Record Number of TL Fleets Increases Driver Pay in 3Q

This story appears in the Dec. 1 print edition of Transport Topics.

The percentage of truckload fleets raising pay for solo dry van drivers leaped to a record in the third quarter, according to a new report.

Gordon Klemp, principal at the National Transportation Institute, told Transport Topics that 42% of truckload firms boosted pay between July and September, far above the previous high of 11% in a single quarter.

“The increases were so large for several reasons,” said Klemp, whose survey compiles wage, but not benefit, information from more than 300 truckload fleets. “One is the fact that many companies had not done so [raised pay] in excess of five years.

“The weak driver pool, both in numbers and qualifications, is driving the number of moves,” Klemp said, citing the growing importance of retention instead of pay raises in hopes of attracting new drivers. “They need to move pay for driver retention purposes. Turnover remains a nagging problem,”

In addition, Klemp said the third-quarter median increase of 5.6% for solo van drivers with three years of experience was among the best in quarterly wage percentage growth since his survey began 19 years ago. In last year’s third quarter, the increase was 1.3%.

Driver pay has been slow to rise, with an average increase of less than 2% between 2007 and 2013.

The surge began this summer with a 13% increase at U.S. Xpress Enterprises, which ranks No. 18 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. Increases will continue this quarter and in the first quarter, but at a more modest pace, he added.

Klemp noted that “carriers, for some time, have wanted to raise pay — but the level of freight rates hasn’t allowed them to do that. As rates have improved, [fleets] have picked the first opportunity to raise pay. That’s a good business decision.”

Some of the pay increases were as high as 19%, which were unusual cases because the amounts were related to the formation of driver teams by fleets.

Fleets are forming those new teams to crack the team-drivers market, where operators are even more difficult to find than for solo runs.

“It’s 10 times harder to find teams,” John Larkin, a Stifel, Nicolaus & Co. analyst, said at a recent industry meeting.

“If you have teams, you can charge [shippers] almost whatever you want”, because of strong demand for the expedited freight they deliver.

Also last week, American Trucking Associations’ industrywide wage and benefit compensation survey hit the market.

“Carriers can use the detailed information in this survey to benchmark their fleet against competitors,” ATA Chief Economist Bob Costello said.

The ATA survey accumulated information on all of the different types of pay and benefits that participating carriers were offering.

Costello said the ATA survey is a snapshot based on reports from companies with a total of more than 135,000 drivers, including employees and independent contractors.

The information is divided into private, less-than-truckload, truckload and, for the first time, intermodal drayage drivers.

Additional levels of detail, Costello said, reflect flatbed, tank trucks for both local and over-the-road, and LTL by region of the country.

While ATA’s survey found that the base wage was the most common type of pay, Costello noted that the base wage is paid in different ways throughout the industry, including per mile, per hour, a flat daily rate and salary. Three of four carriers surveyed said that they offer two or more types of pay.

The ATA survey, done for the first time in three years, does not quantify the value of different types of benefits. The association didn’t release specifics.

However, Costello noted that the lowest pay was for drivers with limited experience who make irregular route truckload runs, with annual wages below $50,000. The ATA official was careful to note that he didn’t believe that was the right level of pay for that group.

Dedicated runs and specialized truckload service pay better, with LTL the next highest at about $65,000. Private fleet pay is in the vicinity of $75,000 annually, he said.