Driver pay and other incentives are on the rise, spurred by a growing economy, tight capacity, driver turnover and a persistent shortage of drivers, leaders from the National Transportation Institute recently told investors from Stifel, Nicholas & Co.
Drivers with private fleets are earning as much as 36% more than their for-hire counterparts and receiving predictable routes that get them home at night, said Leah Shaver, chief operating officer of the institute, a provider of benchmarking surveys and analysis of driver compensation for the transportation industry.
Rates per mile in the third quarter rose a penny to 2 cents, but some outlier carriers took them up 4 cents to 7 cents, and those higher jumps will become more widespread in 2018, said Gordon Klemp, president of the institute.
Shaver said demand for drivers is so strong in the Midwest and Northeast that “you see pay gaps of up to a few cents a mile, sometimes even a little bit more.”
This regional approach to pay that has become pervasive in the industry, coupled with the shortage of 50,000 drivers as calculated by American Trucking Associations, suggests “that there are just not enough drivers to sustain the longhaul model,” Shaver said.
Private fleets are the place to be for drivers, Shaver said. The pay per year is often $20,000 higher compared with a driver at a for-hire fleet and in the West pay can be 36%, or $28,000, higher.
The tortoise-like rise in hourly pay rates today will likely become a fast-moving hare in 2018, said Klemp, who recapped the major reasons for the shortage — drivers on average are 52 years old, GDP is growing at a 3% clip, unemployment is near 4%, for-hire driver pay has risen an anemic 6.3% since 2006 and many prospective drivers are opting for a gig-economy job like Uber driver.
Klemp said conditions are similar to those in 2004-2005, when turnover jumped as high as 121%, the GDP hit 3% and freight rates rose. “Pay increased 21% and drivers were happy, but they were almost impossible to recruit. This is our pay model now,” Klemp said.
That indicates the 4-cent to 7-cent increase in rates per mile implemented by the outliers could well become the norm by this time next year, he said.
condensed from ttnews.com
