Supply Chain News: No Silver Bullet for Solving the Driver Shortage Issue, Experts Say
If Pay Had Kept Up with Inflation Since 1980, Wages Would be $111,000 Per Year, Double Current Rates
Despite incessant hand wring – and rising wages – the issue of US truck driver turnover continues on.
In the third quarter of 2015, the most recent period for which there Is data, the American Trucking Associations found driver turnover among large carriers ( $30 million or more in revenue) was at 100%, the highest level in three years.
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WThat 100% turnover rate does not mean carriers are replacing their entire team of drivers every year. Rather, it largely reflects the fact that many new drivers leave the profession very early on, so that three, four or more new recruits may be needed to develop one long-term driver.
That is not to say retaining longer term drivers isn’t an issue as well – a reason virtually every major trucking company has been increasing wage rates in the past few years.
But despite those pay hikes, the driver shortage isn’t going to be solved any time soon. That was the major takeaway from a recent teleconference on the subject, hosted by John Larkin, a Wall Street analyst following the transportation sector for investment firm Stifel, and which featured Gordon Klemp andLeah Shaver of The National Transportation Institute (NTI).
Here are some of the key insights from Klemp and Shaver during the discussion:
Carriers implemented numerous driver pay hikes during the 19 months, bracketed by July of 2014 and January of 2016. This is the shortest driver pay increase cycle since the NTI began collecting records nearly 22 years ago.
During this period, average driver pay increased approximately 14%. The average driver pay increase cycle has lasted roughly 33 months during the past 22 years. Conversely, during the Great Recession driver pay dropped about 25%, on average.
The combination of electronic logging devices, speed limiters, and hair follicle drug testing could combine to reduce effective industry capacity by upwards of 15%, exacerbating the driver shortage.
Private fleets pay drivers between 20% and 50% more than over-the-road for-hire truckload drivers are paid. That, plus a more predictable work schedule and more regular home time, helps private fleets hold driver turnover to just 14% or so annually.
When adjusted for inflation, an average driver pay of $38,618 in 1980 per year would equate to $111,455 per year today. With driver pay averaging just $54,000 per year in 2015, purchasing power is less than half of what it was at the time of deregulation.
US Truck Driver Pay has Nowhere Near Kept Up with Inflation
Source: The National Transportation Institute
On average drivers spend about $1,000 per month on food, showers, laundry, etc., while they are driving, which they generally pay out of their own pockets.Only 6% of drivers are women today. NTI views women as a largely untapped source of drivers, however carriers will have to change some of their recruiting practices and will have to make certain accommodations in order to realize the full potential of this mostly untapped source of potentially high quality, safe drivers.
Dispatcher/fleet manager assignment is critical. Many carriers assign their best dispatchers to their best drivers. This may not be optimal as inexperienced dispatchers are cutting their teeth on inexperienced and often temperamental drivers. In addition, personality tests can be used to better match drivers with dispatchers.
Driver needs don’t change much over time. They are looking for a consistent paycheck, a sufficiency of miles to reach total pay targets, the desired quantity and frequency of home time, and empathetic respect. Carriers that can provide all four of these requirements generally operate with significantly lower turnover.
Our Take: Is it any wonder we have a truck driver shortage in the US when pay simply doesn’t even keep up with inflation? This is some eye opening data.
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