The Roemer Report: January 2021

With capacity still tight, trucker pay finally climbing after years of stagnation

It’s heartening to see, in the midst of it all, some strong signs of better health and vitality in the trucking industry. Among the tidings of great joy for a better 2021 were two things analysts have been repeatedly pointing out since well before the Holidays: Capacity had tightened significantly and that driver pay was starting to climb—after years of stagnation.

Driver pay began to rise in the Fall

It began building late October. Transport Topic’s Dan Ronan talked to industry recruiters and fleet CEOs about these trends after fleets began announcing pay hikes for drivers that month. Jeremy Reymer, CEO of Indianapolis-based driver recruiting firm DriverReach, noted “I’ve seen a number of companies over the last couple of weeks make statements that they are raising their driver pay,” explaining “I think we’ve lost a ton of drivers this year, because of COVID.”

Schneider National told Transport Topics that it was raising pay for drivers with one year or more of experience by 4 cents per mile more. Schneider says that inexperienced team drivers, zero to one year, will receive an additional 2 cents per mile in pay.

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Schneider: Pandemic accelerated supply chain

Schneider EVP Dave Geyer explained that “the pandemic has influenced the speed in which shippers are accelerating products through their supply chain [and those] … who rely on time-sensitive service or have high-value freight now realize, more than ever, the importance or value of having professional, safe and dependable team service.”

Geyer explained that for the trucking industry to meet shippers expectations of faster more reliable service, they’re going to have to pay for it. “These shippers are seeking solutions from Schneider at higher rates for the expedited transit time, and Schneider is passing the rate increase on to our team drivers.” Well, how about that.

According to Transport Topics stats, Schneider ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 18 on the Transport Topics Top 50 list of the largest logistics companies.

Trucker raises in the headlines

Trucking News treated Epes Transport, headquartered in Greensboro North Carolina to some digital ink after it announced (JIT for Christmas) what the company asserts is “its largest pay increase across all divisions effective Jan. 3, 2021.”

Phil Peck, Chief Operating Officer with Epes Transport System explains that “During 2020, our truck drivers really stepped up and showed the country what essential work they do every day.” That he says is “Why we’re so excited and proud to announce this historic pay raise.”

According to Trucking News the increase will impact the majority of our hourly and mileage positions, across multiple operations. Peck notes “It is well deserved to recognize our professional fleet for their service and dedication during a difficult year, as well as position ourselves for dynamic growth in 2021.”

Trucking news reports Epes Transport System is a truckload common and contract carrier with 1,500 units. It is the largest privately-owned trucking company in the state.

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Reasons for the raises this season

DriverReach’s Reymer finds there are several reasons companies are raising pay in 2021 including:

  • A surge in retirements among older drivers propelled by COVID-19.

  • A desire among drivers to work closer to home and be home most nights.

  • The dramatic surge in e-commerce, and the need for tens of thousands of local drivers.

  • The 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 in the new Drug and Alcohol Clearinghouse.

Most agree though, that another factor compelling companies to hike pay is the robust increase in contract and spot rates over the past several months.

In his blog titled “Cost increases are coming — your rates need to reflect that sooner than later” OverDrive’s Gary Buchs interviewed Owner-operator Robert Boyle an experienced truck owner, who lives near Dayton, Ohio, is and a longtime source for sage advice regarding all that is trucking.

“I’m foreseeing yet another significant shift in the cost of business,” notes Boyle, because profits have been surprisingly strong for the publicly traded companies. He says take a look at the Dow Jones Transportation Average, the quarterly stock reports, and the reports of owner-operator incomes.

Noticeable increase in new Authorities

Boyle tells his colleagues in the business to take notice there has been a noticeable increase in newly issued DOT authorities, along with interest in purchasing trucks and trailers. Look at the demand to hire drivers.

Boyle explains: “As profit potential increases, so does the cost of entry and the cost of your inputs. We are likely going to have increases in fuel and fuel tax costs again. I’ve seen many stories related to increases in tolls — somewhat usual this time of year — and the cycle continues upward in an inflationary pattern.”

Boyle says the industry cannot wait until well after increases truly take hold to adjust your cost basis and rates. He also warns that firms should avoid just trading dollar for dollar to match increasing expenses.

Know your costs, at all cost

Boyle, a trucker and engineer, corporate manager and Vietnam vet (Thank you for your service sir!) offers some good advice about cost awareness and control – take the problem of tolls in particular. Too many owner operators, he says, automatically reject opportunities from Pennsylvania up through the Northeast to avoid tolls.

Yes tolls become an accounting burden yet keeping track of the real cost of tolls – and adjusting rates accordingly – has never been easier he says. “Have a good awareness of, and estimate for, what your real costs are going to be. Then calculate everything as best you can along with all your other expenses before accepting a load tender – it’s vital to your ability to survive and thrive in business.”

Vitality to survive the drive and thrive

With all of us headed down “Route 2021” the industry seems to be taking a new lane regarding business practices and importantly driver pay. The fact is the industry is responding – the anecdotal evidence is mounting that more than just a few outliers are “experimenting” with higher pay for drivers. That is GOOD News! From all of us here at the Roemer Report …

Bob Tales