Making it worth their while

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American Trucking Associations and the Canadian Trucking Alliance have endorsed a pre-clearance pilot project that would relocate all U.S. border functions for both commercial and passenger traffic from the Buffalo, N.Y., side of the Peace Bridge to Fort Erie, Ontario. Both groups hope the project ultimately will lead to full pre-clearance of U.S.-bound commercial traffic in Canada in order to reduce traffic disruptions and processing delays. A second element of the pilot would limit U.S. functions in Canada to pre-screening duties such as X-ray scans, radiation monitoring and physical examination of cargo.

Schneider National worked with Stoughton Trailers and Wabash National to design a stackable intermodal container that is authorized for use on any railroad and matches the interior dimensions of a standard 53-foot trailer. The container is designed to be multimodal, provide extra interior space and increase route flexibility. It can accommodate 25 pinwheeled pallets and allows the potential for up to 15 percent more palletized cargo than standard intermodal containers, Schneider said.

Chicago Mayor Richard Daley last month proposed several measures that he hopes will create more oversight of city departments touched by the scandal-plagued Hired Truck Program. He proposed hiring five nonunion project managers to oversee trucks, equipment and projects in the Department of Transportation and 10 nonunion project managers to oversee planning, quality control and projects in the Department of Water Management.

Carriers recently have been saying that incomes for over-the-road truckload drivers will need to climb to $60,000 before carriers will be able to attract enough drivers to meet freight demand. That figure would be for the average driver – with some making much less and others quite a bit more.

As an average, $60,000 would be high. Rather, I think we will see average incomes for drivers stabilize at about $50,000. When I developed The National Survey of Driver Wages in 1996, I calculated that the average income for drivers at that time was about $34,000; I predicted income would need to reach $40,000 before the industry would be able to attract enough entrants.

I based that prediction on a simple table I developed that estimates how much a driver must

Factory
Hourly
Wage
Straight
Time
2,080 hours
Overtime
200
hours

Total

On-the-road
Costs
Needed
Driver
Income
$9 $18,720 $2,700 $21,420 $5,000 $26,420
$12 $24,960 $3,600 $28,560 $5,000 $33,560
$15 $31,200 $4,500 $35,700 $5,000 $40,700
$18 $37,440 $5,400 $42,840 $5,000 $47,840
$21 $43,680 $6,300 $49,980 $5,000 $54,980

make to be on par with a factory worker at a different hourly-wages rate. It assumes the factory worker is paid for 2,080 hours of straight time and 200 hours of overtime at time-and-a-half. I also assumed $5,000 as additional out-of-pocket costs of living on the road. Some drivers will swear that’s too low, but don’t forget that there also are out-of-pocket costs for eating during home time. In addition, there is some tax deductibility for meals on the road, although not all drivers take advantage of that provision. Finally, many drivers save money using their tractors as a primary residence.

To be better off than a $9-an-hour worker, the driver will need to generate $26,420 of income. If a driver receives an average income of $34,000, clearly he will be about $7,000 to $8,000 better off on the road. That would be the “combat pay” a driver would receive for life on the highway. It may not seem like much, but for a driver that might have to make child-support payments of $400 a month, it could be the only way to make ends meet.

During the ’90s, my local McDonald’s started advertising for entry-level people at $9 an hour. Wages shot up in all sectors, and entry-level jobs in the $10 to $12 hourly range started appearing. To keep pace, driver wages also began rising 4 to 5 percent a year, approaching $40,000 – a level at which there was a bonus versus a $12-an-hour job.

But the 2001 recession brought wage gains to a screeching halt. Some major carriers rolled back wages for new drivers, suggesting that they didn’t feel there was a shortage of drivers. Now with the economy rolling again, we are seeing upward pressure on wages across all sectors, with many low-skill jobs paying $12 to $15 an hour. So if driver wages now average $40,000 a year, there is little “combat pay” to induce drivers to remain on the road, when they can get a job close to home that pays $15 an hour. But if driver incomes approach $50,000, a bonus for life on the road is restored.

Of course, $15 an hour is a top-end wage in many parts of the country. I don’t think we will see too many $18 to $21 hourly jobs outside of unionized plants or skilled trades such as construction jobs. So the industry likely will stabilize with a driver income that competes with jobs in the $12 to $15 hourly range. Some drivers will do much better.

Competing with other industries for quality workers should help carriers. Other changes are worth noting:

Drivers will become more demanding at $50,000. An average driver will make much more than most public schoolteachers, so don’t be surprised if drivers become smarter and better educated. Drivers today are demanding enough, but consider what will happen when their average IQ is bumped up a few points.

Dispatchers will be harder to find and keep. The wages of an average driver probably will rise faster than dispatcher income. How many of your dispatchers who hold CDLs will decide it’s easier and more profitable to drive a truck than put up with all the demands of dispatching? And if you recruit dispatchers from your driver force, will you be able to find anyone willing to take a pay cut?

Part-time drivers will be easier to find. As wages go up, more people who hold other jobs – including some of your dispatchers – will be attracted to run 400 to 800 miles over the weekend. When I ran a fleet, I had dispatchers from other companies drive part time on the weekends for me. Apparently, their full-time employers thought their extra tractors would make more money parked in their yard than out on the road moving freight.

Raising “combat pay” may have other implications for your operation, but it will be necessary if you want to thrive.