Fleets Still Rely on Higher Pay to Retain, Attract TL Drivers

The amount of truckload driver pay increases continued to move upward this summer, as fleets seeking to keep or attract operators more than doubled wage increases over the second quarter of last year.

Fleets that raised pay boosted wages at a 7.8% pace in the quarter, said Gordon Klemp, a principal at the National Transportation Institute, which studies compensation at 350 truckload operators. In last year’s second quarter, the average wage hike was 3.1%, he told Transport Topics on Aug. 26.

“The latest data is telling us that pay is still not high enough to attract new drivers,” he said, to an industry that lost workers during the recession because they couldn’t make enough money. “Somehow, we have to rebuild that pool. Until that happens, pay is going to have to go up, and freight rates will have to rise to support them.”

One fleet that raised pay in the second quarter was American Central Transport, or ACT. Others included Averitt Express, Daseke unit Boyd Bros. Transport in Clayton, Alabama, and J&R Schugel, a New Ulm, Minnesota-based fleet.

Tom Kretsinger Jr., president of Liberty, Missouri-based ACT, outlined the complicated process behind wage adjustments that have been made twice this year, including a 7% increase for over-the-road operators.

“Step 1 is that you have to be aggressive with [freight] rate increases,” he said. “Step 2 is having confidence you can hold on to that increase. Step 3 is to pass it on to the driver.”

Kretsinger described pay as a “moving target” for his company, which strives to offer top-drawer wages only to find that a competitor is catching up.

Klemp said that trend reflects an acceleration in the driver pay increase cycle, which started in earnest last year with a 13% rise by U.S. Xpress Enterprises. Since that August 2014 announcement, he said, a record number of fleets raised pay and shortened the cycle.

A cycle begins with an increase, such as Chattanooga, Tennessee-based U.S. Xpress’ move, that is matched by competitors, he said. It ends when more than half of the lowest payers are forced to raise rates.

The current spurt likely will last for about one more year, Klemp said, reaching 24 months — far faster than past cycles that ran about three years.

Brad Brown, a spokesman for Averitt, which ranks No. 33 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, said last week truckload drivers’ increase “is all about staying competitive. We want to reward longevity.”

The Cookeville, Tennessee-based company’s truckload increase was the first since April last year, when that pay rose about 3%.

Brown said Averitt’s pay adjustments require careful attention because the company has several business units.

Averitt’s regional less-than-truckload and dedicated businesses are governed by conditions in those markets.

“It’s all about being competitive in each area,” Brown said. “You do have to be aware that there are different operating groups.”

Fleets also continue to reach beyond pay to appeal to drivers.

David Schumann, general manager of Progressive Transportation, said the truckload carrier focuses on how a driver will fit into the company and not just cents-per-mile wages.

“Our recruiters want to know why that driver wants to work for us,” he told TT on Aug. 27. “We want to hear what the driver wants and fit the job to their needs. We’ll tell you what we have, and then we’ll work toward a partnership.”

Progressive is an asset-based unit of TTS, a Dallas-area company that is No. 22 on the brokerage list of Transport Topics Top 50 Logistics companies.

“Wages are just one part of the benefits package,” he said. “We don’t want the driver who is just out there for the wages. We know we will lose them” to someone offering more cents per mile or a sign-on bonus.

Wages still are part of the picture because the company has boosted pay four times in the past 12 months by a total of about 15%, Schumann said.

He added that Progressive doesn’t use the sign-on bonus but focuses instead on retention bonuses to keep drivers.

Kretsinger and Klemp both underscored the many considerations over and above mileage pay.

ACT also has raised holiday pay and has found that there are all of kinds of keys to keeping drivers content.

For example, he said, one ACT driver’s biggest concern was a comfortable seat.

“We try to find out what makes their world better, and then we try to respond,” he said.

Klemp said fleets continue to tweak multiple compensation-related options, including scorecards that rate and reward performance on factors such as safety and fuel efficiency.

Increases in pension contributions and trade-offs, such as adding paid vacation instead of a wage boost, are growing in popularity.

“Some drivers would rather have an extra day off,” he said.

Another focus is detention pay, Klemp said, since delays at shippers’ docks often prompt drivers to quit.