If you’re on a trucking company’s payroll, you may find yourself on a compensation roller coaster these days. Whether you’re dealing with the uphill, downhill or a little bit of both, driver compensation can be a wild ride.

The Current Driver Compensation Landscape

According to data from the National Transportation Institute (NTI), the average compensation for truck drivers in 2016 was $52,406, with first-year wages for private fleets topping out at $70,000 per year. Toward the end of 2017, Stifel Capital Markets documented widespread pay increases for truck drivers across the country averaging one to two cents-per mile, but also observed some companies bumping compensation up as much as four to seven cents-per-mile.

Truck driver compensation is seeing new growth, and while modern compensation models seem relatively straightforward, logistics companies often employ more complicated methods to entice new drivers to come on board while providing a compelling retention plan for veteran drivers. Here are a few examples:

  • Hornady Transportation LLC, a Daeske company, implemented a graduated per-mile pay structure for its drivers. Some new drivers saw an increase of four cents-per-mile plus an anniversary increase, while veteran drivers started at an even higher rate, also with an anniversary increase. Hornady also added increases for tarp pay, layover pay, and other unique situations.
  • Epes Transport System also modified its pay structure, increasing hourly pay and separately increasing its contractor pay.
  • Boyd Bros. Transportation offers up to $14,000 in experience-based sign-on bonuses that are partially funded by stock grants.

The Positive Impact of Modern Market Influences

A number of relatively positive market influences are making way for truck driver wage increases and bonuses, one of which is increased demand, or what Trucks.com refers to as “America’s e-commerce addiction.” This simple economic principle has impacted trucking in a big way in the past year or so. The US Department of Commerce reported Q4 e-commerce sales of $119 billion for 2017, a 3.2% increase over Q3. The Commerce Department reported in early 2018 that consumers spent $453.46 billion on the web for retail purchases during all of 2017 – a 16% increase over the previous year. Truckers bore the brunt, for better or worse, of distributing all of those purchases, resulting in billions of dollars finding their way into their wallets and pocketbooks.

Adding to the surplus, recent tax reform allowed fleets to put money in their drivers’ pockets at levels not seen in more than 30 years. According to a survey conducted by the American Trucking Association (ATA), 50% of ATA members planned to increase wages or offer bonuses to their employees as a direct result of 2018 business tax reform. While some questions still loom about specifics of the reform, it is apparent that businesses in general, including shipping companies, will see an overall lower tax rate, which in many cases translates into more cash in their employees’ pockets.

Mixed Signals

While strong markets and tax reform clearly have had a positive impact on the bottom line of many trucking companies, some other compensation influences are more of a double-edged sword. One such phenomenon is the record shortage of qualified drivers. A recent aging/shrinking labor pool has forced fleet managers to become very creative in meeting an inversely proportionate increase in capacity.

Other good news/bad news issues facing trucking today include:

  • ELDs – While the ELD mandate was published in 2015, two years ahead of the first step in a graduated implementation, some carriers are choosing to forego domino-effect compensation difficulties altogether by closing their doors. A boon to truck driver safety (and those with whom they share the road) as well as a clear path to saving money previously spent on violations and inefficiencies, the ELD mandate has proven to be too much for some trucking companies, resulting the ultimate decrease in driver compensation.
  • Automation – Intended to save money and protect other drivers on the road, automated fleets have become less the stuff of science fiction and more and more a modern reality. And while fleet managers in general may see a financial surplus from such automation, truck drivers of the human persuasion may be experiencing layoffs.

The Downside of Driver Compensation

Unfortunately, there are some aspects of the transportation and distribution industry that lack even so much as a silver lining. Sean Kilcarr, Editor in Chief of Fleet Owner magazine, acknowledged one such aspect as the new career-seeker persona that doesn’t like being away from home for long stints of time and covering a variety of job-related expenses out-of-pocket. These career-seekers are moving away from trucking careers in droves. NTI founder, president, and CEO, Gordon Klemp, notes that truck driving is “physically demanding work, with higher than average injury rates, because you are doing things the human body – young and old alike – doesn’t like to do.” Consequently, the profession as a whole is suffering a noticeable exodus, but the beginnings of an extinction.

Despite a marked increase in driver compensation described previously, NTI reports that driver pay still has not kept up with inflation. NTI’s Klemp suggests that if the institution of trucking were to observe the inflation rate from 1979 to 2016, union drivers could expect an annual salary of $101,600.

Add to these issues the inconsistencies and irregularities in driver compensation across trucking verticals, and the challenge for the institution is clear.

Is it Possible to Have Fun on the Driver Compensation Roller Coaster?

While managing a fleet clearly presents a variety of unique challenges, there are a few things fleet managers can do to stay on top of unwieldy compensation issues.

  • Refocus on Efficiency – The current trucking landscape is somewhat unforgiving when it comes to excess. Fleet managers need to have intuitive solutions in place to help trim the fat. From planning a driver’s day to determining superior distribution routes, fleets need to prioritize efficiency in order to be able to reinvest in their drivers.
  • Generate Complete and Accurate Data – Whether it’s the result of misinformation or missing information, mistake-inducing guesswork can have a serious, negative impact on driver compensation. Your competitors are slicing and dicing their data in a way that benefits their drivers. Are you?
  • Manage Asset Lifecycles – In addition to a proper maintenance plan, a trustworthy telematics solution helps defray theft and determine the best utilization of fleet vehicles based on their condition.

PDI is prepared to ride the roller coaster of driver compensation with you, with end-to-end solutions designed to serve you in the field, in the store, and on the road. Contact PDI today to find out how we can support you and your drivers.