Fleets have been reporting big changes in both the truck driver pay and fuel prices front. Truck driver wages and benefits are rebounding in big ways even as fuel prices cause trucking operating costs to increase by 6% according to the latest ATRI report.
In fact, fleet operating costs have increased to their highest levels since 2014, driven by increasing fuel costs and better pay and benefits packages for truck drivers. The most recent 2018 update to the ATRI report, which evaluates operational costs of trucking, shows that the marginal cost per mile fleets pay rose to $1.69.
ATRI has been evaluating these numbers for nine years and the only other times that number was higher was in 2011 and 2015 when it came in at $1.70. Additionally, the hourly cost for fleets rose by $3, moving up to $66.65 per hour. This represents a stark contrast with previous years, when operating costs were dropping due to lower fuel prices. Since fuel prices have bottomed out, however, the numbers have been rising.
In 2017, fuel costs represented around 36 cents of every mile traveled, which is an increase of more than 3 cents. Fortunately, this still falls far below the high of 64.5 cents per mile recorded in 2013. Now, the new biggest cost lies in what fleets are doing to attract more people into their workforce.
Truck driver wages and benefits make up the largest chunk of a fleet’s overall operating costs. To attract more qualified truck drivers, wages and benefits have increased by 33.6% in the past five years. Even more, benefit costs are rising even more than pay, as fleets realize that it takes more than just money to get more bodies into cabs.
A whopping 63% of the fleets who responded to the ATRI survey reported that they are offering a financial incentive or benefit beyond just wages. Many fleets are turning to safe driving and on-time delivery as factors used to reward truck drivers and attempt to recruit more. With freight demand still booming, ATRI expects pay and benefits to continue posting strong gains well into 2019.
Yet, fuel prices and truck driver pay weren’t the only costs that showed rises in the latest ATRI report. Every category aside from truck insurance premiums showed a measurable rise over last year’s numbers. To read more detailed information from the report, follow this link.
What Fleets are Doing About Wages
Even though fleets are spending far more on benefits and other enticing rewards than they used to, truck driver pay continues to show big gains as carriers attempt to address the capacity crunch and find people to move their freight. In a sense, this is being driven as much by necessity as it is by history.
Consider this: After the trucking industry was deregulated in 1980, wages have pretty much stagnated as inflation and other comparable jobs showed increases. Fleets are now attempting to regain the label of trucking being a solid middle-class career. With U.S. Department of Labor proving this point, trucking companies are scrambling to answer the call.
According to DOL statistics, if truck driver wages had kept up with inflation, a truck driver today would be earning approximately $100,000 per year. While current wages are nowhere near this level, trucking companies are making big strides to close this gap. With the freight environment taking off in 2017, trucking fleets began trying to make themselves a far more attractive target for individuals looking for a safe and solid career. Consider that truck orders in the first quarter of 2018 hit a 12-year high, with an average of 45,000 new units per month arriving in fleet yards. Trailer orders are also seeing a huge surge. The only way for fleets to maximize the value of the equipment they are purchasing is to ensure they have truck drivers to use said equipment.
It seems like every month there is a new announcement that a motor carrier is increasing pay, delivering on larger bonuses, or coming up with a new benefit to attract and retain top talent. A recent survey showed that more than 60% of motor carriers are increasing per-mile pay for their truck drivers, and over half have increased their performance bonuses.
While most fleets are increasing pay by 1 to 6 cents per mile, some fleets are moving that needle even higher, increasing compensation by as much as 11 cents per mile. There is no doubt that truckers are on the receiving end of higher paychecks.
Still, trucking companies need to make more money to pay more money. As such, freight rates are increasing. With fleets now beginning to charge more, truck drivers are reaping the benefits of higher rates and seeing large increases in pay. Still, pay is not the only thing fleets are putting on their radar as tried-and-true ways of attracting and retaining team members.
Salary Guarantees
The idea of a guaranteed salary used to be unheard of in the trucking industry, yet that is exactly the solution many trucking companies are moving towards. Some fleets are moving towards a guaranteed minimum or even upping the maximum level of pay.
Rather than a truck driver relying on miles traveled, even if those can vary over time, a guaranteed salary can be just the thing to prevent truck drivers from seeking other employment or moving to a motor carrier who offers better pay and benefits. Motor carriers are also developing pay based on productivity and truck driver performance.
While truck drivers under these innovative programs will still need to meet monthly minimums, the program still allows for a little breathing room. If a breakdown happens or something else unforeseen occurs, truck divers can still have a recourse and know that they can rely on a set amount of money every month to keep themselves and their families secure.
Tools are in development that will allow fleet managers to get a better window into truck driver performance and operations. Using this data, motor carriers will provide a better idea of what truck drivers should earn. Fleets can then maintain profitability while still ensuring their truck drivers are paid appropriately.
Increasing Quality of Life
There is a perception among some that truck driving – as a profession – is difficult and unrewarding. Yet, if you ask many truck drivers, they will tell you that they love their jobs on the road. After all, many would rather enjoy the freedom of the road, in whatever capacity, than must sit in a cubicle in a window-less office.
Sure, truckers can experience things like long delays, long hours, and traffic jams, but trucking as a profession still holds plenty of appeal. The appeal lies in the quality of life increases that many fleets are implementing. Motor carriers are now looking to mitigate any losses that truckers face from having to route around traffic or be away from home for long periods of time.
Even so, for truck drivers who must be away from home for long periods of time, trucking companies are moving to mitigate any potential attrition problems by providing big paychecks and other benefits. From on-site gyms to paid health insurance and more, motor carriers are doing everything they can in this tight employment environment.
While increasing pay is one thing, trucking companies are also attempting to address the unevenness of truck driver pay. Many fleets are now offering guaranteed weekly minimum pay, which used to be unheard of in the industry. Based on that weekly minimum, trucking companies are also offering PTO.
Quality of life also relates to intangibles. From more entertainment options in the cab to intensive wellness programs designed to help truck drivers stay healthy and happy. Motor carriers understand that there is more involved than just a high paycheck to keep their people happy.
Are truck drivers feeling more appreciated? Are they feeling valued and respected? Truck drivers want to get the message that they are valued, respected, and cared for. Truck drivers want to be rewarded with perks and benefits workers in other industries take for granted.
No matter what, the trend is clear. Trucking companies are going to continue doing whatever they can to attract new entrants into the market, regardless of higher fuel prices. They understand that the best way to ensure they are recruiting and retaining only the best is to stand out from the competition.