Pay up: Companies confronting the driver shortage one dime at a time

  (Photo: Shutterstock)  Despite national unemployment rates sitting at an “18-year low of 3.8 percent,” the so-called driver squeeze continues to make headlines in 2018, marking it “a pretty rowdy year in wages,” according to Gordon Klemp, president of the National Transportation Institute (FreightWavesThe Washington PostUSA Today, and NPR). Some trucking companies are pushing back against the shortage with announcements of their own: pay increases for their drivers. Klemp calls the phenomenon a “perfect storm of shrinking capacity, growing demand, [and] shrinking experience.” The American Trucking Associations’ 2017 Driver Shortage Reportdescribes the industry’s effort to combat fluctuations in the market:

The natural market reaction to any shortage is that prices rise. In this case, price is driver wages, which are again increasing significantly. Most fleets instituted large pay increases in the summer of 2014 with many repeating the increases again in 2015. Even with the soft freight environment in 2016, many fleets increased pay rates last year as well. Today, sign-on bonuses are used throughout the industry as competition for drivers heats up. Expect driver pay to continue rising as long as the driver shortage continues. Good benefits are also part of a total compensation package in the industry.

As the report above addresses, each company has a different approach to distributing their benefits—some increase their mileage rates, others promise yearly bonuses or guaranteed weekly earnings. The way the companies distributed the information was as varied as the content itself. From pop-up windows to press releases, many of these announcements were front and center on company websites, grabbing the attention of potential new drivers and news agencies alike. May 2018 was a particularly busy month for industry increases, as both Schneider National and C.R. England announced investments in their driver pay rates, each taking effect by the end of the month.

Schneider circulated the news via a series of press releases. A flashy graphic (“Again? Yep.” superimposed on an image of a wallet stuffed with hundred dollar bills) sits in the corner of the article announcing that, as a result of weekly driver pay evaluations, “Schneider is proud to announce a second round of significant team and solo driver pay increases in 2018” right “on the heels of a February pay increase.” The aforementioned February increase boosted van truckload rates by up to $.04 per mile. Additionally, teams have the opportunity to start $.56 per mile, while OTR drivers can start at $.52 per mile, and regional drivers can earn $.50 per mile. Although “pay increase amounts will vary by experience level and geography,” “all Van Truckload drivers of all experience levels have seen one or more market-based mileage rate base pay increases in the last year!” May pay increases continued to rise, averaging $.01-$.02 per mile. Team drivers also saw an increase in base pay ($.56 per mile to $.57 per mile). In the last 20 months, Schneider reports that their rates “have increased by as much as $.10 per mile” in response to market conditions.

C.R. England’s May 25, 2018 press release is vague in its details, but introduces “multi-million dollar investment in our drivers” as a response to the “ever-changing and increasingly competitive marketplace” according to CEO Chad England. Chief Sales Officer Brandon Harrison reports that C.R. England’s drivers are “now among the highest paid in the industry” following an $11 million investment in line haul pay. Dependent on experience level and position, 60% of the driver force will enjoy pay increases anywhere from 5.3% to 25%. Evidently, they have the right idea: in an aggressive market, C.R. England is up over 200 drivers year over year, maintaining “first and foremost a competitive pay package” and adding guaranteed weekly pay, according to Harrison.

In April 2018, Groendyke Transportation announced their “largest driver pay increase in company history,” which went into effect this May. “The raise includes a mileage pay increase across the board of up to 6 cents per mile and an average hourly non-revenue rate increase of 9.4 percent for all drivers. In addition, Groendyke’s chemical drivers will receive a flat-rate increase that will bump their pay significantly.” Groendyke’s president, Greg Hodgen, notes that the organization aims to “have a sustainable pay model that proactively keeps its drivers’ pay competitive in the tank truck industry and in trucking overall.”

 Mileage rate increases, January-May 2018  (Graph: Gordon Klemp, National Transportation Institute)

MILEAGE RATE INCREASES, JANUARY-MAY 2018 (GRAPH: GORDON KLEMP, NATIONAL TRANSPORTATION INSTITUTE)

No matter the approach, pay has risen across the industry, as evidenced in the graph above provided by the National Transportation Institute. Derek Leathers, CEO of Werner Enterprises, as quoted in NPR’s January 2018 article, notes that “Pay in the industry’s come up considerably. Here at Werner our pay’s up 17 percent over the last couple of years,” while Chad Brueck, Vice President and General Manager for Pegasus Transportation calls it “the most competitive driver market I’ve seen in 15 years.” Schneider, in its January 2018 press release, acknowledges that their “Average solo Van Truckload Over-the-Road mileage rates have increased almost 15 percent in the last two years, with Regional and Team mileage rates close to 10 percent.”

While it’s difficult to make a definitive statement on how to best accommodate the driver squeeze, it’s clear to see that each company will be taking a different approach in keeping the industry aggressive and appealing to drivers.