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Supply Chain News: Driver Pay Once again Headed Higher, Supported by Record Spot Market Rates


After almost Two Years of Little Action on Wages, Driver Shortage Once again Pushing Carriers to Hike Wages for Drivers

Oct. 13, 2020

The US truck driver shortage is back on, pushing carriers to continue to raise driver pay, additional costs that will eventually be passed on to shippers – and supported for now at least with record levels of rates in the spot market.

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In September, Baylor Trucking announced a 75 cents per mile pay rate for team drivers, with a $3,000 minimum weekly guarantee.

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That's a change from the start of the virus pandemic, when the Labor Department reported 88,300 drivers and other transportation-related workers lost their jobs in April in the face of plummeting demand in all but a few sectors. But freight volumes have appeared to recover rapidly of late, and suddenly there aren't enough drivers to go around again

The driver shortage is a result of many factors. Those include:

• A surge in retirements among the large cohort of older drives, a trend exacerbated driver concerns about COVID-19.
• A desire among drivers to work closer to home and be home more nights each week.
• The surging growth ecommerce, creating the need for tens of thousands of local delivery drivers, peeling off long haul drivers
• Difficulties renewing or getting a new commercial driver license at state motor vehicle offices during the pandemic.
• The disqualification of an estimated 30,000 drivers as a result the new Drug and Alcohol Clearinghouse.

"Most fleets report that they could do four times the amount of work that they are doing, if only they had qualified drivers," said Leah Shaver, CEO of the National Transportation Institute, said on a recent webinar.

Carriers as a result suddenly have little choice but to raise pay to attract potential new drivers to the career, poach drivers from other carriers, and maintain the drivers they already have.

Transport Topics, the magazine of the American Trucking Associations noted that while the industry is not yet nearing the sizable hikes seen during 2018, when the freight market was very strong, a growing number of carriers are raising what they pay drivers. But that follows 20 months or so when there was little news of wage hikes given week demand.

But times have changed. For example, on October 6 Schneider National in a statement on its web site that it is raising pay for its team drivers. Those with one year or more of experience will receive 4 cents per mile more, while inexperienced team drivers, zero to one year, will receive an additional 2 cents per mile in pay.

At the upper end of the increase, drivers will see a pay increase of up to $6,240 a year. That has pushed annual pay for many Schneider drivers above $90,000, the company said.

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In September, Baylor Trucking announced a 75 cents per mile pay rate for team drivers, with a $3,000 minimum weekly guarantee.

Meanwhile, at Crete Carrier starting pay for national drivers will move upward to a range 51 cents to 57 cents per mile, depending on experience. The pay cap for over-the-road fleets will also grow to between 58 cents to 61 cents per mile.

Fortunately for carriers, the freight market is helping carriers afford to boost pay, in the sport market at least.

DAT Solutions, load board that tracks rates, recently said the national average for van rates set a record high on September 6, six cents higher than the previous high mark set in June 2018.

Other carriers are likely to follow Schneider's example and once again raise pay – moves which will show up in contract rates for shippers soon enough too.

Any reaction to this new round of driver pay hikes? Let us know your thoughts at the Feedback section below.




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