The Driver Shortage: Searching for Solutions

The search for drivers is becoming extremely competitive in today’s market. Many company’s are changing their pay structure, incentives and benefits packages to attract drivers.

Commercial Carrier Journal (CCJ) Digital is working on a three-month series that examines the driver shortage and ways to reduce the impact of this crisis.

Linda Longton of CCJ Digital writes:

Strong freight, tight capacity and surging rates mean conditions for carriers “are approaching their most favorable situation in 14 years,” according to FTR’s Trucking Conditions Index.

Except, that is, when it comes to drivers.

Long a major headache for carriers, in today’s environment, the search for drivers is “getting really, really competitive,” says Gordon Klemp, president of the National Transportation Institute, whose company tracks driver pay and benefits. “In the first two months of this year, the numbers of pay changes — we’ve never had a first quarter that’s even close,” he says. “And the size of some of the changes is pretty impressive.”

Desperate to take advantage of the booming freight market, carriers are offering drivers incentives ranging from higher pay and jumbo-sized bonuses to improved creature comforts and generous benefit packages. While experts say such approaches only encourage turnover, other tactics could provide long-term solutions to some of trucking’s systemic problems. At the same time, increasingly sophisticated technologies are giving fleets more tools to help recruit and retain this scarce resource.

Ask drivers why recruiting and retaining them is so challenging, and three out of four say carriers “don’t pay enough,” according to a recent survey by CCJ sister brands Truckers News and Overdrive. That’s a criticism many fleets are taking to heart: Truckers News has reported more than 25 pay changes since October, and Klemp notes that many took effect immediately. Historically, fleets might announce a pay bump in January but make it effective in late March, he says.

Klemp also expects some fleets that made announcements early in the year to raise pay again, possibly in the third quarter, based on competitive pressures and continuing strength in freight rates. “Pay won’t move unless rates are going up,” he says. Klemp predicts that if GDP is above 3 percent in the last three quarters, pay will be 15 percent higher on Dec. 31, 2018, than it was the prior year.

Alongside pay increases, many fleets are offering attention-grabbing sign-on bonuses. Klemp’s company reports median sign-on bonus amounts in February were three or four times as high as those a year earlier, depending on the segment. While such bonuses are common, many experts suggest any sign-on pay beyond what’s needed to cushion the transition to a new job only encourages turnover.

And sign-on bonuses may not be all that effective — at least for attracting the best candidates. Most veteran drivers “don’t trust them,” says Michael Fisk, director of hiring, marketing and driver development for Roadmaster Group, based in Glendale, Ariz. That’s perhaps why only 2 percent of respondents to a recent Truckers News survey said they would change jobs for a large sign-on bonus.

Fleets in the Southeast that typically lag other regions in terms of pay have announced the largest cost-per-mile raises, Klemp says. “The aggressiveness of pay changes down there might indicate they are hurrying to catch up to their counterparts in the Midwest and Northeast where they bump up against them.” The Northeast is historically the highest-paying region, and pay changes there have been fewer, he says.

Increasingly, fleets are tailoring pay packages to not only attract new talent but also reward existing drivers. K&B Transportation (CCJ Top 250, No. 124), based in South Sioux City, Neb., recently announced graduated pay increases tied to company longevity and starting at zero to six months on up to more than five years. Similarly, Joplin, Mo.-based CFI announced its Experienced Driver pay package in November when “we realized it took too long for our own experienced drivers to reach the top of our pay scale,” says Michael Hinz, senior vice president of sales and operations.

Bringing consistency to driver pay is key, says Phil Byrd, chief executive officer of Bulldog Hiway Express, based in North Charleston, S.C. “Drivers and potential drivers are looking for reliable income — not $1,000 this week, $500 next week,” Byrd says. “They want a predictable weekly income like most people do.” Drivers paid on Bulldog’s “salary plus” receive a salary and then incentives to help them earn above their base.

The growth of Amazon and consumer expectations for next-day deliveries have enabled teams to command large pay premiums, Klemp says, with experienced teams getting “into pretty rarified air” compensation-wise. Some carriers such as Tennessee-based Covenant Transport (No. 39) and U.S. Xpress (No. 16) are offering teams substantial bonuses. Covenant’s program pays $2,000 every time a team passes 60,000 paid miles together, up to a total of $40,000. U.S. Xpress has a similar plan but is offering a $50,000 bonus paid in $2,000 increments and in vacation time over a four-year period to current and future team drivers.

Beyond pay and bonuses, many carriers are looking for creative ways to cut through the recruiting noise and get drivers’ attention. Inwood, N.Y.-based Express Trucking & Courier, which provides expedited high-value shipping, offers free health insurance for drivers and their families with a $15 co-pay through United Health Care — a benefit that Ken Deocharran, Express president, values at $2,000 per month. If drivers already have medical coverage through a spouse, they can use the money to pay for their mortgage, rent or car payment, up to the $2,000, he says. The concept has been well-received, Deocharran says. “We put out an ad, and within 24 hours, 60 drivers responded. … It gave us a competitive edge in the market.”

However, it does little good to raise pay, boost bonuses and sweeten benefits if fleets don’t communicate these changes effectively to potential candidates and their own drivers. That’s where technology plays an increasingly important role. Whether through social media, email or a customized fleet portal, successful fleets use any means available to cultivate relationships with drivers. “It used to be ‘yes’ or ‘no,’ ” says Roadmaster’s Fisk. “Now, if it’s a ‘no’ now, we’re going to stay in touch with you. It has to be relational, where they’re interacting with you as well.”

As carriers deal with the realities of today’s more severe driver shortage, many are looking for ways to be more flexible in their hiring standards while maintaining safe operations, FTR notes in its Trucking Update. Fisk suggests fleets take a more sophisticated approach to hiring. “We constantly assess and reassess how we hire,” he says, evaluating each candidate from an individual perspective.

If a driver had a traffic accident at 19 and now is 35, Fisk considers the current level of maturity and possible change in habits “instead of just having a list of nonqualifiers,” he says. Such flexibility may require implementing additional programs or other requirements for the new hire to be successful.

Meanwhile, despite fleets’ best efforts to recruit each other’s drivers, many are content to stay put. Amid the flurry of carrier pay announcements, last month Truckers News and Overdrive asked drivers and owner-operators how likely they were to change jobs. Forty-seven percent said they have no plans to jump carriers because they are happy with their current employer. Another 17 percent said changing jobs was “just too much hassle.”

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Technology Investments Driving Change in Transportation

Technology has become a driving force behind just about everything these days, and that includes that transportation industry. While technology is often viewed by many as disruptive, it is also necessary to grow in an ever-changing environment.

Daniel P. Bearth of Transport Topics writes:

The combination of technology and innovation is changing the business of transportation and logistics in ways that are both potentially disruptive and critical to improving existing processes.

And the changes are coming from inside and outside of the industry.

XPO Logistics, which rode a string of high-profile acquisitions to become the largest third-party logistics company in North America in 2017, is investing $450 million in technology, and CEO Bradley Jacobs said he sees it as the key to maintaining the company’s position in the market.

“The logistics space is wide open for the development of exciting technologies,” Jacobs recently told investment analysts. “We view our technology as being critical to continuously improving customer service, controlling our costs and leveraging our scale.”

At the same time, investors are pouring money into startups and groundbreaking new technologies that have the potential to radically alter the landscape of the industry.

Firms such as Uber Technologies, Alphabet’s Waymo and Tesla Inc. are pushing the frontiers of self-driving vehicles, for example, while global players such as Deutsche Post DHL and UPS Inc. are testing the use of robots as part of a move to automate warehousing and distribution activities.

Since 2013, investors have poured $14.4 billion into equity financing for new companies in the transportation, logistics and supply chain management sectors, according to data from CB Insights, a New York-based research firm that specializes in tracking investment in technology and new business startups.

In Chattanooga, Tenn., a group of local business executives have teamed up to provide seed capital and mentoring for entrepreneurs with ideas for improving the business of transportation and logistics.

So far, logistics venture fund Dynamo has funded 13 companies, including Steam Logistics, which provides ocean and airfreight forwarding. Another Chattanooga-based fund, Lamp Post Group, has funded Bellhops, Bellhops, an Uber-like on-demand moving company, and Reliance Partners, an insurance brokerage firm.

One of the first beneficiaries of Dynamo’s investment is 20-year-old Jacob Boudreau, who ran a web marketing business while still in high school in Atlanta and who now with his partner, 21-year-old Sean Henry, heads up a company called Stord that helps warehouse operators market underutilized space.


Drivers Note No Difference Since the ELD Mandate Enforcement Date

April 1, 2018 was the official date for the ELD mandate enforcement. The rule is that if drivers get caught violating this mandate, they will be put out of service for 10 hours, and then, they can continue their delivery with paper logs. However, they must be ELD compliant by the time they are dispatched on their next load.

The Overdrive staff at overdriveonline writes:

The first day of so-called “hard enforcement” of the ELD mandate came and went with little fanfare, based on a sampling of drivers’ online comments. In an interesting quirk of the calendar, the day coincided with April Fool’s Day and Easter Sunday, the day of the week itself one where truck-enforcement activity is characteristically light.

As noted by Overdrive in late March, the U.S. DOT and its enforcement partner the Commercial Vehicle Safety Alliance will begin putting truckers out of service for 10 hours if they’re required by regulations to have an ELD and aren’t running one. After the 10-hour period is up, drivers can continue to deliver their load on paper logs, though they must be compliant by the time they’re dispatched on their next load or be subject to another 10-hour out-of-service order.

 April 1 also marked the date by which ELD violations would begin counting against carriers’ scores in the Compliance, Safety, Accountability program.
Most owner-operators responding Monday to an evening request for comments posted to Overdrive‘s Facebook page noted nothing out of the ordinary in general terms from enforcement.“Haven’t noticed a thing” different, wrote Jeff Clark.

Glen Murphy concurred: “Haven’t seen anything out of the normal.”

To that point, noted Rick Underwood, “All of the California scales have been open for business today” on his routes through the state, known for its busy inspectors.

Several owner-ops and drivers took the opportunity to weigh in with either opposition to or support for the new reality that is the ELD mandate. A round-up follows below.

Renee Peek-Wiggins Crabtree: We haul livestock and are not required to use ELDs yet. We are working to get hours of service changed to accommodate everyone. That’s the real problem, more so than ELDs. 

Crabtree went on to espouse the view that ELDs nonetheless constituted a “big brother” invasion of privacy.

Ben Krull: I don’t drive a truck for a living but do deal with drivers every day. I hate the new law, because now all of the drivers are in a hurry and impatient.

Andy Brant: The same people complaining about [ELDs] are the same ones who are trying to bend the rules. The hours of service are the exact same now as they’ve been for a number of years now, and the government only sees the hours of service if you or your company get an audit [or inspection]. Every industry has a set of standards and rules for that specific industry, and you know them when you sign up. This isn’t changing those rules — it is enforcing people to be in compliance with the ones already set in place. This will actually make it easier for you to do your job correctly and by the law, if you take five minutes out of your day to learn it. Let’s face it, if you’re reading this you’re using the same type of technology as e-logs, so “the technology is too difficult” can’t be an excuse.

Missi Howard I got my class a license in 2015 so all I know is ELD. I miss the good old days when the cheaters could fill out their comic books any way they wanted and just keep driving. There was so much more parking then. ELDs have created a real parking crisis for me and I hate it.

And, Howard added, given she’s known nothing other than e-logs for hours recording, “if I ever have to do paper logs in an emergency I’m in trouble.”