What Driver Shortage?

With their industry rapidly consolidating around them and their trucks idled by slackening demand from a weak economy, motor carriers are scratching out savings from a source untouchable in recent years — driver compensation.

Beset by a chronic driver shortage since the middle of the last decade, trucking companies still in business after a year of disastrous reverses are finding that their drivers are staying put while recruits can be had for a less-than-premium price.

“In the past probably four months, the industry has experienced a real stabilization in driver turnover,” Arkansas Trucking Association president Lane Kidd said. “In talking with trucking executives, driver shortages are no longer at the top of their list.”

One of the first to publicly cut back on pay for new drivers, USA Truck Inc. in Van Buren detailed the program in its third-quarter report.

Jerry Orler, the company’s chief financial officer, confirmed that the carrier is, at least temporarily, flush with drivers.

“There are so many trucking companies going out of business,” Orler said. “The [driver] retention rates are the best they’ve been.”

Eager to exploit a rare chance to reduce an expense line, USA Truck instituted a three-phase plan to “bring driver wages more into line with historical levels while maintaining the improvements made [to driver compensation].”

The Van Buren company was joined recently by J.B. Hunt Transport Services Inc. of Lowell. Hunt, the nation’s largest publicly traded truckload carrier, is also scaling back new driver pay and benefits, said industry analyst Donald Broughton of A.G. Edwards and Sons in St. Louis.

“It’s been done by a number of people in the industry,” Broughton said.

CEO Robert M. Powell said the USA Truck program paid immediate dividends.

“Driver recruiting and training costs for the third quarter of 2001 decreased 28.2 percent from the same quarter of 2000 despite hiring an almost identical number of drivers,” Powell said in a company press release. “Part of that was because during the third quarter of 2001 we experienced our best quarter of driver retention since the first quarter of 1997.”

Orler put it another way.

“There are plenty of drivers,” he said.

Dangerous Job

It’s hard to appreciate the impact of such a statement without an understanding of the lengths to which trucking companies have gone in recent years to entice drivers to climb behind the wheels of their tractors.

Long-haul driving is a dangerous, lonely, exhausting job. “Truck driver” consistently ranks as one of the most hazardous jobs in the United States, primarily due to highway crashes and loading/unloading accidents. Also, drivers, who often work at night, are too often victims of robbery and assault.

In fact, driving a truck was the most dangerous job in the United States in each of the last four years for which complete records are available, according to the U.S. Department of Labor Statistics.

Add long stretches away from home, a factor in the high divorce rate for truckers, and the job has little to recommend it to the average wage-earner. Even the legendary independence of the trucker is largely gone, as every move of tractor-trailers is tracked by global positioning satellites.

To counteract such negatives, trucking companies have continuously raised driver pay-per-mile since 1997. By November 2000, major carriers had upped driver wages 14 percent from the February 1997 level, a national survey by SignPost Inc. of Hudson, Wis., showed. In addition, companies shortened the lifetime of equipment and began replacing tractors after only three years of use. Whole fleets turned over in 1998-2000. The new equipment contained features specifically designed to appeal to drivers, such as conventional, long-nosed hoods, televisions, refrigerators and Internet connections.

While many critics charge that the industry’s per-mile pay scale, while producing annual salaries of $30,000-$50,000, actually abuses drivers by paying sub-minimum wages per hour (trucking is one of very few nonfarm activities exempted from the U.S. Fair Labor Standards Act), the increase in pay and benefits is undeniable.

Relief at a Price

During the last year, though, trucking firms nationwide have been devastated by the combination of lower freight demand, high interest and insurance rates, fuel costs and a glutted used-truck market. Thousands of companies have declared bankruptcy or sold out to larger carriers, resulting in a surge of available drivers.

For surviving companies, the easing of the driver crunch is a welcome relief.

“Drivers are simply choosing to stay with their companies,” Kidd said. “Trucking companies are now fine-tuning their operations with respect to driver pay and benefits. You’re not necessarily out there offering signing bonuses.”

In USA Truck’s case, facing $2.2 million in third-quarter expenses related solely to an October 2000 pay increase, bonuses for newly hired drivers are not in the cards.

Starting in the second quarter of 2001, the company capped the amount of compensation for driving experience it offered to new hires. During the third quarter, the pay scale for drivers with less than a year’s experience was lowered.

And last month, USA Truck lowered the pay scale for new drivers with more than a year in the industry, a change designed to “reduce driver pay as a percent of revenue without substantially affecting the strides we have made in the areas of safety, recruiting and retention,” the company said.

Existing drivers will begin to notice changes soon. The company plans no truck trade-ins next year.

“We will instead extend the lives of the equipment that would normally have traded next year,” the company said. “We will return to a normal trading schedule when [used-truck] market conditions improve.”

Orler hastened to dispel the notion that the company was installing an austerity program.

“We try to get [drivers] every new improvement that comes along,” he said. “Our plan is to continue to do that. We have extended the life on some of our units, which may be something of a negative, but there’s not much of a market for used trucks.”

The Trend

SignPost’s quarterly National Survey of Driver Wages confirms that the Arkansas carriers are part of a national trend.

“With the industry suffering from high fuel costs and slow freight, it is not surprising that few carriers elected to make a significant change in their wage packages,” the company stated earlier this year.

“Being able to keep trucks full of drivers without increasing wages is welcome news to truckload carriers under severe profit pressures,” National Survey Editor David Goodson said.

Orler agreed.

“We’re right on our plan,” he said. “We’ve been able to get everyone we need,” while complaints have been almost nonexistent from veteran drivers.

“I think maybe they have a little more appreciation for their job,” he said.