Few Carriers Raise Driver Pay in Second Quarter, Report Says

This story appears in the Sept. 2 print edition of Transport Topics.

A few fleets made modest increases in driver pay in the second quarter as they and compeitors refine standards for performance-based compensation and sign-on bonuses, according to industry experts and officials.

“Most carriers believe there are very few quality drivers out there to hire,” said Gordon Klemp, president of the National Transportation Institute, whose company measures driver pay and compensation trends at more than 300 fleets. “They don’t believe that raising pay will bring the number of drivers they would really like to have.”

Just 3.7% of the surveyed fleets raised pay, barely above the 2.8% that did so in the second quarter of last year. Most of the increases were given by lower-paying carriers.

Second-quarter increases on average totaled 4.1% on an annualized basis, compared with 3.2% in the 2012 period.

“The fact is that driver pay, in terms of real wages, hasn’t risen appreciably in 20 years,” Bill Graves, president of American Trucking Associations, told Transport Topics. “The pay-by-mile model will continue to grow more and more challenging due to declines in average length of haul and increasing congestion. Something will have to give.”

He offered several alternatives, saying that mileage pay will have to rise, incentives such as on-time delivery or meeting safety targets will have to be created, or the basis of pay will have to shift to hourly.

“Our strategy is not necessarily raising pay for drivers as a whole,” Eric Fuller, chief operating officer at U.S. Xpress Enterprises Inc., told TT. “Instead, we are rewarding drivers for the right behaviors, such as safety and utilization.”

U.S. Xpress, which ranks No. 16 on the Transport Topics Top 100 list of for-hire carriers in the U.S. and Canada, plans to roll out a new performance-based program this fall with a safety bonus and incentives based on miles a driver wants to run and a driver’s increased availability.

“It’s really designed to make the job more attractive,” Fuller said. “We want to be the type of company that will attract drivers, who will migrate to us if they want higher miles.”

U.S. Xpress, based in Chattanooga, Tenn., also wants to increase home time with the program.

“It really comes down to retention,” Fuller said. “That reduces our cost on the back end and from a recruiting standpoint.”

As other fleets use similar criteria for those programs, Klemp said carriers increasingly design the programs to make them attainable and limited to a handful of “super drivers.”

Performance pay, typically scored on a quarterly basis, can add at least 4 cents a mile to a driver’s paycheck. That’s about 10% more than industry average pay on recent surveys.

“Fleets also believe they will attract drivers more easily with a $2,500 sign-on bonus instead of increasing pay 2 cents a mile,” Klemp said.

Bonuses have been as high as $7,500, but the payouts are short-term and are targeted to specific markets, he said.

“Bonuses are growing, and they will grow more,” said Steve Prelipp, a consultant and former carrier recruiting executive, based on comments he heard from fleets at a recent industry meeting.

“Fleets more and more are buying [driver] capacity,” he said. “If you are going to grow as a fleet, you will have to take new CDL holders and do finishing training or do a lease-purchase program.”

“One of the big questions with the signing bonus is the timing of the payout,” said Chuck Bradford, creative director for the driver recruitment specialist Hightower Agency in Madison, Miss. Bradford was referring to the length of time a driver must work for the carrier before the payouts. “If it is too far out, they may not be interested,” he said.

One company that raised pay, Prime Inc., announced last week that it recently increased company driver pay 1 cent a mile and owner-operator compensation by 4 cents a mile.

“Performance from everyone throughout the Prime family has resulted not only in increased revenue but in improved services across the board,” said John Hancock, director of training and driver recruitment at Prime, which ranks No. 21 on for-hire TT100.

Other fleets also use targeted approaches or are considering increases.

NFI Industries Vice Chairman Ike Brown told TT that pay is based on specific projects and geographic regions because 100% of its business is dedicated freight. Drivers’ pay is adjusted for additional services such as unloading. Seniority also is a factor as NFI compiles a projected annual pay rate and makes modest adjustments.

Con-way Inc. spokesman Gary Frantz said: “We are evaluating a number of potential enhancements to our total compensation package for drivers, and we intend to remain market competitive.”