Last month in this space, I wrote about the impact driver and equipment detention is having on the industry. This year, for the first time, the issue appeared on the American Transportation Research Institute’s (ATRI) annual list of top industry issues.
The other issue to appear for the first time was driver compensation. Interestingly, and not surprisingly, this was the top issue among drivers, and didn’t even make the top 10 among motor carriers.
What’s also interesting is that this issue surged to number one among drivers following a year in which most made more money than in the past.
But it’s still not enough.
Bob Costello, chief economist of the American Trucking Associations (ATA), said during a panel discussion at the association’s Management Conference & Exhibition, that driver pay packages have increased, but their take-home pay has not kept pace.
This is for a variety of reasons, including shorter lengths of haul. In 2000, the average dry van truckload of freight traveled 800 miles, which has diminished to 503 miles. Fleets that used to put 125,000 miles a year under the bumper are now struggling to get 100,000, according to Costello.
Drivers are spending more time bumping loading docks and less time traveling down the road, making money.
Which ties into last month’s theme about driver detention, and how unacceptable it is. Drivers are being better compensated for every mile they run, but are now spending more time at shipper and receiver facilities, and in many cases, not being adequately compensated for that time.
And while everyone would agree drivers should be paid more, the reality is there’s now an oversupply of capacity. Fleets relying on spot market freight are struggling to get by.
“You can’t unring that bell,” James Reed, CEO and president of USA Truck, said of driver pay increases that were put in place during a strong 2018. His company raised pay rates 6.5%.
“Now you have a softer rate environment,” he acknowledged. “I think a lot of those smaller fleets in the spot market are going to struggle this year. You can’t walk that (pay increases) back. There’s less freight and lower rates. It’s tough.”
Already, we have seen a spike of bankruptcies among fleets south of the border. That trend has yet to surface in Canada, but can it be far away? As freight volumes soften and shippers flex their muscles, fleets will have to be very creative and forward-thinking to survive.