Hours vs. miles

July 8, 2015
Are you ready for a radical change in driver pay?

The floodgates have opened. In the past two months, I’ve gotten press releases on a daily basis from fleets announcing increases in driver pay. Sometimes it’s for just one division, others for the entire operation. Some are relatively small fleets, others among the largest. Often they’re trumping the fleet’s second or third increase this year. And the increases are substantial, reaching as high as 25%. 

These announcements also share two things in common: they come from truckload carriers, and the rates are based on miles driven. Neither of those should be surprising. It’s widely recognized that truckload carriers are bearing the brunt of the current driver shortage, and the fact that truckload is the only segment that compensates drivers by miles, not hours worked, isn’t unrelated to that problem.

For reasons both specific to trucking and more generally linked to changes in social attitudes, I think we’re about to see an end to that business model.  And it could happen quickly.

Right now, there’s plenty of freight for carriers and tight capacity largely created by the unavailability of qualified drivers. Changes in hours of service, a rapidly aging workforce, and the inability to attract new entrants make it easy to forecast that we won’t see an end to that shortage anytime soon.

Initially, at least, it was also easy to point to low pay as the reason experienced drivers were leaving and new ones weren’t  interested even with unemployment rates high. Driven by carriers’ almost desperate need to keep trucks rolling, this latest round of driver pay increases seems to have addressed the low-pay issue, but where are the people who should be lining up for these now better-paying jobs?  

I think the answer is one truckload carriers have known all along but haven’t wanted to acknowledge, even to themselves. It isn’t the amount of pay; it’s the way drivers earn that pay.

Pay-by-the-mile forces too much of a fleet’s operational uncertainties onto the driver even though the driver has no control over them. Traffic congestion, loading and unloading delays, unavailability of a backhaul, bad weather, and other inefficiencies in the supply chain are in essence absorbed by that driver getting paid by the mile. Having your weekly pay fluctuate because of things outside your control creates a major disincentive to start or continue driving a truck.

Then there’s the issue of safety. You can argue that it’s more perception than reality. But to most observers, paying someone for the miles they drive, not the hours they work, encourages them to speed, to look for ways around HOS limits, to ignore fatigue and push on. Look carefully and you’ll see critics moving beyond the trucking community to raise this objection in the general media as well as the halls of Congress.

The current rush to increase driver pay is a competitive issue. Once one carrier moved to raise mileage rates, others rushed to match or exceed those raises so they could keep their trucks hauling freight. I’ve already heard that some carriers are looking at pay guarantees as a way to retain drivers, and I don’t think it will be long before one fleet decides to make a truly meaningful move by switching to hourly wages. When that happens, others will follow quickly, and pay-by-the-mile will be history.

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