“Drivers Needed.” This sign is common on many trucks that pass by on our nation’s highways. Why are trucking companies using their vehicles to advertise a shortage of drivers? The answer is simple. Spot rates are rising, loads need to be picked up, and trucks are ready to haul the goods. But carriers are in dire need of reliable drivers to perform these tasks.
2017 was a challenging year for many carriers due to the driver shortage, which continues to be a top concern in 2018. Last year, lack of drivers caused a decline in the number of miles driven and a rise in the number of unseated trucks for many trucking companies. This prompted some carriers to increase driver pay to retain their current drivers, and to increase sign-on bonuses to attract new drivers. Reduced revenues due to unseated trucks and increased driver pay had the effect of eroding profits and increasing operating ratios for many transportation companies.
Similar to last year, driver shortage remains the biggest issue for the trucking industry in 2018. There are a multitude of factors that have led to the shrinking driver population.
- Aging Driver Pool
The average driver is between 53 and 56 years old and more drivers are leaving the industry than entering.
- Lifestyle Shift
There is a lifestyle shift that hinders new entrants into the market. Long-haul drivers are only able to be home a few nights a week. Younger drivers want to go home more often and this leads them to search for jobs in other industries.
- Driver Pay
Average driver pay is around $45,000 - $50,000 per year. Current drivers are looking for new jobs that offer comparable pay and have the added bonus of allowing them to return home every night. For example, construction workers have been in high demand for the last few years. Construction wages are increasing, and many younger drivers are considering moving to a career in this industry where they would earn a similar salary, travel less, and be home with their families on a regular basis.
Although the industry as a whole is struggling with driver shortages, some carriers have seen success with driver recruitment and retention. These trucking companies entice drivers and retain them by differentiating themselves from other carriers using:
- Reliable Equipment
Drivers prefer operating a truck that is dependable and will not leave them stranded on the side of the road, which might cost them money by reducing their drive time pay.
- Apps and Social Media
Carriers are using apps and social media to send both internal and external messages to drivers and to recognize driver contributions, anniversaries, achievements, and more. These intangible benefits make drivers feel they are a valued member of the company which promotes loyalty.
- Dedicated Short Hauls
Some trucking companies have adapted their operating model to take on more dedicated and shorter hauls to ensure drivers are able to go home on a more consistent basis.
- Retention Bonuses
Retention bonuses ensure drivers do not see a dip in their wages from the prior year and mitigate the risk of drivers searching for a better opportunity.
The first quarter of 2018 has been promising in terms of spot rate increases and some companies have been able to obtain rate increases as high as 10 percent from shippers. The best way to turn these rate increases into profits and a healthy operating ratio is to manage driver recruiting and retention issues to ensure that there are a minimal number of unseated trucks. In short, the loads and rate increases are there, but trucking companies should consider using some of the ideas above to address the larger issue of recruiting and retention in order to increase the bottom line.