What am I missing?

Whenifirst started at my current company, there was a 2 yr wait to get your foot in the door. I got in on a Canadian gig. No oversized. Normal flatbed loads of structural steel. Your average driver would make $8k after fuel a week (do the math). The money was unbelievable. There was a big blow up between ConocoPhillips and Alberta, and the gravy train ended suddenly.

Right before this happened, the company seemed to have hired a new Chief Beancounter. They started reading from the bottom feeder Playbook. cut the company trucks back from 68 to 64 mph and detune the engines. Fuel economy dropped to 4mpg on a Columbia with a 430 Detroit. They also got it in their head that they could make money by pushing their lease purchase deal on everyone. So they started advertising in the magazines,"No experience necessary" to get drivers in to do their lease. Safety rates plummets. When that happens, the higher end freight starts to vanish. There go your high end drivers. Safety rating falls through the toilet.

So, they try hand holding...aka micromanaging. You go from a fleet of drivers whose job is to problem solve to a fleet of drivers who expect to be coddled and babied. Company reputation goes into the mud and suddenly we have to compete with the stick and brick haulers for freight.

Management comes to me looking for suggestions to their plight. They see it as a problem with drivers. Crap rolls downhill, not uphill. You need to clean house at the office first. Fire your Chief Beancounter and anyone who views his Playbook as the gospel truth. It would take a little work, but we could pull the company out of the sewer.

Well, the question is, which would be more profitable...driver retention or churning and burning drivers. The higher end customers prefer to deal with the higher end drivers.if you have a hundred million dollar load that need to be shipped, would you be willing to pay $24/a mile to insure that it's shipped safely and properly? Okay, let's take it to the other end. You have two trucking companies wanting to ship your GradeA eggs for you. One charges $4 a mile, but has only 1 claim ever hundred load. The other charges $2/mile but has a 1 claim every 5 loads. You have customers lined up waiting for their eggs. Which trucking company would you give the contract to? The Beancounter will tell you the $2/mile company and show you a spreadsheet on how much money you would save. But if your customer can't get his eggs from you, he will get them from somewhere else. You will lose your customer.
Beancounter will tell you that they can try micromanaging the drivers, and hire safety people and quality control people to oversee the drivers (wouldn't it be cheaper to pay for better service than micromanaging? 1 truck with a claim compared to 20?)

 

Companies like those 2 really could care less who they hire a long as they meet the insurance.They collect subsidy for eacy driver,so they're not losing money otherwise they wouldn't be in business.Trucking is one of the lowest paid jobs there is.When you think about it,they don't even pay minimum wage for companies that pay by the mile.But if this is what you wanna do then you have to take the pay that is offered or find a non trucking job.

 

I think there is a combination of things.. a lot of people out of work needing to get a job.. CDL scbools and companies needing drivers...

I know werner has a combination of drivers who have been with werner for years and they also have a steady stream of new drivers... they dont have their own CDL school recruit at schools..

 

I believe this is what you and the others are missing from the equation:

I posted that in another thread and hopefully that lead others in the post some of the understanding of what the truckload turnover is all about. Hopefully cutting and pasting will not create any waves but I don't feel the need to rephrase it.

Truckload turnover happens because it makes these big corporations profits and it is easy to run a business burning through employees; the middle management and office staff does not have to be accountable or responsible if they can blame the driver.

 

I agree.

To be concise -

there is no driver's shortage

the ads you see are recruiting and nothing more

supply and demand has to do with the market, in this case it is a very very competitive market where most make about 4% profit being in the market. IT does not have anything to do with the driver.

Wages are determined by a lot of factor's, one of which has a term, what the market can bare. What I mean is if the competitive wage thing is at say 40 cents a mile. then that is what people are willing to pay for basic drivers. Most people here who are driver's only think they know what's going on but there is a lot more to just the wage and benefits like APUs.

This is a really large industry and drivers come and go, for the company that employs driver, there is a cost to that and a company does not want to pay that costs. There is no corporate wellfare, no big advantage to the bottom line or any other "stuff' like that to it, a lot of these companies depend on large volume to capture small profits.

One thing that is missed is that there are levels of performance tied with a driver's wage, in thinking that miles are important and nothing more, then those driver's need to find a way to increase that rate and the only way is to be a value to the customer and company. I think most experience O/O's understand that and maybe a bunch of drivers too.

 

Ooooooooooops

 

Don't be sorry, Eddy: those are fantastic points, that serve to shed light on the situation, and maybe educate us better about what we're getting into.

 

The 'Y' key is just above and a bit to the left of the 'H' key.

 

So educate us.

 

That is some really poor economics!

The rate of freight depends directly on the wages of the driver not the other way around. The basic fact is freight is going to move (within a margin of course) no matter what the cost; Companies are just not going to sit on their product. They have to get it to market. There is not doubt about that. Too many drivers do not realize that basic fact.

The mega-crap that have the dominance in the market and therefore set the wages and freight rates by sheer dominance. And yes they do it with corporate welfare subsidies. Follow along in what their average worker costs:

$5000 -The average mega-crap worker will work for the crap for 8 months following paying for mega-crap school at a cost about $5,000. That is often paid with the GI bill, pell grants, or unemployment grants.

-$2600 - They will drive with a trainer for about 6 weeks. The usual scale paid is around $400 for first 4 weeks and $500 for the last two.

-$11050 - The next 26 weeks they move and average of 1700 miles of freight at a wage of around $.25 cpm. $.25 x 1700 x 26 = $11050

=$8650 - sum the total up and you get $8650 for the driver. Divide that by the conservative figure of 70 hours per a work week. @ 32 weeks (8 months) you get: $8650 / (32 weeks x 70 hours) = $3.86 an hour!

Very few industries get to employ workers at that low of a wage!

Futhermore, additional government subsidies pay up to 40% of certain workers wages for the first couple years. The rate mega-crap then pay is: {$5000 -[.6 ($2600 + $11050)] }/(32 weeks x 70) = $1.39 an hour!

Without subsidies you cannot get labor at $1.39 an hour!

That low labor rate allows the mega-crap a lower overhead to underbid otherwise honest carriers for a larger portion of the freight. Lower freight rates set the wage scale for the rest of the industry.