SEARCH searchBY TOPIC
right_division Green SCM Distribution
Bookmark us
sitemap
SCDigest Logo
distribution

Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- Jan. 21, 2016 -

 

Supply Chain News: Carriers Increasingly Embracing Driver Council to Stem Turnover, but Legalities Complicate the Approach


Are Councils a Great Vehicle to Solicit Driver Feedback - or a Management Plot to Control Costs

 

SCDigest Editorial Staff

 

Even as freight volume growth slowed in the second half of 2015, bringing supply and demand in the US trucking sector more in balance, driver retention remains a key issue for the industry.

While turnover rates in 2015 moved below the 100%+ level seen for the preceding several years, the churn in the US truckload sector among large carriers ($30 million or more in revenue) was still 87% in Q2 2015, in the most recent figures available from the American Trucking Associations, up from 84% in Q1. (The Q3 turnover report from the ATA should be out almost any day.)

SCDigest Says:

start
The National Labor Relations Act, includes has a broad provision that precludes aimed the creation of "company unions," or any quasi-representative body that discusses wages and working conditions.
close
What Do You Say?
Click Here to Send Us Your Comments
feedback
Click Here to Post or See Reader Feedback

Turnover and recruitment continues to be the top concern cited by trucking industry execs in quarterly earnings calls, and a lack of drivers continues to be the largest barrier to fleet expansion at many carriers. That even as most truckload carriers offered significant increases in driver pay over the past two years.

For instance, salaries, wages and benefit expenses at Swift Transportation, the largest U.S. truckload carrier, were up 18% year-over-year in the 2015 third quarter. While some of that increase is attributable to more miles being driven, the overwhelming majority of the added stems from increases in wages.

It looks like that trend may continue in the coming year. Truckload carrier C.R. England, for example, is boosting pay for certain drivers a substantial 12.3% Jan. 4. While the rate of increases for drivers may slow this year versus 2014-15, barring a recession the upward trend will likely continue.

While the focus has naturally been on wages, rates per mile are far from the only factor in retaining drivers. The fact that turnover at smaller carriers is significantly lower at smaller carriers (76% in Q2 2015) versus larger ones is generally attributed to a more personal, community type environment at smaller truckers. It is certainly not better pay.

Last March, SCDigest reported on this issue, noting that John Elliott, CEO of expedited and regional truckload carrier Load One in Taylor, MI, found in a recent survey of its drivers that the top factor in driver retention was "Respect, hands down. It was almost two to three times higher in scoring" in the driver surveys. (See Is Higher Pay Really the Key to Solving Driver Shortage?)

Now, a new report from the Washington Post says an increasing number of trucking forms are trying to use "driver councils" of one form or another to get in front of issues of concern to drivers - and form a more collaborative environment that they hope will reduce turnover.

Carrier management usually meets with such councils several times a year, such as quarterly, to talk over issues and concerns. At some carriers, the councils serve as more than just offering a voice for truckers to management.

At carrier Central Hauling in Arkansas, for example, a council there serving primarily independent owner-operators has developed training modules to help drivers manage the business aspects of their jobs, like keeping up with truck payments and minimizing fuel costs. The carrier executive says the council has helped the drivers feel connected to the business - and thus less likely to leave.


(Distribution/Materials Handling Story Continues Below )

CATEGORY SPONSOR: LONGBOW ADVANTAGE - JDA SUPPLY CHAIN CONSULTANTS

Download Longbow Advantage

Business Briefs

 

 

The Keys to WMS Success,

Maximizing JDA WMS

Performance and More

 

 

 

 

 

"You're not going to leave Central Hauling because you weren't treated fairly, or you didn't have the resources to be successful," a Central Hauling driver tells the Washington Post.

Company management says its turnover in 2015 was only about half of the national average, offering evidence its council is working.

Such councils have been around a long time, but seem to be on the increase. The Post article estimates that as many as 50% of truckers with more than 250 drivers have a council of one form or another - but certainly with varying degrees of effectiveness.

The retention issue has also spawned a number of service firms that use various other mechanisms to solicit driver feedback for company management. For example, company called WorkHound, which promotes itself as a "driver retention app."

But despite their growth, such councils can run into some legal issues in their operation.

Why? The National Labor Relations Act, includes has a broad provision that precludes aimed the creation of "company unions," or any quasi-representative body that discusses wages and working conditions. The law is meant to prevent such groups becoming in fact largely controlled by company management.

So, such drivers' councils "can't discuss anything important," Michael Belzer, an expert in trucking industry labor policy at Wayne State University, told the Washington Post. That would include issues that would normally be negotiated in collective bargaining - with wages and benefits clearly falling into that category.

Central Hauling says it avoids legal issues by not directing the council's activities at all or even monitoring what it does.

The Post article says the councils are often used to sort of test drive, if you will, new ideas before they are implemented. An example might be a new pay-for-performance program that would allow drivers to earn extra compensation for things like scoring well on inspections and getting good customer feedback.

The councils not only enable management to get valuable feedback from drivers, they also allow drivers to better understand the challenges, realities and constraints of the business - which helps them better consider why management does what it does.

But in addition to the potential legal issues - and SCDigest suspects the NLRB constraints are frequently exceeded in practice - the council concept has other critics who think they serve to benefit management over workers.

Those critics include Steve Viscelli, a visiting assistant professor of sociology at Swarthmore College who is writing a book on the trucking industry. The carriers are "trying not to bid up the wages among themselves, but they're trying to also delay [driver] exit," Viscelli says. "They know that in order to meaningfully reduce that turnover rate, they're going to have to raise wages substantially. So collectively they kind of manage it. And that's way cheaper than solving the problem."

Our view: These driver councils are of course a good idea, and probably help carriers and drivers in many areas - even if they at times do in fact deal in issues theoretically proscribed by labor law. That said, such an approach might delay for a time wage rates, but in the end, the market will settle on whatever pay rate is needed to attract the number of truck drivers required - as we've seen over the past couple of years.

What do you think of driver councils? Useful concept - or management tool? Let us know your thoughts at the Feedback button below (email) or in the Feedback section. Anonymity will be provided upon request.


Recent Feedback

 

No Feedback on this article yet

 

 
.