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Seeking solutions to the driver shortage

May 9, 2014

As the truck driver shortage becomes a bigger and bigger problem by the day – with one projection estimating the industry will be short a million drivers just 10 years hence – many feel that current driver recruiting, hiring, and retention processes need to be completely overhauled if not disposed of entirely.

“We’ve been dealing with this driver shortage problem since the 1980s and the industry really hasn’t stepped forward with what I would call a ‘holistic’ solution,” explained Duff Swain, president of consulting firm Trincon Group, during a webinar this week designed to lay out new solutions for the driver shortage.

“The industry has only selectively looked at the issue, often focusing on the idea ‘de jour’ to address it,” he said. “For years we tried throwing money at the problem, and at drivers, attempting the lure them to one company or another. The result: driver turnover still hovers around 100% and the shortage continues.”

Trincon pointed to data compiled by the American Trucking Associations, which estimates that there are 3.1 million active truck drivers in the U.S. with a current shortage of about 25,000 drivers and that 96,000 drivers need to be hired each year to keep pace with turnover. Furthermore, the shortage is expected to grow to some 300,000 drivers within the next two years, rising to one million drivers by 2024.

“We need to look more comprehensively at the problem, in particular the role individual carrier’s play in improving the image and reality of truck driving as a long term career,” Swain stressed.

Trincon believes four major points need to be addresses by fleets, regardless of size, in order to truly craft a long-term fix for the driver shortage:

  • Solve turnover first: This requires adopting what Trincon calls “onboarding” strategies to build better relations with driver candidates on the front end of the recruiting and orientation process. “’Onboarding’ reduces the learning curve by 34% to 46%,” noted Bill Kistner, Trincon’s VP of sales development. “Research by the Aberdeen Group also found that 69% of new hires who go through ‘onboarding’ processes stay with their employers for a minimum of 3 years or more.”
  • Have something to sell: Developing a career path for drivers in terms of measurable pay increases, ongoing training, the ability to shift into different job functions within a trucking company, and of course healthcare benefits, 401K retirement plans, vacation and home time not only bring drivers through the door but help keep them long term.
  • Keep the pipeline full: David Youkers, Trincon’s senior account manager, said only 6% of drivers today are 35 and younger so more attention needs to be paid on targeting long-term sources of labor. “High school students, immigrants, displaced workers, military veterans: the industry needs to extend its outreach beyond the existing driver pool,” Trincon’s Swain added. “Outreach needs to be conducted through churches, colleges, high schools, and the unemployment office.”
  • Relationship with drivers schools a must: More than anything, carriers must form close relationships with accredited driver training schools as well as find ways to help driver candidates pay for training. “Relationships with schools will be big,” Swain said. “Carriers need to be able to influence the curriculum, especially the ‘driver finishing’ part of the program, because insurance providers look closely at that in determining risk exposure.”

In terms of fleshing out those four strategies, Trincon’s executives suggested several other specific tactics for fleets during its webinar, including:

  • Looking at drivers as “professionals” and as employees looking for a long-term career path
  • Providing compensation packages that rewards skills, experience and tenure in addition to productivity
  • Establishing defined expectations, goals and recognition, plus consistent communication with drivers
  • Defining processes that hold drivers accountable
  • Build deeper relationships between drivers and key personnel from the outset, such as driver managers, dispatchers, and others
  • Make it easy to understand compensation and benefits from the get go and how both improve over a driver’s tenure

Overlaying those points, however, is the need for the industry to recognize that pay is not the critical linchpin of the driver shortage issue.

“Is compensation an issue? Of course it is. But once you establish competitive pay, it is how the driver gets treated that determines whether they stay or leave,” Swain stressed. “Pure and simple, we’ve been trying various methods of pay and bonuses year after year in this industry with little change in driver shortage and turnover rates to show for it.”

Driver polls conducted by Trincon found that 65% don’t feel any allegiance to their company, with 65% to 70% reporting that they don’t feel valued by their employers, either. “In short, they’ll walk rather than confront those issues,” Swain stressed.

Yet establishing more “competitive” pay structures is the key first step to solving the driver shortage.

Human resources firm HireRight, for example, noted in its recent Transportation Spotlight survey – a subset of its 2014 HireRight Employment Screening Benchmark Report – that the bulk of drivers who leave the trucking industry are doing so to make more money. According to HireRight’s polling data:

  • 51% of respondents said they left to make more money.
  • 41% left to spend more time at home.
  • 27% left to seek better benefits.

In addition, HireRight found that the increased pressures on drivers from hours-of-service (HOS) regulations, electronic logging, and the Compliance, Safety and Accountability (CSA) program are making other sources of income “more attractive.”

Trincon’s Youkers added that an estimated 5% to 7% of the current truck driver population has been taken off the road due to CSA, with HOS reforms reducing current truck driver productivity by as much as 8%.

Steven Spencer, VP-transportation at HireRight, echoed Trincon’s advice for solving the driver shortage by noting that “proactive” steps by carriers to improve retention include offering bonuses based on productivity and performance, flexible work arrangements, and even opportunities for drivers to become owner/operators.

“When asked about additional driver recruitment methods used, 36% [of carriers] stated they offered a signing bonus,” he said. “This approach is becoming more widespread than in recent years and in some cases is even being offered for recent truck driving school graduates. In addition, 16% of respondents reported they customized jobs based on an applicant's preferred location or lifestyle. Many employers are also recruiting workers through untapped labor pools such as dislocated workers, transitioning military personnel, and veterans.”

All that being said, though, there is widespread recognition that there is no “silver bullet” for the increasingly challenging aspects of the truck driver shortage.

John Larkin, managing director and head of transportation capital markets research for Wall Street firm Stifel, Nicolaus & Co., noted in a research brief filed from the 29th annual Trucking Profitability Strategies Conference hosted by the University of Georgia in Athens, GA, this April.

“Linking compensation to performance has proven to be effective in improving operational performance. Bonuses incentivizing fuel efficiency, productivity, on-time performance, and safety all help drivers focus on these areas,” he explained. “The personalized treatment of each individual driver, well-maintained equipment, and alignment with driver friendly customers can help maintain a positive outlook and ultimately improved performance.”

One takeaway from the trucking executives speaking at that conference is that while driver signing bonuses are generally counterproductive, referral bonuses for existing drivers can help significantly.

Yet at the end of the day, Larkin said few of the industry speakers could zero in on what he called a “market-clearing” wage for drivers that would get them into seats and keep them there.

“Many suggested that it is at least $10,000 to $15,000 per year above today's $40,000 to $60,000 annual driver wage range,” he noted. “Yet even then, truck driving will likely remain the employment of last resort for many years to come.”

About the Author

Sean Kilcarr | Editor in Chief

Sean previously reported and commented on trends affecting the many different strata of the trucking industry. Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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