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Industry faces driver comfort vs. wages

Dec. 20, 2005
A white paper tackling driver lifestyle and wages as key issues in addressing driver shortages in the trucking industry was published by Detroit, MI-based third party logistics provider National Logistics Management

A white paper tackling driver lifestyle and wages as key issues in addressing driver shortages in the trucking industry was published by Detroit, MI-based third party logistics provider National Logistics Management (NLM).

NLM said that the trucking industry target for wages should be $60,000— 43% above the current $42,000 industry average. NLM acknowledges that this rate would raise shipping charges but would also deliver improved safety, productivity, customer service and an overall improvement in the driver pool.

According to NLM, LTL carriers that pay drivers an average of $65,000 a year have a turnover rate of less than 20%-- compared with truckload carriers experiencing turnover rates of around 100%. Jim Applegate, NLM director of sales and account management, said that he doesn’t anticipate the trucking industry to near that target in the foreseeable future.

“There are price pressures within all industries to keep salaries low,” Applegate told FleetOwner. “[The $60,000 salary target] is a long way to go from $42,000. I think if shippers make it more attractive for drivers to come into play, [capacity] issues will go away. But the problem is making shippers open up their checkbooks.”

Evans Distribution Systems-- a Melvindale, MI-based full service transportation company offering warehousing, transportation, added services and third party logistics—told Fleet Owner that it has ramped up efforts to meet the lifestyle needs of drivers in the past 18 months with success.

“As a company, we’ve had to do a good job in retaining our drivers and creating a comfortable atmosphere to work for us,” said Leslie Ajlouny, Evans vp- business development—adding that this mitigates turnover. “We’re trying to create an environment that’s great to work in so when we get a driver, we can keep him or her. Retention is almost more important than recruiting.

“We emphasize constant communication from the staff and H.R. team to make sure the drivers’ concerns are heard…and to make them feel like part of the team,” Ajlouny continued. “Our receptionist took on some responsibility in driver recruiting and embraced that role and to retain that communication with the driver. We do newsletters to drivers. We have a driver recognition program that rewards drivers that get recognized by customers for good performance.”

The company at one time saw a driver turnover rate of 100% but has “gone way down” over the past 18 months, Ajlouny said.

But also at issue is whether the current driver shortage is actually a good thing for the trucking industry, as tight capacity has resulted in generally solid rates. NLM’s Applegate added that the well-publicized spate of gangbuster earnings from motor carriers in recent quarters only tells half of the story.

“I think the earning results are deceiving,” Applegate said. “The publicly traded companies have benefited over the last quarters, but a lot of smaller owner-operators and smaller fleet drivers aren’t. A lot of people have had to shut down their vehicles because of fuel prices. There are two dynamics: some people with great business models and an organization that can take on fuel costs; and a lot of smaller players that aren’t as technologically savvy that don’t capture fuel surcharges in a timely fashion.”

Evan’s Ajlouny believes that despite fuel and capacity woes, the trucking industry is experiencing solid growth as a whole. And with that growth, Evans is trying to lock in freight that is conducive to driver retention. “We’re more selective with our business and we try to focus on business opportunities that are more dedicated and more consistent to make sure our drivers are home every night. We are better off now than we were two years ago and that’s pretty consistent within the industry.”

From the perspective of the shippers the tight capacity experienced by the trucking industry emphasizes the need to “pre-plan” and diversify its utilization of carriers so that its shipping needs are met year-round. “It’s a matter of [what carrier] has the capacity and how they planned the capacity to meet the market needs. In a crunch, those that had done their pre-planning will lock in capacity. A company that made a commitment with these carriers and drivers will smooth out cyclical peaks and valleys of this industry.”

For more information on NLM, go to www.nlmi.com.

For more information on Evans Distribution Systems, go to www.evansdist.com.

About the Author

Terrence Nguyen

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