Truck driving schools, carriers renew partnerships as driver shortage worsens
Truck driving schools are pushing forward in the long wake of a semitrailer driver shortage ongoing for more than a decade as carriers maintain relationships with the schools to attract more qualified drivers to the industry, but when the shortage will be solved remains uncertain.
In 2005, trade organization American Trucking Associations reported a nationwide shortage of 20,000 drivers, but it has since expanded to more than 70,000 drivers.
“I don’t expect the driver shortage to end in the foreseeable future,” said Clark Gray, vice president of driver resources and compliance for Tontitown-based PAM Transport. “The last statistics I saw from the American Trucking Associations estimated that the shortage could reach 175,000 by the year 2025.”
Nationwide, more than 1.678 million people are employed as semitrailer drivers, earning an average wage of $20.43 hourly or $42,500 annually, according to U.S. Bureau of Labor Statistics.
For more than 20 years, PAM has had a partnership with C1 Truck Driver Training center, which has schools across the country, including North Little Rock, allowing the carrier to “increase student capacity,” Gray said, adding that the “partnership has worked really well over all those years.” The carrier covers most of the costs for those students in the program. While the number of drivers PAM will need this year uncertain, Gray said the economy and freight market “will certainly influence where we set our manning levels. Last year we hired over 4,000 drivers.”
Van Buren-based USA Truck has had a 10-year partnership with the Commercial Driver Development Program at University of Arkansas at Fort Smith and a newer relationship with Mid-America Truck Driving School in Springdale. The carrier offers scholarship programs for both schools. The program at UAFS has been “very successful,” said Steve Brantley, director of driver recruiting for USA Truck. The program at Mid-America was established a year ago and renewed about two weeks ago, said Doug Carter, owner of Mid-America Truck Driving School. Other program partners include University of Arkansas Global Campus in Rogers and Northwest Technical Institute in Springdale.
Program goals are to raise awareness and “remove barriers” that prevent women and veterans from becoming drivers, Carter said. In 2017, USA Truck will focus on hiring more drivers who are veterans and help them to make the transition from the military, Brantley said. The company announced Monday (Jan. 23) a Military Transition Apprenticeship Training Program with support from the U.S. Veterans Administration and the U.S. Department of Labor.
“Our military apprenticeship training program is for transitioning service members eligible for GI Bill/post 911 employment training benefits,” Martin Tewari, president of trucking at USA Truck, said in a statement . “The program enables eligible veterans to receive Class A CDL training with no upfront costs. Plus, they can start employment at USA Truck while receiving earned benefits from the Veterans Administration, of $1,200 per month or more for up to 15 months.”
Women account for 47% of the population, but only 6% are drivers, Carter said. This has changed very little since he started his career as a truck driver in the 1980s. However, about 20% of those attending classes at Mid-America are women. They offer more stability in the workforce, and they do their homework, are more selective and don’t change jobs as frequently, he said.
In the third quarter of 2016, turnover rate fell two points to 81% for carriers with more than $30 million in annual revenue, according to American Trucking Associations. While the turnover rate is at its lowest point since the second quarter of 2011, ATA Chief Economist Bob Costello expects the problem of finding “well-qualified drivers” to continue to worsen “as the freight economy improves.”
PAM and USA Truck have seen reduced turnover rates from those who have completed programs at the schools. Students who are hired are integrated into “the culture from day one,” Brantley said. And, they tend to have more loyalty toward the company that sponsored their tuition.
“It helps that we were the company that assisted them in getting into a new career field,” Gray said.
After completing school, students are guided by driver mentors “through the over the road portion of their training. It is in that process that they see all of the management and oversight we have in place to ensure they successfully reach their goal.”
This past summer, USA Truck was the first corporate donor for the program at Mid-America, and gave more than $50,000 for 15 scholarships. While it was announced as a $55,000 donation, “we can make more scholarships available if the demand is there,” Brantley said. Carter said the program might allow up to 20 scholarships this year, and he hopes to find more companies to give to the program.
On average, classroom sizes are between eight and 10 students. The busiest times for classes are between early spring and late fall. Now, classes are at about 50% capacity. The school expects to offer 10 or 11 classes this year, which is two or three more classes than it did last year. Placement rate after completing the school is more than 95%.
Dave Robertson, president of the Center for Business and Professional Development at UAFS, said the Commercial Driver Development Program trains between 60 and 80 new drivers each year. A total of 135 drivers attended the program last year, which includes the drivers who might be returning for a refresher course or defensive driving.
The partnership with USA Truck not only helps the school with recruiting but also financially with the tuition. The four-week course costs $2,700.
Arkansas, which employs 33,400 drivers, has the second highest driver concentration in the United States, with more than 28 drivers per 1,000 jobs, according to the Bureau of Labor Statistics. Average wages in the state are $18.69 per hour or $38,870 annually. Texas employs 181,640 drivers, the most of any state, but North Dakota has the highest concentration of drivers at more than 36 drivers per 1,000 jobs and the highest average wage at $53,400.
Experienced team drivers making long-haul runs have the opportunity to earn more. Carter said two brothers who completed the school together should be earning a combined salary of nearly $135,000 annually after about 12 to 18 months.
PAM doesn’t have wage increases planned “at this time. However, we do adjust compensation in certain markets/lanes as needed throughout each year,” Gray said. Depending on whether capacity becomes tighter, this could lead to wage increases, Brantley said.
Driver wage inflation looks to be a “key theme for 2017,” according to trucking/transportation analyst Brad Delco of Stephens Inc. Over the next 12 months, costs are expected to rise related to driver wage increases, and carriers should be able to pass these along through increased rates in the bid season. Over the past 15 years, Delco noted three periods when carrier’s labor costs increased more than 5%: 2004, 2011 and 2014. Carriers were paying about 7% more per loaded mile. In those periods, rates also increased at a similar level, but earnings rose about 20%. Labor costs accounted for between 20% and 25% of revenue.
On Jan. 1, a one-cent per mile driver wage increase went into effect for several carriers, including Crete Carrier, Shaffer Trucking and Baylor Trucking. Later this month, a two-cent per mile raise will go into effect for CFI. Carriers such as Swift Transportation and Schneider have established $4,000 sign-on bonuses for drivers. CGI is offering an $8,000 sign-on bonus for team drivers.
“We expect more announcements for wage increases” in the trucking industry, “including the public carriers who have not instituted major wage increases since 2014,” according to Delco’s industry note.
“Driver pay increases and tepid freight demand have helped the driver situation only marginally,” according to transportation and logistics analysts John Larkin and David Ross, both of Stifel. They also noted that autonomous trucks won’t be a solution for the shortage “for at least a decade due to political opposition.”
In a report on the less-than-truckload industry, Ross wrote that President Donald Trump’s infrastructure plans are expected to increase freight demand and reduce supply because the road work would interfere with traffic and “would likely tap the truck driving pool for the necessary construction labor.”