by Marty Cook
Posted 8/11/2014 12:00 am
When Steve Williams held grand opening ceremonies for Maverick Transportation LLC’s driver training center in late July in North Little Rock, the event came on the heels of his company announcing two pay raises for its drivers.
Williams said the pay raises, one an across-the-board 2 cents-a-mile raise and the other the waiver of a waiting period for a performance bonus, would raise his drivers’ annual pay to $50,000 to $58,000 for a first-year driver and to as much as $80,000 for an experienced driver. Then, Williams added an important insight.
“It’s not enough,” said Maverick’s founder and CEO.
Listen to any Arkansas trucking company executive — with the possible exception of unionized ABF Freight — and you will hear lamentations about driver shortages in the industry. Williams, in his opening remarks at his center’s christening, said it was important that potential drivers look at the industry as a “career of choice and not a last resort.”
Short of cultural change to repopularize the job, executives know they have to pay more to attract drivers and work harder to keep them. The trend doesn’t look like it is going to get any better anytime soon.
USA Truck of Van Buren had an otherwise positive quarterly earnings report tarnished a bit by problems caused by driver shortages. USA Truck reported net income of $700,000 on $125 million in total revenue, its first positive quarter since 2011, but the trucking segment of the business still had a quarterly operating loss of $1.7 million on $83.2 million in revenue because of unseated trucks.
Executives said 8.1 percent of the company’s 2,196 trucks — about 177 at any given time — sat unused because of a lack of drivers. Filling just 100 of them would be enough to break even, Beckham said.
“We could put hundreds of drivers to work if we had them,” said USA Truck CFO Cliff Beckham, who last week announced his resignation. “Everybody is scrambling. It’s like a game of musical chairs. When the music stops everybody tries to grab a chair, which is the driver.”
John Simone, USA Truck’s CEO, said in a conference call that the company is continuing to try different methods to recruit and retain drivers. He said turnover peaked in April and was improving through July, but said it was too early to tell when the company would hit its goal of 6 percent for unseated drivers.
During the same July 31 conference call, Beckham said the company would institute a pay raise that would average about 1 cent per mile per driver. Beckham agreed with Williams that pay raises will help but would not be the only cure.
“There’s a long-term demographic structural problem in our industry,” Beckham said. “There are more jobs than people coming in to take jobs. We have seen a tightening of the labor pool.”
Jim Ray, a co-founder of Fastport, a company formed to help combat the driver shortage problem, said the average age of truckers is 55 and that 300,000 jobs will need to be filled by 2020.
“We are all sharpening efforts on retention and recruiting,” Beckham said. “There’s 1,000 different ways to recruit drivers.”
ABF Freight, the largest subsidiary of ArcBest Corp. of Fort Smith, doesn’t have the same pay issues as some of its nonunion competitors. ABF Freight had second-quarter revenue of $492.9 million and its drivers’ cost is stable thanks to a labor agreement with the Teamsters.
During a conference call July 31, ArcBest CEO Judy McReynolds said the company had some production problems because the increase in overall shipping nationwide had put stress on the company’s docks. The company hired new workers to handle the increased workload, but the inexperienced workers were 20 percent less efficient, McReynolds said.
ABF’s Teamsters, who are already better paid than average even after making wage concessions last year, got a 2 percent raise at the start of July, and the stable workforce results in about a 4 percent turnover, excluding retirement. Compare that to Maverick’s 62 percent turnover and a national average near 100 percent.
Brad Delco, a transportation analyst with Stephens Inc. in Little Rock, said the increase in freight shipments nationwide is a sign that the economy is continuing to improve. The economy’s continued improvement will only make the driver shortage more acute.
Delco said he predicts nonunion truck companies may have to raise wages 4 to 6 percent.
“One of the staggering statistics [of USA Truck’s report] was unseated drivers,” Delco said. “That’s a large percentage of their fleet they don’t have drivers for. That’s putting a crimp on capacity.”
Beckham said pricing has increased and that increases in revenue should help with wage adjustments while not hurting the industry’s customers, and, indirectly, consumers. Beckham said raising prices to ship bread, for example, shouldn’t cause Wal-Mart to boost the cost of bread.
“The distribution costs for manufacturers or retailers are significant but they’re pennies on the dollar,” Beckham said.
If the economy continues to improve, then the trucking industry will face other pressures on driver retention. A better economy means more jobs in fields such as construction, which will suction off drivers.
Williams said truck driving isn’t an easy, glamorous life, which is why part of his training program at Maverick is having experienced drivers teach the “nuances” of the driving life to new drivers. P.A.M. Transport Services Inc. of Tontitown and Maverick pair new drivers with tutors on early trips to ease the introduction to the trucking life.
“Drivers are on the road 25 nights a month,” Beckham said. “They make decent money but, for the lifestyle, it’s not enough.”
Delco said higher pay is important but not the only adjustment needed.
“Pay is an important factor, but there are other aspects of the job,” Delco said. “Getting drivers home, making the quality of life a little better is a key. That will help achieve equilibrium.”
Another program designed to help the trucking industry is the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes. Ray spoke at Maverick’s training center opening because Maverick is one trucking company — as is J.B. Hunt Transport of Lowell — that has partnered with the program to hire veterans.
Williams said over the next 20 years, commerce on the interstate system will double. Fifty-one thousand trucks are parked right now because of no drivers, Williams said.
“It’s incumbent on us to attract, train and retain drivers,” Williams said.