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November 19, 2020 2:00 PM, EST

Trucking Companies Increasing Pay Could Indicate Greater Trend

Stevens Transport driver wearing mask Stevens Transport will increase pay for all drivers by as much as 14%. (Stevens Transport)

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Carriers are boosting compensation to address an ongoing driver shortage that some fear may worsen as a recent surge in COVID-19 cases threatens to put new strains on the supply chain.

“With the difficulty of finding qualified drivers — even during a global pandemic — many fleets are looking to raise driver pay, with some already instituting pay increases this year,” American Trucking Associations Chief Economist Bob Costello told Transport Topics. “This is a labor-shortfall hole that we are unlikely to dig out of anytime soon, and will continue to put upward pressure on wages.”

Among carriers boosting pay, Stevens Transport said Nov. 16 that it will increase pay for all drivers by as much as 14%, while Kentucky-based CoreTrans on Nov. 12 announced a compensation program with increased pay and home-time options.

Cargo Transporters

Effective Jan. 3, Cargo Transporters will raise solo driver pay by 2 cents and team driver pay by 1 cent per dispatched mile. (Cargo Transporters Inc.)

Wisconsin-based Paper Transport Inc. said certain regional drivers will receive a 7% pay increase on average and a minimum weekly pay guarantee. And on Nov. 9 Venture Transport announced that it would increase pay for regional and over-the-road drivers based in Indianapolis and St. Louis. The increase is based on tenure and experience but will equate to approximately 4% in gross pay.

Heading into next year. Cargo Transporters announced a pay increase for drivers effective Jan. 3. The asset-based regional and national carrier said it will increase solo driver pay by 2 cents and team driver pay by 1 cent per dispatched mile.

These increases mirror a wider trend in the industry, said Tim Podvin, senior director of carrier development and transportation solutions at DHL Supply Chain. “In recent meetings with many of our core carriers, driver shortage and plans to increase driver pay have been recurring topics of conversation,” he told TT. “Most carriers have already implemented recent driver wage increases or are planning to do so soon.”

Others are recognizing the work their employees have already done during the pandemic. Ryder System, for one, committed to providing $30 million in bonuses to its frontline employees in appreciation for their efforts during the coronavirus pandemic.

Ryder Supply Chain Solutions ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It is No. 5 on the TT Top 50 logistics companies list.

Avery Vise, vice president of trucking research at transportation intelligence firm FTR

Vise

Recognizing employees’ work during this difficult year and rewarding them into 2021 will be vital for the industry, noted Avery Vise, vice president of trucking research at FTR Transportation Intelligence. His company monitors trends in the trucking industry, and expects continued robust demand for drivers.

“We anticipate that we’ll see an acceleration of what we’ve been seeing probably through 2021,” Vise told TT. “Certainly most of 2021. Our outlook is that the overall freight environment will remain quite strong.”

He noted, however, that the pandemic, social distancing restrictions and state licensing agency disruptions have curtailed the number of new CDL holders while also compelling existing drivers to work elsewhere.

“Those are real constraints on drivers that are not going to reverse quickly,” Vise said. “Once a vaccine is widely available we may very well see a significant increase in the supply of people willing to be drivers. But even in the best-case scenario we’re not looking at the widespread availability of a vaccine for months.”

He noted that economic conditions will also play a role. “As we look ahead into 2021 the capacity side is almost a given to be tight,” Vise said. “The ability to bring on drivers is going to be constrained relative to the norm. The real question is going to be the demand side. How strong will demand be.”

Transport Futures economist Noel Perry noted the industry stabilized when demand rebounded after the initial drop during the nation’s springtime lockdown. He said indications point to another buildup in capacity now, but warned if conditions level off companies could overshoot their capacity needs.

Paul Lewis

Lewis

“If this expansion of demand continues then I expect that trend to increase,” Perry told TT. “Now here is the other side of the equation. All of these guys making the decisions were really stunned by the drop-off in demand during the lockdowns. Given the surge in COVID cases people are worried about another lockdown.”

Perry added, “I don’t expect the economy to keep expanding like it is now. And once the economy stops expanding rates will stop going up and fleets will no longer have any reason to expand.”

Paul Lewis, vice president of policy and finance at the Eno Center for Transportation, noted the difficulty of forecasting in this unpredictable environment.

“It’s hard to discern whether this is a one-off or whether this is a long-term trend,” Lewis said. “I wouldn’t put a ton of stake into what we know today because that could change very quickly in the next couple of months.”

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