Most Fleets Postponing Driver Pay Increases Until U.S. Economy Accelerates, Study Says

This story appears in the Oct. 11 print edition of Transport Topics.

Most fleets are continuing to steer away from raising driver pay this year, but about 80% of carriers expect they will have to take that step when the pace of the U.S. economic recovery accelerates, according to a new survey.

Pay will rise between 2 cents a mile and 4 cents a mile in the next 12 months after generally remaining unchanged so far this year, said Gordon Klemp, based on the latest driver wage survey of more than 350 truckload fleets for the National Transportation Institute, Kansas City, Mo.

“Overall, carriers are very uncertain about what the freight market is going to do,” he told Transport Topics on Oct. 7. “There is a general sense of confidence there will be a rebound, but they are not sure exactly where it will show up.”

“Carriers clearly understand that pay is going to have to go up eventually,” Klemp said. “They don’t want to lock into higher pay until more freight-rate increases show up in contracts.”

Fleets such as flatbed carriers Maverick USA and Boyd Bros. boosted pay as much as 6 cents a mile earlier this year, and some others have made recent increases.

Klemp said more increases will happen because fleets that haven’t yet raised pay will have to do so in order to hold onto drivers. He noted that the current spread between the highest and lowest pay is about 15 cents a mile, far above the average spread of 9 cents a mile.

“Carriers out there are in different states of pain,” Klemp said. “The ones at the bottom of the scale still need to come up” in pay.

Average pay remains below pre-recession levels, the latest survey found.

Dry-van pay in the third quarter averaged 35.2 cents a mile, a scant 0.7 cent higher than last year but below the 36 cents a mile average in 2008.

Flatbed has risen 1.1 cents a mile this year, but is still 0.4 cents a mile behind levels when the housing market began to collapse in 2007.

Refrigerated fleets’ pay remained steady, rising to 34.3 cents a mile in the latest survey from 34.1 cents two years ago.

Another sign of caution is greater use of bonuses to attract drivers instead of raising pay right away.

The most common sign-on bonus offered has increased sharply this year, moving from $1,000 in the first quarter to $2,500 in the third quarter, Klemp said.

“We, like everyone else, are looking at what the industry is going to do with driver pay,” said Scott Arves, CEO of Transport America, which restored 2 cents a mile to drivers’ starting pay to match pre-recession levels.

Before pay can rise further, Arves said, volume has to come back and rates have to improve enough to support more increases.

Carriers such as D.M. Bowman and KLLM Transport moved to raise pay selectively, spurred by regional demand factors.

“We have seen quite a bit of wage pressure in the industry due to the concentration of carriers in the mid-Atlantic area,” said Jim Ward, CEO of Bowman, Williamsport, Md.

Last month, D.M. Bowman raised regional drivers’ pay 2 cents a mile and created a performance pay package worth up to 3 cents per mile.

The basis for the performance pay includes factors such as on-time service, idling percentages, speed and hard braking incidents.

Pay rose 4 cents a mile to between 39 cents a mile and 43 cents a mile last month for Midwest regional drivers at KLLM, Jackson, Miss., said Kirk Blankenship, director of driver resources.

Regional drivers on lease/purchase plans and independent contractors also received a raise, moving to 72% of revenue from 70%.

Pay for KLLM’s over-the-road long-haul drivers in the lease-purchase and independent contractor groups was boosted to as much as $1.50 a mile.

“We are trying to expand our fleets and help our over-the-road, lease-purchase and independent contractor drivers,” Blankenship said.

A few other increases also are being reported.

Marten Transport, Mondovi, Wis., added regional drivers to a pay increase package offered to over-the-road drivers last year. Solo drivers can earn up to 44.5 cents per mile on their base rate.

“We’ve been very committed to keeping driver pay strong despite economic challenges,” said Tim Norlin, director of recruiting at Marten.

Dupré Logistics, Lafayette, La., last month increased pay 3% to 6% for drivers in its energy distribution services unit.

“Based on 15 hours per week of overtime which drivers generally receive, the average hourly pay was $20.25 per hour prior to the increase and has now moved to $20.86 per hour,” said Tom Voelkel, president of Dupré.