Recent conversations have been around driver pay and attracting drivers into our industry. OK, that conversation has been happening for the last ten or so years. Some recent conversations have been around the notion that we need to “delink” as it were how the driver currently gets paid per mile and transition to an hourly rate.
One culprit of the driver pay conversation stems around the implementation of the new hours of service. First, let’s remove the conversation of proposed safety benefits of the new hours of service. Our conversation will focus around the driver and their pay as it pertains to retention and recruitment. Late in 2013, the new and revised hours of service went into effect. With that, a driver needs to take a 30 minute break after being on duty 8 hours. Another major change that went into effect was when and how a driver utilizes the 34 hour restart. Now a driver needs to have 2 periods of uninterrupted rest between the hours of 1 am and 5 am during their 34 hour restart. If they do not achieve that, they do not gain back the 70 hours of driving. They also can only use 1 restart in a 7 day cycle. These items along with a driver now understanding they have a “scorecard” as it were with the Compliance Safety Accountability (CSA) Program is to let carriers know how well they are doing as a truck driver. Truck drivers, rightfully so, are being more cautious about protecting that score, thus they are doing more that affects what they can do on the clock.
Industry experts see all this as costing about 20 percent of driver’s usable hours. Thus, their productivity is hampered. Now, before recent changes, drivers accomplished various performance items in their day that did not have a directly pay correlation. This was because it was in the performance of their driving time so it was “rolled” into their driving rate. Drivers understood where they were paid for these performance items and it made sense. Now, if the On Duty and Not Driving Time was kept to a minimum, then most drivers were happy. This is where a good carrier would plan out what the driver was going to be doing. This way the driver had the chance to plan out where they were going, what needed to be done and the process was somewhat smooth. If the carrier did not take these steps, did not work on keeping the drivers moving, then friction started to develop because that driver was losing valuable time.
A philosophy in the trucking industry that I grew up in is, “that if the wheels are turning, everyone is getting paid”. For years, this adage has proven true. Now, losing almost 20 percent of those usable hours to on duty time and not being compensated for puts a strain on the driver. There is no way for drivers and carriers to overcome that loss. Making changes to even the mileage rate will only have minimal impact on what a driver will make in their weekly paycheck. An example of what I am saying would look like this; currently a driver that does 3,000 miles a week, paid $0.35 per 轎車服務 mile would take home before taxes $1,050 (Annual Rate of $54,600). If they lose 20 percent of their productivity, that would be a loss of 600 miles, bringing the driver down to 2,400 miles per week. Even if we raised their pay by $0.10 to $0.45 per mile; the driver’s weekly take home pay is $1,080.00 (Annual Rate of $56,160). As you see, there is only marginal improvement to the driver by increasing their mileage pay by 30 percent.
Now, plenty will say that we should be paying drivers more than this. I will not disagree with you there. In our conversation here, that is a tangent we won’t be able to rectify. There is one aspect that is outside of the drivers and somewhat the carriers control and that is, what is the shipper willing to pay? Many shippers are willing to pay a little extra for a true quality carrier. That would be a carrier that the shipper may have some history with. Or one that has proven to be a quality carrier over time. Even then, if their carrier was going to increase rates by 30 percent like our example above, the shipper might look to see if those rates are the future competitive rates, or would it be something short of that. Either way, a carrier with a long standing customer relationship would like to keep from getting into that position of having someone else also bidding on those lanes. That would also have the ability to drive the rate down, just as it has happened already in our free market economy.
So do we change from the mileage rate of pay to maybe an hourly rate of pay? Major issue there is that the industry norm is to pay the carrier per mile. Thus in turn, the driver is also paid on that mile. If there’s a “disconnect” created by paying per hour than per mile carrier cost could sky rocket. Recent example; I moved freight from the Chicago area to Auburn, WA. Total miles for this is 2,064. Shipper to be billed $4,800 for the shipment. That comes out to $2.33 per mile for the carrier. Using industry averages for driver pay, benefits, maintenance, fuel, insurance, and registrations it will cost the carrier about $4,100 to move the truck down the road for this shipment. This is not gross profit for the carrier, they still have payroll on support people that does not go into these numbers. So while this shows about 15 percent profit, it will be closer to 4 or 5 percent by the time everything comes out.