Shippers Up Pay In Bid to Stem Truck Driver Shortage

By Brian White | December 9, 2020

Category: Labor & Employment

Tractor-trailers on the intersate

A U.S. truck driver shortage is prompting shipping companies to rethink employee compensation packages and truck driver employee rights in a bid to cover the industry’s declining numbers.

Shipping companies KLLM Transport and Pride Transport in particular are raising drivers’ pay, announcing the decision on Nov. 25.

Pride Transport is offering new drivers a $10,000 sign-on bonus paid over two years. The company’s director of recruiting, Steve Schelin, says the news raises its drivers’ base pay up by some 47 cents a mile, plus a matching 401(k) plan and health insurance coverage.

KLLM Transport says the pay raise means that owner-operator truck drivers will see a 9% raise on monthly earnings, with a new rate on reimbursed miles that includes fuel costs on loaded and empty trailers. The company’s employee drivers will see an increase of more than 8%, according to a KLLM Transport news release.

Persistent Truck Driver Shortage

The stepped-up compensation comes as the U.S. faces a truck driver shortage, specifically with tractor-trailer drivers who make cross country trips.

The industry has seen a decline in the number of these long-haul drivers for the past 15 years.

An industry analysis shows the shortfall began in 2005. By 2017, there were 50,700 openings that needed to be filled. The number increased the following year to 60,800 open driver positions. By 2028, the American Trucking Associations predicts the truck driver shortage to swell to 160,000.

The American Trucking Associations also say part of the truck driver shortage comes from an older workforce, with the average age of a trucker being 46.

Another factor cited in the American Trucking Associations’ 2019 report showed a lack of diversity. An estimated 7% of U.S. truck drivers are women, and 40% are minorities, a figure that’s up about 14% from 2001.

Still, many trucking companies report a lack of qualified candidates. Many carriers have implemented strict requirements for driving histories. In 2015, 88% of carriers reported this problem.

Alan Karickhoff, a research analyst with American Trucking Associations, made a dire prediction last year about what would happen if the truck driver shortage continued at the same pace as last year.

“If the trend stays on course, there will likely be severe supply chain disruptions resulting in significant shipping delays, higher inventory carrying costs, and perhaps shortages at stores,” he said.

Truck Driver Shortage During Pandemic

The coronavirus outbreak further pushed an already stressed shipping industry.

Since July, the number of truck drivers with larger fleets fell by more than 150,000, or 4.4%.

“This is the biggest downturn I’ve seen since we’ve been doing this research,” said Qualified Carriers CEO Jeff Tucker.

Tucker said the months following the nationwide closures were “brutal” as non-essential business shut down in March and April.

The lack of shipping demand saw truck drivers dealing with “reverse price gouging” according to Tucker, with some rates dropping to less than $1 a mile. The issue had truck drivers taking their frustration to Washington and protesting in May.

“The American truck driver needs help, and we need it now,” demonstrator Rick Santiago told the Washington Post.

By summer, the trucking industry saw a loss of 77,900 drivers. A demand spiked in September but by then, federal subsidies keeping payrolls liquid had run out.

“When freight started picking up in June and July, it could have been that by July the cash position of these carriers was so bad they couldn’t afford to keep these drivers on,” Tucker said.

September saw trucking companies hire some 45,900 additional drivers but were still short 71,000 truckers compared to the previous year.

Autonomous Tech & The Truck Driver Shortage

Even when the pandemic has cleared, truck drivers will continue to face an uncertain future.

M.I.T. researchers predict self-driving trucks are a decade or more away, but semis carrying loads are already on the road. Shipping company TuSimple recently announced plans to build an “autonomous hub” to run a network of driverless trucks across the country.

The company is already live testing the technology in Texas and Arizona, where driverless vehicles are legal. They have a goal to have the network up and running by 2023.

Although not on a scale to be considered a shipping service, in China, driverless trucks are delivering KFC chicken to customers.

Truck Driver Recruitment Challenges

“Pay can fix the problem in the short-term, but [in the] long-term we need to change the job,” J.B. Hunt Transport Services Executive Vice President Shelley Simpson said during a conference on Nov. 11.

Simpson says a more efficient network connecting drivers is needed, in addition to improved compensation packages. These improvements could reduce wait times by drivers who report losing 5.9% of their monthly pay to these delays.

Better treatment of drivers is also a factor in keeping the workforce properly staffed, also cited by American Trucking Associations in its 2019 report on the truck driver shortage.

Overall, according to an M.I.T. report on the future of work, truck driving jobs and other occupations that face being replaced by algorithms and robots need better support from the government and corporate sectors.

The MIT report calls for raising the minimum wage, expanding unemployment insurance, and protecting collective bargaining laws.

“We don’t think there’s necessarily a driver shortage long term, but we think there is a shortage of information and connectivity that would create a more efficient network,” and a more efficient network, with more miles for truck drivers largely paid by the mile, is what is needed to entice more potential truck drivers to get behind the wheel and keep them there, Simpson said.