This past week a conference was held by the American Trucking Association for fleet owners, managers, and executives, in the TL, LTL, and private fleet sectors. During the conference they discussed many issues including HOS changes, growth in the transportation industry, and of course the all-important subject: driver retention.
The term “driver retention” encompasses much more than it might seem. A complete discussion of driver retention must touch on many things including driver health, benefits, equipment, schedule, and – of course – pay. As anyone familiar with our industry knows, compensation for truck drivers works very differently than for most other jobs.
Rather than an hourly wage or a commission on profits, drivers are generally paid by the mile. Since the government regulates both how many miles can be driven in an hour (with speed limits) and how many hours can be driven in a day (with HOS rules), truck drivers have a maximum number of miles that can be driven in any given day. For OTR drivers however, they are still on the job even when the wheels aren’t rolling. Any increase in compensation with the current pay model would only increase the pay per mile, not the pay for the time that a driver is responsible for his rig and cargo but isn’t on the road.
But we all know this, so why are we discussing it? Because the model as it is does not work. Sure, freight can get from point A to point B, but in the for-hire trucking industry, annual driver turnover is hovering just around 100%. The industry with the next highest turnover rate (based off of numbers from 2011) is the hospitality industry with 33.7%. The hospitality industry has a notoriously high turnover rate, and yet trucking beats it with a rate that’s three times higher.
A major reason for the huge turnover rate is that truckers aren’t being properly compensated for ALL of the time they spend on-duty, whether they’re driving or not.
When you leave the for-hire industry behind and look at private fleets, the situation changes entirely. At the ATA conference where turnover was being discussed, Wal-Mart’s Vice President of Transportation, Jeff Flackler, was a panel member. Wal-Mart has a private fleet of trucks and drivers. Not only do they pay their drivers per mile, but about a third of the pay their drivers receive comes from other non-driving activities they perform. According to Flackler, they also receive a solid benefits package. Currently their driver turnover rate is between 5 and 6 percent.
So can we hope that for-hire fleets with turnover rates 20 times higher than that will take a page from their book? One panel member in the for-hire industry noted that while mileage based pay might be on its way out (and that’s a big “might”), using an hourly pay scale would be “financial suicide.”
According to an article on Overdrive Online, the panel instead concluded that in order to increase driver retention – and solve the “shortage” – the driver compensation system must be changed “to make sure drivers are paid for work done and time spent not behind the wheel.”