New truck driver pay model aimed at capacity retention

New truck driver pay model aimed at capacity retention

Daseke's 'Salary Plus' driver pay program provides drivers with a base salary, along with bonuses for mileage and safety. Photo credit: Shutterstock.com.

Truck driver pay needs to rise higher to attract new talent to trucking, but driver pay also needs to be more consistent from paycheck to paycheck if trucking companies, especially over-the-road truckload carriers, want to keep the drivers they do hire.

Drivers often cite fluctuations in weekly pay, or less pay or miles than promised by company recruiters, as the reason they jump from one trucking employer to another, raising driver turnover rates, trucking operating costs, and, eventually, the rates shippers pay.

Flatbed and specialized carrier Daseke Inc. hopes to remedy that problem with a new pay model that pays truckers a base salary and includes bonuses based on mileage and safety, Don Daseke, founder, chairman and CEO of the company, said in an interview Tuesday.

“We’re always trying things,” Daseke said. “If you’re in a full employment economy, where prospective truck drivers have more choices — they can work in a factory, construction, local driving job — we have to do some different things to appeal to that prospective driver.”

Over the past year, the $1.6 billion company has been experimenting with what Daseke called its “Salary Plus” driver pay program at several of its 17 subsidiary specialized and flatbed carriers, including Smokey Point Distributing and Central Oregon Trucking Company (COTC).

“Most drivers don’t have big savings, so if their pay fluctuates dramatically from week to week, that makes it hard for them to plan financially,” Daseke told JOC.com. “If we can provide truck drivers that financial base with a salary, we should do it,” he said. “We owe it to them.”

Pushing up pay for premium drivers

Smokey Point tested a new driver pay model that offered guaranteed salaries to those who drove more than 9,900 miles a month. Those salaries were as high as $76,000 a year, depending on a driver’s tenure with the carrier. Drivers receive bonus pay for extra miles.

Central Oregon Trucking introduced a similar pay program last year, calling it “Weekly Driver Salary Pay.” COTC offered a minimum salary of $1,250 a week for drivers running 2,430 miles — the weekly amount guaranteed by the company. Again, additional miles raise the total.

“We’re tweaking the program, but I’ll predict that in next couple of years you’ll see a version of Salary Plus at each of our companies,” said Daseke. He also believes in higher pay. “ I’d like to see all of our truck drivers make $100,000 a year in five years, and that could happen.”

That level of pay is well above the average truckload driver pay, which is in the high $50,000s a year, according to the National Transportation Institute, which tracks truck driver pay across a broad range of carrier types. But specialized and flatbed drivers may command premiums.

“If you’re paying $100,000 a year, you’ll get the drivers,” Daseke said, even if working conditions are more extreme than in other sectors of trucking. “You look at the drivers working in oil fields in West Texas or Alaska, why would anybody do it? Because they’ll make more money.”

Daseke operates approximately 6,000 trucks, which means it needs 6,000 drivers, both employees and owner-operators across its platform of flatbed and specialized businesses. The nature of that business means those drivers must be specially trained for their equipment.

“Dry-van truck drivers essentially close the trailer door and go, while our drivers have to tarp the load, chain the load, make certain it is centered on the trailer, know their exact route, know all the technical issues associated with hauling oversized, specialized loads,” Daseke said.

Daseke “absolutely” believes salary-based pay models for truckers will spread. Daseke’s size will help it break away from the per-mile model, he said. “A really small trucking company probably can’t take the risk of paying drivers if they’re not moving loads, but we can.”

Signs of change

There are signs salary-based pay packages and other models offering some level of guaranteed pay are gaining a foothold in an industry that has long tied pay to miles driven. “We see variations of this,” Gordon Klemp, principal and founder of NTI, told JOC.com.

Guaranteed pay can range “anyplace from $700 to $1,700 a week, with $1,200 being about the middle,” Klemp said in an interview late last year. “The majority of the carriers would be paying $1,000 or more a week, and the top would be in the neighborhood of $1,400 to $1,700.”

For the pay model to work, “drivers have to be available for dispatch, but if the carrier has a strong freight base (meaning consistent loads), they can offer something like this,” Klemp said. Where carriers have, “it seems to be working. I haven’t seen anybody discontinue it.”

Per-mile pay and mileage-based costing, however, are deeply embedded in trucking. It has been easier to track how many miles truckers drive than how many hours they work. Truckload carriers, in particular, have stuck with per-mile pay to ensure drivers are productive.

“The reason we’ve been paying people piecework for truck driving all these years is because we haven’t had visibility,” Michael Belzer, associate professor of economics at Wayne State University in Detroit, told JOC.com last year. “We didn’t know whether they were working or not.”

But with electronic logging devices (ELDs) now required for commercial truck drivers, trucking companies should have a much more granular and accurate view of driver hours and both driving and non-driving work they do. “The time is right for making a change,” Belzer said.

That change will entail higher shipping costs, but that’s necessary if customers expect to be able to secure capacity, Daseke said. Ultimately, capacity is fixed by the available supply of truck drivers. “If shippers ask whether it will cost more to move goods,” he said, “that’s right.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy

Comments

i would say Good & experience Tructor Trailer Driver should be getting a minimum of $25 p/hr