau of Labor Statistics.
That’s up from a 3.7 percent year-over-year increase in December and a 3.3 percent increase in October and the strongest annualized hiring gain since last July.
Con-way Truckload is experimenting with guaranteed pay — a groundbreaking concept for an industry that traditionally has paid drivers by the mile.
Con-way will introduce a guaranteed pay package for team drivers next month, and guaranteed pay for solo truck drivers may be on the horizon.
The team pay package “is a precursor to that,” said Bert Johnson, director of human resources and driver recruitment for the Joplin, Mo.-based truckload carrier.
Carriers experiencing steady freight demand in what’s typically the weakest domestic shipping season of the year are recruiting now to fill truck cabs ahead of a potential freight surge in the second quarter. They’re looking for company drivers and especially owner-operators, who they can keep on board at less cost.
Both types of trucker are increasingly hard to find and more difficult to hire, carrier executives say. Driver pay is comparatively low and the driver’s workday long. Carriers also are tightening their hiring requirements as a more stringent federal safety regime makes screening and hiring “qualified” drivers a priority.
Although some truckload carriers may pay drivers $50,000 a year or more, the average annual pay for a tractor-trailer driver in May 2010 was $39,450, according to the Bureau of Labor Statistics. That’s less than the mean wage for all U.S. occupations, which was $44,410 in 2010. Heavy truck driver pay also increased more slowly than the national average pay over the last decade, rising 17.1 percent from 2001 through 2010, while the national average rose 30.5 percent.
Then came the recession, which decimated the driver pool, eliminating more than 330,000 jobs for heavy truck drivers in just two years — an 18.4 percent plunge. By May 2010, the number of tractor-trailer drivers in the U.S. had dropped to 1.47 million, the lowest number on record since 1997, according to the BLS.
The second quarter of 2010 is when freight demand began to chaff against available truck capacity, which increasingly is measured not by tractors or trailers but by drivers. As the recovery progressed in fits and stops through 2011, demand for drivers increased, and so did driver turnover at truckload carriers, as drivers began to jump from company to company in search of better pay and working conditions.
The driver market tightened in the fourth quarter, according to Werner Enterprises, the nation’s third-largest truckload carrier. Difficulty in hiring enough drivers kept Werner’s capacity slightly below its target level of about 7,300 trucks in the latter part of 2011, the company said when announcing its fourth quarter earnings.
U.S. freight shipments hit a seven-year high point in December, according to the Bureau of Transportation Statistics, increasing 3.9 percent from November. “Assuming the domestic economy strengthens in 2012, we anticipate the driver market will become even more challenging,” Werner said.
Trucking companies are responding to that challenge, offering signing bonuses for solo and team drivers, employees and owner-operators.
Flatbed specialist Maverick Transportation, which operates about 1,200 tractor-trailers, will raise its starting per-mile pay to 42 to 43 cents in April. Maverick will also offer “longevity” incentives and other bonuses aimed at keeping its drivers, and put 350 new trucks into service in the first quarter.
“Everyone in our industry knows that professional drivers need, and more importantly, deserve higher pay,” Maverick’s Chairman and CEO Steve Williams said. “We decided to move fast in 2012 in order to demonstrate our ongoing commitment to offer the best compensation plan and the best driving job in the industry.”
Con-way Truckload’s approach is based on helping owner-operators manage their costs and guaranteeing a certain level of base pay for drivers who meet performance standards. Last month, the company introduced “Destination Ownership,” a program aimed at converting company drivers to independent contractors.
“We’ve been trying to grow our owner-operator fleet for quite some time, and it’s been a struggle doing that,” Johnson said. The company is offering employees its own used vehicles at trade-in prices through a third-party leasing company. The trucks come with a warranty and service package.
“This gives the potential owner-operator a leg up, and we’re not making money on the lease,” Johnson said.
The guaranteed pay program for team drivers gets under way in March, he said. Team drivers that qualify will get 5,000 guaranteed paid miles per week, even if their actual mileage is less, Johnson said. Con-way will keep track of the deficit and collect on it if the team exceeds 5,000 miles. If there is no mileage deficit, those drivers will be paid for the base 5,000 miles plus any additional miles.
The carrier has been working on the guaranteed pay program for a year, and began testing it in December, Johnson said. Most drivers, he said, are hitting the 5,000-mile-a-week milestone, but the guarantee provides consistency, and consistent pay may be more important to some drivers than higher pay. “It equalizes their pay week after week after week. It removes the stress if they’re sitting two days waiting on a load,” Johnson said. That should attract drivers, he said. Con-way Truckload has 302 driver teams, and it wants to get that number up to 450 or 500, he said.
“If we can make this a success for our teams this year, there’s nothing to stop us from doing a 2,500-mile-a-week guarantee for our solo drivers,” he said.