Heartland Express during the first quarter of the year is increasing pay 3 cents a mile for all “system” and regional drivers. Combined with an increase in early 2004, pay for those drivers will be 15 percent higher than in 2003.
CNF has completed the sale of its Menlo Worldwide Forwarding unit to United Parcel Service for $150 million in cash plus the assumption of about $110 million of debt.
Old Dominion Freight Line has purchased LTL carrier Wichita Southeast Kansas Transit and plans to integrate WSKT’s network of 43 centers with its own 139 service centers. The acquisition gives Old Dominion a presence in Nebraska for the first time, bringing total states served to 41.
Segmentz, a provider of transportation and logistics management services, has acquired certain assets and assumed certain liabilities of Temple Trucking, a privately held Indianapolis-based company with locations in Champaign, Ill.; Warsaw, Ind.; Grand Rapids, Mich.; and Louisville, Ky.
Ruan Transportation of Des Moines, Iowa, has purchased Arbor Freight Service of Eau Claire, Wis. Arbor Freight – a full-service company with locations in Wisconsin, Indiana and Iowa – has 75 tractors and 150 trailers.
AAA Cooper has opened a new terminal in Florence, Ky. The 24-door facility will serve the metro area of Cincinnati and Northern Kentucky. LTL carrier AAA Cooper now has 76 terminals in 16 states and Puerto Rico.
Trucking companies don’t often offer guarantees. Between equipment breakdowns and highway shutdowns, most carriers believe that the service they deliver to customers is, to some degree, beyond their control.
Yet one multibillion-dollar freight company owes much of its success to guaranteeing next-day delivery when it “absolutely, positively has to be there.” The company was trying to convince a skeptical public that it could provide superior service to other alternatives. It wasn’t important that all a customer received as compensation for a late delivery was free shipping costs. Here was a company willing to back up its promises.
While you may not have the guts to offer customer guarantees for on-time service, consider offering guarantees to drivers for sensitive items, such as home time. Doing so offers several benefits.
Guarantees help you stand out from the crowd in competing for drivers. All carriers promise home time to drivers, but few guarantee it. One company I worked with guaranteed $150 to drivers that didn’t get home on time for the number of days promised. By offering to pay a specific and significant penalty for failing to keep its promise of home time, the carrier improved its recruiting.
Likewise, a guarantee changes behavior in operations because no manager wants to pay the guarantee. While home time is among the top concerns in retaining drivers, few carriers have systems to track their performance. By monetizing your promise to drivers, you have a simple way of measuring, by manager, your company’s performance in home time and other commitments.
And when operational demands keep a driver from making it home, he gets compensation. At the time I worked with this carrier, $150 was about a day’s pay, which was seen as fair compensation. In fact, drivers often wanted the extra money instead of the home time and complained when they didn’t get stuck out on the road.
Home time is but one example of a driver satisfaction item worth guaranteeing. Also consider guaranteeing that:
*Pay issues will be resolved within 24 hours of being reported.
*Trucks will be out of the shop by a promised time.
*Drivers will have to wait no more than two business hours for their next dispatch.
Guarantees in these areas help your company as well as your drivers. Unresolved pay disputes take up time and energy of drivers and operations staff and lead to ill will. Drivers figure out how to get their tractors serviced out on the road – at a greater expense to you – in order to avoid the company shop, where they never know when their truck will be back. And even though the hours-of-service changes have made waiting time for dispatches less of an issue, I would bet it remains a major driver complaint at most carriers and a significant drain on productivity.
Not all of these items would call for $150. Paying $15 for “dinner on us if we screw up” might be enough to express the company’s commitment. Yet it would encourage payroll and operations to work together to get issues resolved faster, even if it meant giving the driver a firm “no.” Drivers would be encouraged to use the company shop, knowing that they will get their tractor back by a deadline or receive a free dinner. They would be able to plan their day when their tractor was in for service. Operations would have an incentive to pre-plan dispatches and make dispatch decisions more quickly.
If you decide to try driver guarantees, beware that some managers may be tempted to pressure drivers not to demand payment for a broken promise. And although you might not want to break a promise intentionally, the guarantee won’t be truly effective until you have to pay off some drivers. Only then will the word get around among your drivers – and, ideally, your competitors’ drivers – that the guarantee is for real.
Again, a well-crafted guarantee program not only will get drivers satisfied but also will encourage your organization to do what it always should be doing – to maximize both retention and profits.