Opinion: The Right Thing to Do

By Dan England, C.R. England

I applaud Dan Bearth for his opinion in the Feb. 14 Transport Topics. His description of the industry’s driver crisis is right on target [“Ignoring Driver’s Pay Is Risky Business,” p. 9].

The purpose for my writing is to tell what C. R. England is doing to address this crisis. However, I would first like to build on the foundation laid by Mr. Bearth.

In the summer of 1999, we were visited by the owners of one of the largest truckload fleets in Europe. We discussed many topics, but none was more enlightening than the discussion of drivers. They were astounded at the turnover levels that we experience in this country. They literally have “waiting lists” of driver applicants. In Europe and virtually everywhere else in the world, except the United States and Canada, truck driving jobs are valued and sought after because the level of compensation places them above what can be earned in other industries, such as construction and manufacturing.

Before 1980, the relationship between wages in trucking and wages in other industries here was not much different than now exists in Europe. Deregulation changed that. As the floodgates were opened to new competitors, costs needed to be cut and efficiency needed to be improved in order to remain viable. Although driver wages generally were not cut, they were increased only modestly for many years. The American consumer has been a tremendous beneficiary of this process. The American truck driver has not.

Over the past decade the driver problem has become increasingly acute. Truckload carriers have spent hundreds of millions of dollars trying to attract and retain drivers by offering nicer equipment, more home time, plush facilities, recognition programs, advancement opportunities, family-oriented and driver-friendly conditions, and so on. One particularly disturbing trend has been for carriers to compete more and more for drivers on the basis of “truck speed.” In other words, we have been willing to offer speed as an employment carrot, even though it will result in more accidents and more maintenance and fuel expense. For years, it was popular to say that the so-called “soft issues” were more important to drivers than pay and benefits. These efforts have no doubt helped, but they have served only to forestall the deepening crisis.

During the last half of the 1990s, carriers have begun to realize that unless compensation is at a level that is sufficient to attract people into the industry, the “soft issues” don’t mean much.

With a greater recognition of the importance of compensation, we have now entered the “leap-frogging” era. Every month or so, a carrier announces a pay increase. Sure to follow are announcements from other carriers. With a few exceptions, these increases tend to be much more modest than the press releases would have us believe. The problem with the “leap-frogging” is that it has accomplished little more than to maintain trucking’s position as offering only marginal wages for the amount of work required. We tend to overlook that the nation’s full employment climate is requiring competing industries to do the same with their wages.

The most notable exception to this cycle of modest increases was the J. B. Hunt initiative in February 1997. With its bold announcement of significant pay increases, Hunt attempted to assert industry leadership. It did reduce the company’s turnover, but it appears to have been less than successful from a financial standpoint. Hunt tried to absorb the higher wage cost by attracting more experienced drivers, which would result in offsetting cost reductions in other areas. Another possible option was to increase freight rates. However, this was nearly impossible because the other carriers did not follow suit. I admire Hunt for its courage and foresight. I think it was a mistake to assume that all of the costs could be absorbed and offset internally.

With fuel prices devastating our owner-operator ranks and our operating margins, with the percentage of unseated tractors continuing to rise, and with an imminent hours-of-service change that will reduce the productivity of our drivers, the capacity growth of our industry will be severely limited. If the economy continues to be robust, our customers will struggle as never before in moving their goods.

We at C. R. England are convinced that the only way the driver problem, and the resulting capacity crunch, can be avoided is by raising average wages to the $50,000 range over the next two to three years. These are costs that cannot be absorbed, especially by reefer carriers.

I will tell you what C. R. England is doing to accomplish this end. When interviewed by Transport Topics in January, we announced that we were raising our rates by 5% and adjusting our fuel surcharge to reflect a $1.06 base. We recently received a bid package from one of our major accounts. The bids were due in early February. We did what we said we were going to do, and we weren’t awarded one pound of freight! Are we upset? Yes. Are we discouraged? No!

As the demand for trucks continues to strengthen, we are having more and more success. We are going to continue to increase our rates because it is the right thing to do. We are prepared to lose some freight in the process. I have sympathy for our customers in that they are also working in extremely competitive industries. What they need to understand is that these costs should be passed along to the consumer, who has been enjoying such a good ride since 1980.

We at C. R. England are committed to doing our part in increasing driver wages.