Truck driver pay, turnover will continue to rise
by May 17, 2018 4:09 pm 1,042 views
Carriers expect turnover to rise in the second quarter as they increase driver pay to limit turnover and its related costs, a recent survey shows. More than two-thirds of large carriers have increased driver per-mile pay, and half of small carriers have increased the pay, while 23% of mid-size carriers have done so.
Lana Batts, co-president of Driver iQ, a Tulsa-based background screening services provider, recently released the quarterly Trends in Truckload Recruitment and Retention survey showing the driver pay changes. Large carriers are those with more than $100 million in annual revenue, mid-size carriers have an annual revenue of between $30 million and $100 million and small carriers have revenues of less than $30 million annually.
In the survey, more than 90% of large and mid-size carriers believe driver pay should be $75,000 to reduce turnover. This is 41% higher than the $53,000 average in 2016, according to American Trucking Associations. Less than 70% of small carriers believed a $75,000 wage would reduce turnover, but more than 20% of small carriers believed a $100,000 salary would decreased turnover.
In the first quarter of 2018, 38% of recruiters expect turnover to rise in the second quarter, the survey shows. More than half of large and mid-size carriers believe driver turnover will rise in the second quarter. Mid-size carriers were the least likely to believe it would decrease over the period.
In the fourth quarter of 2017, the turnover rate for large truckload fleets declined seven points to 88%; however, the rate was 14 points higher from the same quarter in 2016, according to the ATA. In 2006, turnover was 140%, and the last time it was 100% was in 2014.
ATA Chief Economist Bob Costello attributed the recent turnover dip to the strong freight demand keeping drivers at their existing fleets as they were making money with good volumes and the fleets that implemented pay increases in the previous quarter, giving drivers less of a reason to move to another job.
On April 29, Little Rock-based carrier Maverick Transportation increased pay by 5 cents per mile for over-the-road drivers in the Temperature Control Division.
“It’s a top priority for us to be on the leading edge of driver compensation,” said John Culp, president of Maverick Transportation. “If we can put more money in our drivers’ pockets, we do it. Last November, we boosted pay for our other divisions, and we’re very pleased to raise the pay in the Temperature Control Division, too.”
On Dec. 18, Maverick increased driver pay by 5 cents per mile for its flatbed and glass over-the-road segments. Also, the carrier has offered a $5,000 sign-on bonus for drivers with at least one year of experience.
In a recent supply chain conference hosted by the Sam M. Walton College of Business at the University of Arkansas, Shelley Simpson, executive vice president, chief commercial officer and president of highway services for Lowell-based carrier J.B. Hunt Transport Services, explained how the driver shortage was leading to pay increases and more hikes were expected.
In 2018, the trucking industry will need 60,000 new drivers, according to the ATA, and 49% of this shortage is because of retiring drivers. But, 24% of carriers have taken steps to resolve the shortage caused by retirements, according to the Driver iQ survey.
“Pay is an immediate thought that people start to have, but it really does come down to home time, predictability and treatment overall,” Simpson said.
In the second quarter of this year, 72% of recruiters expect driver pay and benefits to increase, compared to lower expectations in 2017, when more than 40% of recruiters expected driver compensation to fall, the survey shows. Also, 83% of large carriers expected compensation will continue to rise. More than 60% of mid-size carriers believe it will continue to rise, and about half of small carriers think it will rise.
Brad Delco, equity research analyst focused on the trucking industry for Little Rock-based Stephens Inc., previously said he expected some large pay increases in the short term, but longer-term, over-the-road truck drivers should be earning between $75,000 and $80,000.
If driver pay had kept pace with inflation since deregulation in 1980, drivers would have earned $111,000 annually in 2015, according to the Bureau of Labor Statistics.
Driver iQ also found pay increases helped to offset the lack of home time, lack of predictability of home time and lack of predictability of paychecks.
In the second quarter of 2018, 62% of carrier executives expect to see the number of driver applicants rise as a result of more aggressive recruiting efforts, including increased pay, benefits and bonuses. More than 75% of small carriers believe the number of applicants will increase, compared to 50% of the mid-size carriers.