Why Walmart pays its truck drivers 6 figures

It’s not out of the goodness of Walmart’s corporate heart that it pays truck drivers a truckload. Rather, truckers are key to Walmart’s retail dominance — and they have been from the start. Without a highly engaged trucking workforce, it’s not likely that the company would have flourished in the way it has. The Fortune 1 company prioritized supply chain long before it became a buzzword.

“At Walmart, we believe in offering our drivers a competitive compensation package to attract the best drivers in the industry,” a Walmart spokesperson told FreightWaves in an emailed statement.  

Walmart employs some 14,000 drivers, which makes it comparable to some of the largest for-hire fleets in the U.S. It’s added 5,800 drivers to the company in the past five years alone. 

Recently, Walmart has shifted some of its strategies around recruiting those new drivers. In 2018, Walmart changed its truck driving recruitment program to allow more drivers to pass its program. A senior vice president at Walmart told Yahoo! Finance at the time it was because of a “shortage” of truck drivers. (Those who study the trucking industry dispute that such a shortage exists, concluding that drivers leave the industry for jobs with better pay and hours.)

Last year, Walmart announced another key pivot. The company said in January 2023, building on a pilot it launched the year before, that it would allow Walmart associates living in participating locations to apply to a 12-week CDL program. For perhaps the first time, a Walmart company driver doesn’t need years of experience to get behind the wheel of its branded 18-wheelers. It may be that Walmart’s tack on trucking is changing. 

Operating in the boondocks forced Walmart to become a distribution whiz

Decades before Walmart became the biggest company in the world — raking in $611 billion in revenue last year — its leadership team couldn’t find anyone to haul freight to its first stores. Walmart operated mostly in the boondocks, far from where most trucking companies wanted to go.

“We couldn’t find anybody who wanted to run their trucks 60 or 70 miles out of the way into these little towns where we were operating,” Don Sonderquist, an early Walmart executive, explained in an interview published in 1992. “We were totally ignored by the distributors and the jobbers. That’s not only how we came to build our own distribution system, it’s also how we got used to beating the heck out of everybody on prices.”

This forced founder Sam Walton to build up his own network of suppliers, too. Walmart elected to work directly with the brands it sells in-store, which still allows the company unusual control over the minutiae of the products of some very large companies, according to journalist Charles Fishman, the author of the 2006 book “The Wal-Mart Effect.”

This hyperfocus on supply chain and distribution shaped key decisions from the top to the bottom of Walmart’s operations. That’s according to two people who have closely studied Walmart: Fishman and historian Nelson Lichtenstein, author of the 2006 book “Wal-Mart: The Face of Twenty-First-Century Capitalism” and professor at the University of California, Santa Barbara.

When Walmart sought to open a new store, Fishman and Lichtenstein explained, it built the distribution center. Then, it built stores within a one-day drive of that distribution center. This might seem like an obvious strategy in 2024, but it was somewhat revolutionary in the mid-20th century. Kmart, for example, targeted the same blue-collar Americans that Walmart did. However, Kmart would simply plop stores into suburbs that had plenty of customers. Distribution was an afterthought.

“Walmart has become the largest company in human history by doing something that was already being done, better than anyone else did it,” Fishman said. “Logistics and transportation is one of the things that made Walmart, Walmart, and allowed them to outcompete.”

So … why is Walmart so obsessed with its truckers?

Kroger, Home Depot, Target and the like all operate huge supply chains and obviously manage to get their shelves robustly stocked — without the front-and-center obsession on supply chain. Walmart’s supply chain, though, is different for a few key reasons. Professor Brian Gibson, executive director of the Center for Supply Chain Innovation at Auburn University, laid it out:

• Walmart is just, well, bigger than any other retailer. It has 4,616 stores, compared to fewer than 2,000 for Target, around 2,200 for Home Depot and 2,750 for Kroger. Walmart also has a larger average square footage per store, too.

• Walmart has a mix of grocery and general merchandise, which adds complexity to its trucking network.

• As a result of its large, private fleet, Walmart has unusual clout among equipment manufacturers and other trucking service providers. It’s the type of status that’s usually reserved for companies that only do trucking.

“Walmart’s mission is to save people money so they can live better,” the Walmart spokesperson said in an emailed statement. “Managing our own distribution and trucking networks helps us better serve our customer and manage costs.”

The importance of distribution is perhaps incredibly obvious. If stuff is not on the shelves, customers aren’t going to be buying that stuff. Customers would ultimately buy less during that visit and, if they get fed up by a consistent lack of stuff, eventually not at all. The stuff has to be moved safely and on time across the country. If paying top dollar makes that happen, then it’s sensible for Walmart to agree to do that. 

“They wanted to pay them good money because it was the absolute core of their, of their business — to get this stuff from the distribution center to the store at precisely the right time with no screw-ups,” Lichtenstein said. “That was crucial.”

Paying truck drivers top dollar also makes sense because Walmart doesn’t employ that many of them. The company has about 14,000 truck drivers and 1.6 million associates. Each of those truck drivers holds a lot of power over the shopping experience of a Walmart store.

“One associate here or there can have a positive impact, but it’s not going to change the economics of the store,” Fishman said. “A truck driver is going to really matter. They have an outsized impact on the way the company runs.”

Paying six figures to 14,000 employees may seem reasonable enough for Walmart. “It’s not even 1% of their staff,” Fishman said. 

Walmart is remodeling some of its trucker policies 

Walmart is now changing its truck driver hiring policies. Until 2022, the company required 30 months of driver experience before one could be considered for the company driver role. That year, the company began piloting a program that allowed Walmart associates to go to a 12-week driver training program and become fleet drivers. Walmart expanded the program nationwide. (Outside applicants still need 30 months of training, and not every associate who applies is admitted to the program.)

“We started the Associate-to-Driver program because we wanted to tap into our own talent pool of incredible associates and give them opportunity to develop their career,” the Walmart spokesperson said in a written statement. “It’s been a great opportunity for our associates to continue to grow their careers without having to leave the company.”

The spokesperson said the company requires all trainees to pass the same skills assessment as external hires. Then, they’re partnered with a mentor for six weeks of continued training.

It’s a sensible move for Walmart to train from within; its current CEO, Doug McMillon, started as an hourly associate. “I think it’s a recognition that [you value] your own employees better than somebody walking in off the street,” GIbson said.

The truck driver shortage debate appears… again

Some Walmart drivers aren’t delighted. 

The Texas-based Walmart truck driver, who joined the company two years ago, said the retailer could attract more drivers by raising its pay. “Raise the driver’s pay and you’ll retain and attract [experienced drivers],” he said.

Another Texas-based truck driver, who joined Walmart seven years ago, said he fears it’s a sign that Walmart is approaching trucking in the same way as large for-hire fleets, which see typical turnover rates around 94%.

“Back in the day, you used to need a decade before you’re even looked at to get on with Walmart,” he said. (The driver asked not to have his name included as he is not authorized to speak on behalf of the company.)

Both complaints get at the heart of an ongoing debate in the trucking industry: the so-called truck driver shortage. Trucking employers maintain that they’re unable to hire drivers due to a persistent shortage — caused largely by demographic issues and the lifestyle of trucking. However, researchers (and truck drivers themselves) disagree. Studies suggest the massive turnover seen by large fleets keeps them scrambling to hire new workers; one March 2019 study published by the Bureau of Labor Statistics concluded that “price signals” would lead to a more stable trucking workforce.

A company, like Walmart, that pays six figures and offers good benefits should not struggle with turnover. On the other hand, Walmart needs to hire more drivers as the retailer expands operations and current truckers retire. Walmart has hired nearly 6,000 new drivers in the past five years. 

Experts believe Walmart wants more control over training its truckers

From the perspective of these supply chain experts, it doesn’t seem like the associate-to-driver program is necessarily a way to cut costs. Gibson said Walmart has been “very aggressive” in recruiting drivers in recent years. It may have simply tapped out of the current supply of drivers. 

“I think this is just the latest in the evolution of the hiring process for Walmart,” Gibson said. “Going internal has been proven to be a good strategy by other organizations.”

What’s more, the associate-to-driver program could be a way to better mold the Walmart truck driver. 

“You take somebody who’s been with another company, they’ve developed habits, they’ve developed styles, they know certain systems –  for the good and the bad,” Gibson said. “If they’ve developed any bad habits over time, you can train your new drivers the way you want, the way you need on your systems and try to focus on the skills, capabilities and safety issues that are directly of importance to your organization.”

Fishman agreed. An associate-turned-driver might not bring years of trucking experience, but they certainly get Walmart. 

“It’s possible in this wave of hiring that [outside trucking hires] are diluting this Walmart culture,” Fishman said. “Truck drivers are famously independent.”

What do you think of Walmart’s trucking fleet? Email rpremack@freightwaves.com with your thoughts. And don’t forget to subscribe to MODES.