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Quote of the Day

Tough times call for tough quotes, including these timeless classics:

“Tough times never last, but tough people do.”
-- Robert H. Schuller, American televangelist, pastor and author

“The only thing that overcomes hard luck is hard work.”
-- Harry Golden, American journalist and newspaper publisher

“Never, never, never, never ever give up!”
-- Winston Churchill, British prime minister during WWII

For truckers, let the good times roll

Movie mogul Sam Goldwyn famously once said, “Don’t make predictions, especially about the future.” Nevertheless, we’re going to test fate and time travel ahead nearly a year. Imagine, if you will, that it’s July 1, 2011 as we write these words looking “back to the future.”

After several years of wage reductions, benefit cost-increases and an increasingly frustrating job market, the driver has regained a strong negotiating position. Wages have reversed their downward spiral, and trucking companies are revving up their recruitment ad budgets and retention efforts. Not more than a year ago, this would’ve been unthinkable. Not anymore.

So, what happened to change the drivers’ negotiating position for the better since July 2010? Here are some theories:

1. CSA2010 knocked approximately 4 percent of tractor-trailer drivers off the road by making them virtually off-limits to the insurance companies that provide insurance coverage to trucking companies.

2. The quality of drivers seeking a job had plunged. Better drivers were shown the love by their carriers, and the bottom 20 percent were jettisoned. To lure the better drivers, trucking companies raised wage scales up to 20 percent, while shunning the applicants with unsafe driving record and unstable work histories.

3. Shippers began to insist upon carriers maintaining acceptable CSA2010 ratings. If a carrier couldn’t attain the shipper’s objectives with regards to CSA scores, the carriers lost the freight. The CSA score became as important as an acceptable safety rating, to shippers as well as insurers.

4. The driver shortage made it easier for carriers with drivers to find their own freight, forcing brokers to pay more and more to attract trucks. This forced spot market rates upward for carriers, and this spread throughout the economy, as shippers that depended upon predatory rates could no longer find carriers to haul their freight.

5. The driver pipeline ran dry. Because carriers stopped hiring from tractor-trailer training schools, from November 2008 to April 2011, the flow of new driving talent slowed to a trickle. As existing drivers continued to exit the field, they weren’t replaced, but the impact wasn’t felt because economic activity dropped even quicker. When the economy showed some signs of life, and CSA made carrier growth virtually impossible, the driver shortage became a national story.

6. Banks stopped lending to trucking companies, except for the largest carriers. This made expansion impossible, even with rates climbing, which funded large driver pay increases, while putting a cap on equipment growth. Because banks were laden with questionable loans to trucking companies, they were unwilling to re-enter the pool of lenders that funded carrier growth in past years.

7. The number of skilled blue-collar workers continues to decline. More and more younger people are obtaining college degrees, and fewer and fewer are becoming drivers . . . or electricians, plumbers and mechanics for that matter. Skilled blue-collar entrants into the trucking field kept dropping, causing the driver shortage to intensify.

8. Driving jobs can’t be outsourced. Driving is a profession that can’t be sent to China, India or developing countries. The need for skilled drivers keeps growing, especially with widespread health issues leading to an average driver lifespan of 61 years, according to Driver HEALTH magazine. Too many driver exits and not enough driver entrants led to an intense shortage of drivers, forcing pay rates upward as never witnessed before.

Of course, shippers had some options. They moved freight to piggyback, when possible, and they expanded their own private fleets, skimming the cream of drivers, many of whom desired local jobs with dedicated runs. Major LTL carriers found themselves the beneficiaries of large LTL shipments that were once routed to truckload carriers. Still, it wasn’t enough. Pay rates kept increasing and more and more carriers began to hire students and driving schools re-emerged from their hibernation. By July 2011, the market began to move toward equilibrium, but with much higher rates and better working conditions and driver treatment. (And there were no signs that driver pay would return to the levels seen prior to the spring of 2011.)

What a difference a year makes.

This article was written by a long-time trucking industry executive whose name was withheld by request.

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