Fleets Begin Boosting Driver Pay as Demand Rises, Survey Finds

By Rip Watson and Daniel P. Bearth, Senior Reporters

This story appears in the April 5 print edition of Transport Topics.

A few fleets are starting to raise driver pay, as freight demand and the need for more drivers increase this spring, reversing the pattern of the past couple of years that kept wages steady or reduced them, the National Transportation Institute said.

An NTI survey of driver wages showed the first solid signs of pay increases in more than three years and the virtual end to a steady string of pay cuts in 2008 and 2009.

Because just 1.7% of fleets increased pay in the first quarter, the number of increases so far is small.

“These numbers confirm that freight is increasing enough that fleets are having to raise pay,” said Gordon Klemp, a principal at NTI, Kansas City, Mo., who called the latest survey results “a distinct change in pay direction.”

When demand was strong and drivers were in short supply during 2005 and 2006, up to 5.9% of fleets raised pay in a single quarter, according to Klemp’s survey. But when the economy turned sour, up to 6.6% of fleets cut pay in a single quarter in 2008.

Increases of 1 cent to 3 cents a mile were reported by Boyd Bros. Transportation Inc., Decker Truck Line and Barr-Nunn Transportation. Prime Inc., which uses owner-operators and a different pay scale, raised rates paid to those contractors by 5 cents a mile.

“We have gone through the ready pool of high-quality drivers,” Klemp said. “We are going to see wages go up to attract drivers.”

Decker, Fort Dodge, Iowa, followed that approach and raised pay 3 cents a mile, on average.

“Fortunately, our business has picked up,” said Deb Jorgensen, manager of driver recruiting at Decker, which didn’t reduce pay earlier. “We were seeking higher-quality drivers than what we were seeing before. We wanted to make our pay package simpler and more attractive.”

Drivers now are receiving between 37 cents and 39 cents a mile in Decker’s refrigerated van division, up from 34 cents to 36 cents.

“We are attracting some better-quality people” because of the increase that was made on Feb. 15, Jorgensen said.

Pay hasn’t been changed yet for flatbed drivers yet because the company wants to be sure recent volume improvements will continue, Jorgensen said.

The latest survey was a marked change from a recent report by American Truck Business Services, which surveyed owner-operators and leased drivers and found that take-home pay of independent drivers fell 4.1% last year, even though they ran an average of 3.2% more miles than they did in 2008.

While drivers earned less money and ran more miles in 2009, ATBS President Todd Amen said the year ahead is looking better in terms of strengthening demand for freight hauling.

“We’ve seen the bottom,” Amen said in an online presentation March 18. “Things are coming back.”

Owner-operators collected an average of $1.15 a mile in 2009, a decline of about 24 cents a mile from 2008, according to the ATBS survey.

Most truck owner-operators are paid a percentage of revenue, so their income is closely tied to freight rates, which have been declining over the past 12 to 18 months.

To offset the loss of revenue, Patrick O’Malley, co-chief operating officer of Landstar System Inc., Jacksonville, Fla., said his company has stepped up efforts to help drivers reduce expenses by offering discounts on fuel and equipment purchases and providing electronic load alerts to minimize the time that drivers wait for loads.

Barr-Nunn Transportation, like Decker an Iowa fleet, announced on March 10 that it was raising starting pay for regional drivers in the Northeast by 2 cents a mile. Owner-operators in that region also received an increase, said Jeff Blank, director of recruiting. Richard Bailey, president of Boyd Bros., Clayton, Ala., said 1 cent a mile has been restored out of a 3-cent-a-mile cut the fleet made last year as flatbed demand dwindled.

Boyd Bros. acted after what Bailey termed “pretty dramatic changes” in demand for flatbed trucks, brought on in part by seasonal demand from home improvement retailers.

The flatbed market now has swung to the point that the company is turning away nearly as many loads as it accepts on some days, he added, with particularly strong demand in the Midwest and South.

 “If freight conditions continue to improve, we will look at restoring more or all of the earlier reduction,” he told Transport Topics. “We are a little concerned about how much of this pickup is permanent and how much of it is temporary.”

John Hancock, director of training and driver recruiting at Prime Inc., Springfield, Mo., said owner-operators’ pay is changing to 95 cents a mile or 72% of revenue, whichever is higher, from 90 cents a mile. The revenue percentage is unchanged.

“When we put up our money, that sends a very strong message,” Hancock said. “It’s the right thing to do to allow our owner-operators to share in the growth.”