Drayage Drivers Must Be Treated Better to Boost Intermodal Service, Officials Say

This story appears in the Sept. 29 print edition of Transport Topics.

LONG BEACH, Calif. — The long-overlooked intermodal trucker took center stage last week as some industry officials insisted that shippers, railroads and other participants must treat them better, while others assessed growing threats to the traditional owner-operator structure.

Bill Matheson, president of Schneider Intermodal Services and Ken Kellaway, CEO of drayage carrier RoadOne Intermodal Logistics, joined other industry officials who outlined the potential consequences of these scenarios to attendees of the Intermodal Expo here. The clear message was that the $15 billion drayage industry — collectively smaller than No. 1 railroad Union Pacific — is being buffeted by higher volumes, scarce drivers and pressures to improve productivity.

“The fundamental issue is that this work doesn’t compete effectively on terms of job times and wages,” Matheson said. “The job does need to change. It needs to be more productive. We have been educating our customers by saying in order for us to say yes to their freight, they need to treat drivers right — get them in and out efficiently. They need to be compensated for idle time.”

The official of the Wisconsin-based carrier, which ranks No. 7 on Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, went on to say, “We have shippers who will not have a capacity problem. The rates they pay and the conditions the drivers experience will determine who gets the freight.”

Kellaway also focused on productivity and stressed that intermodal truckers don’t have an effective voice in deciding how the overall intermodal service package should look.

“The drayage community is not at the table” with ocean, rail and other intermodal users when service decisions are made, Kellaway said.

“We need their awareness of the service challenges out there,” he said, noting that a 30-minute terminal or dock delay cuts trucker productivity by 5%.

“The system has to be fluid to be attractive to drivers and be financially viable,” Kellaway said. “We can fix it, but we need to be at the table.”

“We are having difficulty for all of the reasons you’ve heard today,” said Bo Bates, CEO of Evans Network of Cos., a Pennsylvania-based carrier that is struggling with regulatory, pay, lifestyle and congestion issues for its drivers. Like RoadOne, Evans’ drivers are contractors.

Bates said Evans (No. 81 on the TT100 for-hire list) also is trying the same approach, asking customers to squeeze out delays at their docks. “We need to find ways to be much more efficient,” Bates said, praising customers who have asked how they can boost productivity to ensure capacity.

Matheson also outlined a bleak financial picture for drivers in general, including drayage operators, saying that wages have not kept pace with inflation and that they have lagged 18% over a decade.

Intermodal drivers face particular delays because they run in congested urban areas, Matheson said, putting a premium on productivity.

All three truckers said they have faced continuing delays, particularly at ports. Rail terminals also have struggled with congestion, with delays of multiple hours.

When freight that should be available for pickup isn’t ready until four hours later, that makes drivers’ situations very difficult from a productivity standpoint, Matheson said.

Matheson and others also noted that the long-standing industry approach that positions workers as contractors rather than employees is under stress on several fronts.

 One particular area of activity is California, where Hub Group converted its California drivers to employees in the face of decisions that jeopardized owner-operator status.

“Unfortunately, the law is changing in California,” Hub Group President Mark Yeager said, citing court and administrative rulings as well as a FedEx case that eroded legal defenses of owner-operator status.

Yeager said Hub, which still is 65% owner-operator nationwide, decided it was “prudent” to make the switchover. He also said Hub (No. 8 on the TT100) believed it would be easier to hire employee drivers.

Yeager noted that efforts by the Teamsters to convert drivers to employee status were a concern. The union has been campaigning — primarily in California — to change driver status so that drivers could become eligible for union membership.

He acknowledged that it was possible the conversion of employee status could spread to other parts of the country.

Hub officials also believe that intermodal can profit from tight truckload capacity and a lack of drivers because that encourages conversion of highway freight to intermodal.

All of the company officials underscored the importance of treating workers with fairness and respect.

Kellaway, who heads a Massachusetts-based company, and Bates maintained that drayage drivers choose to be entrepreneurs through owner-operator status.

“We are hiring individuals who own trucks,” Bates said, and creating opportunities for them to succeed.

“They could be employee drivers anytime they wanted, ”Kellaway said, making the same point about owner2w1operator opportunity.