Carriers increase driver pay, safety measures in wake of pandemic

by Jeff Della Rosa ([email protected]) 507 views 

Carriers have worked to keep drivers safe as they boost their pay amid the COVID-19 pandemic, tight trucking capacity and a shrinking driver pool.

In a recent Yahoo Finance interview, US Xpress CEO Eric Fuller said he expected driver pay to rise between 15% and 20% this year and even more than 20% next year as freight demand rises.

This year, total freight volume is expected to fall 10.6% to 14.6 billion tons while truck freight declines 8.8%, according to the American Trucking Associations. However, truck freight volumes are expected to rise by 4.9% in 2021 and grow 3.2% annually through 2026.

“The COVID-19 pandemic has had an unprecedented impact on many parts of the economy, and trucking is no exception,” said ATA Chief Economist Bob Costello. “However, despite significant contractions in 2020, the forecast makes it clear that the long-term trend from trucking, as well as for the overall freight economy is positive.”

Fuller said he didn’t think the trucking industry can meet the forecasted rise in freight volumes for 2021 with the existing driver shortage. The 15% to 20% in pay increases this year isn’t expected to attract a lot of people to the industry, he noted. Pay will need to rise a lot more than 20% in 2021 to meet the projected freight demand next year and a shortage of up to 200,000 drivers, he added.

So far this year, as many as 150,000 drivers have left the industry, Fuller said. This can be attributed to COVID but also to the drug and alcohol clearinghouse that went into effect in January that contains 30,000 drivers who can no longer be employed. He also said truck driver schools were shut down at the start of the pandemic, limiting entrants to the industry. About 100,000 fewer commercial driver’s licenses have been issued this year, from last year.

In its third-quarter earnings report, Tontitown-based carrier P.A.M. Transportation Services Inc. noted the pandemic has affected its ability to hire enough drivers to fill its trucks. President Joe Vitiritto said social distancing guidelines have affected the capacity at truck driving schools and led to a shortage of drivers that the company was working to resolve. The company is resolving the shortage by increasing recruiting efforts, training school diversification, and driver retention programs and rewards.

A tight driver market has contributed to a capacity crunch, leading rates to rise while freight demand surges, according to the Cass Freight Index report. Little capacity is expected to be added through the remainder of the year, and as a result, it will remain tight. And the average freight bill is expected to continue to increase, according to the index report.

In late September, Schneider National rolled out a pay increase for its team drivers, according to a recent FreightWaves article. Meanwhile, smaller carriers had already been increasing their pay for weeks before Schneider’s bump.

Median pay for truck drivers was $45,260 in 2019, according to the U.S. Bureau of Labor Statistics.

In the third-quarter earnings call for Lowell-based carrier J.B. Hunt Transport Services Inc., Nick Hobbs, president of Dedicated Contract Services and Final Mile Services, noted the tight driver market has contributed to increased driver wages and recruiting costs. Hobbs said he expects some pressure on margins in the dedicated segment because of these costs. Also, Darren Field, president of intermodal, said the challenging driver market had a negative impact on third-quarter margins in the carrier’s intermodal segment.

While driver pay is expected to continue to rise, carriers have taken extra precautions to ensure driver safety in the pandemic.

“Many Arkansas companies have adopted new practices to help try and keep their drivers and office employees safe,” said Shannon Newton, president of the Arkansas Trucking Association. “The industry has largely and quickly shifted to paperless driver bill of ladings and eliminated as many in-person interactions to help both the drivers and office staff stay safe.”

In May, J.B. Hunt announced the launch of electronic bill of lading (eBOL), allowing businesses and carriers to digitally sign bills of lading and reduce contact during the delivery process.

“The current environment is challenging every aspect of the supply chain, from securing capacity to completing deliveries,” Shelley Simpson, executive vice president, chief commercial officer and president of highway services at J.B. Hunt said in May. “This new electronic bill of lading feature offers simplicity, efficiency and most importantly, a safer option for drivers and front-line employees to sign load documents.”

Newton said most companies have offered its drivers and staff cleaning supplies and personal protective equipment, like masks and gloves.

“Some larger carriers have invested in fogging solutions for their trucks before and after regular service or maintenance,” she said. “There has been a lot of training and developing of plans on how to handle situations when drivers are infected.

“Some companies have limited to no entry of their business,” Newton added. And for those who enter a business, their temperature is taken and are required to wear a mask. The Arkansas Trucking Association has supplied smaller companies with masks and hand sanitizer, she noted.

In June, the Consumer Brands Association established the Contactless Delivery Task Force, which includes more than 35 members in the consumer packaged goods sector, including retailers, carriers and technology providers. The goal of the task force was to develop uniform standards for safely transporting and exchanging freight, with an initial focus on electronic bills of lading.

The shift to a digital platform for delivery verification allows for improved safety, productivity and visibility for employees involved in bringing a product from a manufacturer’s warehouse to the store shelf, according to a news release. Also, a digital platform provides employees with updates while working at home and lets drivers and recipients practice physical distancing at the point of delivery.

“We’ve seen tremendous supply chain disruption and the emergence of new challenges as a result of COVID-19, but it’s given us incredible opportunity to create new solutions that will drive a healthier and safer future for the industry,” said Nick Shroeger, chief network solutions officer for Coyote Logistics, a subsidiary of UPS. “We’ve developed new processes, technologies and policies that allow for limited contact on ensuring our network has the insights and critical information they need to operate efficiently and safely.”

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