Truckload Driver Pay Inches Up in 4th Quarter
This story appears in the March 20 print edition of Transport Topics.
Salaries for truckload drivers rose at the low rate of 0.04 point in the fourth quarter year-over-year, according to the latest National Transportation Institute index (or 0.03% on a preliminary basis), the slowest in 2016.
The index was 154.33 in the fourth quarter, up from 154.29 at the same the year before and up from 154.31 sequentially.
NTI calculated the index based on data from truckload carriers in the United States.
The index grew by 3-5 points annually between 2012 and 2015.
Within truckload, the dry van index rose 0.02 point to 150.94, refrigerated van rose 0.04 point to 155.62 and flatbed rose 0.06 point to 156.44 versus the fourth quarter in 2015.
The index uses a base number of 100 to represent conditions in 1994.
“Driver pay finished the year in a prone position,” said Gordon Klemp, founder and president of the National Transportation Institute. “Even when we compare it with the fourth quarter of 2015, the growth is simply not much.”
But he added that 2017 is shaping up to be more like 2015 than 2016, pointing to positive movement in driver pay for flatbed.
“We’re already seeing driver recruitment in flatbed and more spot market activity this year, based on our conversations with fleets. There is optimism that construction activity will continue to grow,” Klemp said.
Don Daseke, chairman and CEO of Daseke Inc., told Transport Topics that one of his first projects after his company was listed on the Nasdaq exchange Feb. 28 would be to create a stock ownership plan for more than 2,300 drivers in the corporation’s nine operating companies.
Daseke, of Addison, Texas, ranks No. 44 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
Heartland Express Inc. CEO Michael Gerdin told TT that he expects to raise driver pay in 2017 or early 2018 when there is evidence to show tighter capacity and higher rates. He spoke to TT after a presentation at the 2017 Transportation & Logistics Conference in mid-February.
The North Liberty, Iowa, company ranks No. 41 on the for-hire TT100s.
“The last time we raised wages was at the end of 2014 and beginning of 2015 at around 13%, which put a good gap between us and our competition. It’s getting to the point again at Heartland that we’ll have to increase pay at some point. Drivers need to stay ahead on pay, and we as an industry need to support them on this issue,” Gerdin said.
Tom Kretsinger Jr., chairman and CEO of American Central Transport Inc., said that driver pay was flat in the fourth quarter because contract rates continued to lag spot market prices. He also said that one cannot talk about compensation without discussing pricing, efficiency, asset utilization and driver turnover.
Kretsinger said that longhaul drivers want to keep moving, so any delay at a distribution center, lack of freight or difficulty finding available parking will lower pay and increase turnover.
The Liberty, Missouri, midsize fleet operates more than 300 tractors and 1,000 trailers.
“You can promise drivers any rate per mile, but if you don’t keep them constantly moving, the paycheck will be way too low. When drivers are waiting around and things are slow, they quit,” Kretsinger said. “It’s difficult because you don’t want to price too high or you’ll lose good freight, but you don’t want to price too low or you can’t offer a competitive per-mile rate to drivers. Somewhere in the middle is the sweet spot, and we invest heavily in a good sales staff to find it.”
Drivers who work for Cowan Systems also are likely to see a pay increase this year, and some of the company’s subsidiaries automatically raise pay annually, President Dennis Morgan said. Unlike other carriers, he said that Cowan generates most of its revenue from dedicated carriage and most of its customers are on multiyear contracts rather than one-year deals.
The Baltimore-based company ranks No. 62 on the for-hire TT100 and No. 25 on the dedicated truckload sector list. “[The pay raise] will be a little bit more painful this year than looking back on last year, because the freight environment was better last year than we are seeing so far this year. But I do not want to lose drivers, so I’m trying to ensure that I stay with the industry [standards] and reduce my turnover as best I can,” Morgan said. Several companies have already raised pay in the first quarter, including Crete Carrier Corp. and Dart Transit Co., which rank Nos. 33 and 69, respectively, on the for-hire TT100. The first quarter is usually a migration period when drivers investigate which companies will pay the best rates in the upcoming busy season.
Trucking executives predict that more carriers will have to raise pay when they install electronic logging devices before the December deadline to offset the lower miles it likely will cause per day.
