Shipping and Logistics

Trucks and Drivers Key to Industry Health

Written by Sandy Williams

Orders for Class 8 trucks set a record in July. FTR Transportation Intelligence reports orders jumped 25 percent to over 52,250 units last month in what is normally the weakest month of the year for order intake. Five of the highest order months ever occurred in 2018, said FTR.

Tight capacity in the face of rising demand has made fleets desperate to get new trucks, said FTR. “Freight growth is robust and industry capacity is extremely tight. OEMs have been hindered because numerous parts and component suppliers have not been able to produce and deliver on time.”

“The supply chain issues began around March,” said Don Ake, FTR Vice President of Commercial Vehicles. “OEMs started falling behind in deliveries to fleets in April. Deliveries did improve a bit in June, but most OEMs are still operating in catch-up mode. It is uncertain when suppliers will be able to improve delivery times and for OEMs to ship all orders on time. Realistically, it may take up to a year for everyone to catch up.”

The dramatic rise in orders is great news for the truck manufacturing industry, but carriers still need to find drivers to fill the seats.

About 70 percent of all U.S. freight tonnage is moved by trucks, according to the American Trucking Association, but right now the industry is short more than 50,000 drivers. Sean McNally, ATA vice president for public affairs, says the shortage could grow to 174,000 by 2026.

“It is important to note that fleets are not wanting for applicants, but because of the skilled nature of the job, they often struggle to find qualified applicants to fill driving jobs,” said McNally. “Truck drivers must have clean driving records and not have certain criminal convictions. They must also have professional training and licensing.”

Part of the problem facing the industry is an aging workforce and a lifestyle that many young people reject. The driver shortage was a non-issue during the recession, but now that the economy has improved and demand is skyrocketing, the industry finds itself scrambling for ways to attract new drivers and retain the ones they have.

The industry is seeking changes to regulations that will allow younger drivers under age 21 to be able to cross state lines. Driving academies have been set up to provide professional training to put potential drivers on a path to a challenging but rewarding career, said McNally.

High demand and low capacity have allowed carriers to raise freight rates and, in turn, offer higher pay, bonuses and better benefits to recruit people to the industry.

Drivers are also looking for stability in hours and wages. Smokey Point Distributing is taking that to heart. “All trucking companies pay by the mile, and it’s just been an industry standard for so many years that we all follow each other,” Dan Wirkkala, CEO of Smokey Point Distributing, told HDT. “When somebody raises pay by the mile, the others follow. But nobody has really stepped out and taken operational accountability for the efficiency of how many miles they give their drivers.”

Smokey Point announced this year an option to be paid a minimum salary of $65,000 per year. Drivers still need to reach a monthly mileage minimum, but the program has safeguards to allow drivers to make up for downtime or breakdowns. Drivers can use accessorial fees that are paid on top of the base salary to buy miles to meet the minimum annual requirement. The company says it is taking all the risk, not the drivers.

Technological tools track driver productivity and give Smokey Point insight on whether high or low productivity is due to driver performance or operational inefficiencies.

Drivers are also given bonus accrual for miles above the monthly minimum that are paid at the end of the year at the same rate per mile as mileage program drivers. 

“There’s all the incentive in the world for our drivers to overachieve their base salary now, because they get paid for every mile above that minimum base, just like they would on the mileage program,” says Wirkkala. “But the base salary ensures them that they will never make any less than that base amount, regardless of their productivity in miles for the month.”

Since they began the program, Smokey Point has seen driver applications increase by three- to four-fold.

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