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Fleets: Driver pay may need to be $65,000
By Sean Kelley
Several major U.S. carriers say trucker pay has to increase to as much as $65,000 a year before fleets will have enough drivers to meet demand.
Covenant Transportation founder and CEO David Parker said his fleet expected to raise driver pay again in the first quarter of 2005, as many fleets did in 2004, but per-mile incremental pay raises may not be enough to draw the tens of thousands of drivers that the industry needs.
“Should we go up to $65,000 tomorrow?” Parker asked at a “Capacity Crisis” forum for shippers and carriers, held Oct. 11-12 in Atlanta. “I don’t have the guts to do it.”
While the national average pay for truck drivers currently hovers around $40,000, Parker and Duane Acklie, chairman of Crete Carrier Corp., speculated that salaries between $60,000 and $65,000 would be needed to fill the current shortfall.
“LTLs are paying $65,000 and have less than 20 percent turnover,” Parker said. “We’re paying $42,000 and have 100 percent turnover … I think you’re going to see driver pay increase over the next few years, 5 or 6 cents a year for the next five years.”
“Pay is important,” Acklie said. “We don’t have a shortage of drivers, just a shortage of drivers willing to work for what we pay.”
The discussion of driver pay is being driven by a torrid freight market, more restrictive operating regulations and a limited pool of qualified drivers. The trucking industry has reached a theoretical point of 100 percent capacity, said Jim Meil, an Eaton economist. Still, few carriers are expanding their fleets, and because railroads are just as burdened by the freight increase, shipping rates are shooting upward.
Schneider National organized the Atlanta forum to discuss these issues, but no subject dominated the event like the driver shortage and wages.
Trucking companies compete for the same laborers as construction and manufacturing, which offer fewer hours and more home time, carriers and economists said. But pay is still the dominant motivator.
“Even if things ease back, we will still have a driver shortage, and demand for drivers will still outpace supply,” said Erick Starkes of Freight Transportation Research. “This problem is putting a strain on the industry’s ability to add capacity in a hurry.”
“We have to take an abnormal share of the labor pool” to meet the current demand, said Scott Arves, president of transportation for Schneider National. Arves said the only way to take that share is to significantly raise wages, something fleets are reluctant to do. “If we move driver wages today, we feel the full effects tomorrow … Most people have focused on $60,000 or more to attract new entrants to the driver pool. We may not be able to reap the benefits of that move quick enough. Publicly traded trucking companies may not be able to survive Wall Street scrutiny.”
Yet a major increase could have benefits in safety, productivity and customer service. “At $65,000 with a cost of living index to it, you’d probably have a quality of driver increase as well,” Acklie says.
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