Driver Pay 'Flat as a Pancake' in 3rd Quarter; Wages Could Rise in '17
This story appears in the Dec. 19 & 26 print edition of Transport Topics.
Driver pay grew in the third quarter at the lowest levels in seven years as fleets continue to hedge against soft demand, but two large truckload carriers have announced raises effective Jan. 1 that could catalyze others to follow in 2017, according to an industry official who studies salaries.
Gordon Klemp, founder and president of The National Transportation Institute, told Transport Topics the average increase last quarter was fractions of a cent per mile — slightly lower than the meager change between the first and second quarters. The sequential increase of 0.03% represented the smallest change since the second half of 2009, he said.
On a year-over-year percentage basis, pay increased on average 0.66% in the third quarter for a truck driver with three years of experience.
“Driver wages are flat as a pancake so far this year. It’s about as flat as flat could be,” Klemp said. “It’s probably not unsurprising because we came into this year knowing it’d be iffy. But I find it interesting there has been no erosion; turnover is relatively flat, too.”
Kim Beck, vice president of benefits consulting at insurance broker Cottingham & Butler, agreed that there isn’t much movement on driver pay. Her company produces an annual trucking benchmark report on driver compensation and benefits in the truckload market based on a survey of more than 3,500 carriers.
“Most of our clients are mentioning operating cost increases and a slowdown of freight volume in many segments, especially dry van,” Beck said. “I think if we see volume go up, there may be potential for driver rate-pay increases in order to fill trucks and keep drivers. At the moment, it feels like everyone is sitting tight.”
But the freight market could be poised to improve in 2017, industry analysts say, and there are signs that drivers will benefit.
Crete Carrier Corp., which ranks No. 33 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, will raise pay at Crete Carrier and Shaffer Trucking by a penny per mile for national drivers Jan. 1.
“What we are trying to do is be proactive rather than reactive,” CEO Tonn Ostergard said. “We announced the pay raise so that we can attract some drivers during our January-to-April hiring season. We want to take advantage of what we anticipate is going to be a robust 2017 both with trucking demand and the restriction of capacity with the ELDs.”
Klemp said, “Crete is one of the bellwethers out there. When we see them move, it’s generally a harbinger of things to come. They’re adept at reading the market and at the leading edge on pay.”
He said that he wouldn’t be surprised if the moves seen in the first quarter are relatively modest, but also a precursor. “If the economy improves, we’ll see a second round of pay increases later in the year,” he said.
USA Truck Inc., which ranks No. 53 on the for-hire TT100, raised driver pay for independent contractors Oct. 1 to between $1.02 to $1.35 per mile, up as much as 38% from the previous 98-cent rate.
USA Truck also announced it would increase rates for unexpected downtime and short hauls for company drivers, and offer performance bonuses up to 5 cents per mile for company drivers with no preventable accidents.
“We want to make sure we’re market competitive, in the top 35% of carriers in regards to total compensation,” said Martin Tewari, president of trucking operations. “Based on the responses we’re getting from customers as far as bids and improved pricing in 2017, we want to add more capacity to our fleet and lower our capital expenses with more independent contractors.”
Pay-per-mile is just one factor in the compensation package, according to the industry executives. Other benefits include health-care costs, working conditions and in-cab amenities.
When Crete announced the pay hike, it also said that there would be no increases in health-care premiums, co-insurance or deductibles for any employee, regardless of whether costs to the carrier increase in 2017.
“When I talked about it at our drivers’ meeting [in early December], that probably got a bigger round of applause than the penny per mile,” Ostergard said. “The drivers realize the huge benefit of the fact that they won’t incur any cost increases for health and pharmaceutical.”
USA Truck announced it would offer free access to XM Satellite Radio to drivers next year, an expense that the company will absorb.
“For over-the-road drivers, this is their apartment on wheels. Companies offering satellite TV in the truck has become a big draw for drivers in the last year-and-a-half,” Beck said. “The comfort, nice accommodations and reliability of the equipment are becoming more important to drivers.”
