Richard Mikes, managing partner with Transport Capital Partners (TCP) is relating a conversation he had with a carrier he spoke with recently.
The woman, he tells me, sat back and looked at her drivers, how many runs they make in a week and what they were getting paid. She asked herself, “Would I do that job for $50,000?
“No, I wouldn’t,” she told Mikes.
“Sixty-thousand is not an unreasonable rate to expect to be paying these drivers,” she continued. “Will I go out and raise my wages tomorrow? Of course not. But the whole industry is going to have to gravitate towards that in the next few years,” she said, “or we’re really going to be in a mess.”
The conversation stemmed from TCP’s 2011 fourth quarter Business Expectations Survey that found that 65 percent of carriers believe that wages must be more than $60,000—up from 49 percent in May 2011. During the same period, the American Trucking Associations’ (ATA) data in driver turnover rates jumped from a range of 40 to 50 percent up to nearly 90 percent.
“Here we are now with two-thirds of the carriers versus half saying that we have to have wages above $60,000 to attract and retain people in this industry,” Mikes says.
Here’s Some Money, Now Go Away Driver Shortage
There’s the long-term problem and the short-term problem. Long-term, yes, there is the issue of an entire generation retiring—a generation that decided to stick around when the economy took a dive. “We dodged a bullet there,” Mikes says.
But, he explains, recent reports have shown a big pop in freight rate increases—well before the spring shipping season. “It’s happening now so we’ve got a lot of pressure to just retain drivers, not increase the pool of drivers, in the short term. And to protect their driver base, you’re probably going to see a number of carriers bumping wages two, four, or six cents a mile.”
Yet in that same TCP survey, carriers reported that current ROI isn’t keeping pace with costs. Imagine, Mikes explains of the current dilemma, that you are running your old trucks, replacing as necessary. You aren’t going to buy any new trucks to meet demand. So you increase your supply of trucks because you aren’t getting adequate return—you’ve got 10 percent unseated, anyway—and the only way that you can get drivers to drive your trucks is to bump wages up 20 percent.
“How are you going to balance that 20-percent increase when you are going to immediately give a nickel to stop the churning of drivers between carriers, and you’re getting two bucks a mile so there’s a two-percent increase you’re going to shippers with just on pay.”
For TCP, that’s the message they are trying to get out to carriers for 2012: balance. Balancing available trucks with rising freight volumes and balancing driver wages with existing rates.
While drivers—good drivers—clearly do deserve a wage increase, throwing money at the problem blindly is not going to solve the long-term driver shortage nor will it solve the short-term driver retention problem.
Take a Look at the Carrier in The Mirror
Let’s remove all the rising costs from the equation for a moment, and simply look at the job of driving, of why it’s hard to find good people, and the very harsh reality that the main reason for a driver shortage may be because nobody wants to do the job.
People are an organization’s most valuable resource—especially in trucking. And while income is incredibly important, people—by their very nature—need more than just a paycheck at the end of the day. They need support. Given the high amount of stress that drivers face every day, that support can be just as valuable as to the amount they are paid. This may be no more important for any generation than for the one that will be filling your seats in the next ten years.
“It would be idiotic not to address the needs and concerns of drivers,” says Carolyne Blais, recruiting manager with Kriska Transport out of Prescott, ON.
Kriska, an over-the-road carrier, has been nominated as one of Canada’s 50 Best Managed Companies, and more recently, was one of six Canadian carriers to make the Truckload Carriers Association’s list of The Top 20 Fleets to Drive For.
Blais says that there’s a number of things they do. “Pay is certainly part of it—we have a very competitive pay package here,” adding that “for the kind of work that we do, we’re able to offer our drivers more home time than other over the road carriers do.”
Don’t be mistaken, either—Kriska puts new hires through a regimented probation period. “We don’t like unseated capacity anymore than anybody else, but there is a really strong mandate here that says we will leave that truck parked before we put a person in who doesn’t meet our standards. A lot of people in the industry can’t say the same thing.
“I hear sometimes from individuals about another company where they went in expecting to fill out an application, and the next thing you know, they were already road tested and tossed into a class and it’s the same day—are you holy friggin’ kidding me?”
If Kriska hires a driver with 30 years’ experience who complains about going through orientation and having to road test, they won’t fit in with the culture, Blais says. “The kind of people that are attracted to our company realize that we have an image to keep here, it’s part of the business that we do, it’s something our customers are expecting us to do—that’s the kind of person we are attracting.”
They’ve also gotten out of the age-old carrier recruiting game of poaching from other companies by developing an apprenticeship program. Read: hiring new drivers.
“With the aging workforce, and the never-ending babble that we all do of ‘over the road is really tough and most people aren’t going to do it for the rest of their lives,’ when you put all those things together, stealing drivers just doesn’t make sense.”
Culture, Communication, and Crafting Your Drivers
Blais says that the apprenticeship program is their single biggest weapon in overcoming the driver shortage. “Every experienced driver was a new driver when they first started in this industry—somebody took a chance on them.”
“We’re big on doing that and we manage that risk by having a good, solid program.”
The apprenticeship program has strong relationships with schools, offers in-class training, and six weeks of one-on-one
in-cab driving, with constant communication and feedback.
“That’s a huge factor for new people coming into the industry right now,” Blais says. “We don’t see people coming into the industry who grew up on a farm and know intuitively how to drive something that’s bigger than a Neon—that’s not the labor market. People want to go to a company that’s going to give them that practical application so they don’t go into the big, bad world all by themselves and get into trouble.”
For Kriska, it’s all about support, monitoring performance and limitations, then—and here’s that word again—balancing that with their customers needs.
They also make their executives go out on hauls once a year, and starting this year, drivers will spend time in the office.
I asked Mikes, a certified economist and all-around numbers guy, whether support programs and a strong culture is of higher priority than signing bigger checks.
“I’d get some arguments from some people but I’d say it’s a higher priority than wages, personally. I don’t know any business that can survive long-term effectively, efficiently, productively and with profits when you have a 100-percent turnover of your employees a year,” he says.
How to work with drivers is one of the biggest challenges for any carrier, but culture, support, financial perks—it all starts from the executive level.
“You’ve got all these people depending on you—drivers, mechanics, dispatchers,” Mikes says. “You’ve got to be the good shepherd. I really believe that.
“And by the way,” he adds, “that driver is your salesman when he backs up to the dock.”
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