Driver expenses and shortages permeated a significant amount of the presentation three executives from JB Hunt Transport Services made Thursday at the J.P. Morgan Aviation, Transportation and Industrials conference in New York.
Asked if the ELD mandate has had an impact on pricing, Shelley Simpson, the company’s chief commercial officer and president of its Highway Services segment, said that rule has had an impact. “But driver markets are the biggest piece of what is happening inside costs,” she said. “The increases that have happened and are planned will continue to come until we find that sweep spot where we have enough drivers.” Until that point, costs will continue to escalate, “because customers do want the freight moved.”
And shippers know what they’re up against, Simpson said. “I do think our shippers understand what is happening on the driver side,” she said. But “it is important that we have a job that is fair in wages, and that we treat them right.”
Those higher costs are playing into a rising bid season market. Simpson said late last year, the first report on the activities of bid season was sent to JB Hunt shippers, and it noted that the data in it was probably already behind. Since then, the company has provided four updates.
External reports indicate that bid season numbers, where shippers and carriers commit for a certain amount of business in 2018, have been “hovering north of 10%” in year-on-year growth, Simpson said. Internally, JB Hunt figures see it as more like 6% to 10%.
Shippers that committed early in the process secured the lowest prices, Simpson said. Since then, prices have continued to move up in an unspecified “second part,” and “maybe in the third part prices could escalate even more.” (JP Morgan transportation analyst Brian Ossenbeck referred to any bid season business getting done after the April 1 enforcement of the ELD mandate to be the second season of bidding).
As far as a solution to the driver squeeze, Simpson rolled out solutions that have been implemented or widely discussed. Signing bonuses that were once used instead of higher starting pay are no longer adequate and base pay is rising. “We’re trying to smooth their pay checks,” she said. At JB Hunt, turnover is better than a year ago through keeping existing drivers. “But at some point, we have to attract new people into the market, and that is what we’re doing with pay,” she said.
Problems on the tracks
Another problem squeezing trucker performance has been the logistical problems of the railroads that connect with JB Hunt and others in their intermodal services. David Mee, executive vice president and CFO, said there was “no single bandit” in the rail problems, which a day earlier had been discussed by executives from Canadian National. “Nor are we saying that anybody is not paying attention at the railroads to the service issue,” Mee said. “They’re working to improve their system. The timing is up to them and we won’t speak about their timing.” He added that the discussions JB Hunt has had with railroads leaves them confident that the railroads’ plans are “realistic, and we will manage around them.”
A significant “headwind” discussed by Mee is the drayage market. Mee said about 85% of JB Hunt’s drayage is done by their own drivers. But the remaining 15% is a problem. Drayage capacity is “very tight, and has been ever since the winter peak of last year,” he said. “Our ability to supplement the pickup and delivery side is becoming more and more challenging. We are doing more cost-benefit analysis every time we go to pick up an empty or delivered load if one of our own fleet drivers is not available.”
Mee said the company is “totally agnostic” whether growth comes from increased volume or increased prices. But since volume is possibly squeezed by things such as drayage, driver and rail squeezes, Mee said for now, growth “probably comes more from price than loads this year. But it’s too early to say.”
JB Hunt would not be looking to go to 100% employee drayage drivers, Mee said. Its strategy is to build out a business with established lane configurations, “create density and then we will place people in assets.” For now on drayage, Mee said, “there just not any bodies out there and the ones who are working have a lot to choose from.”
Simpson spoke about the company’s new 360 platform, which has helped give it a better aggregation and transparency to the data its truckers gather.
Simpson said one of the initiatives 360 has allowed is to build a data base on detention, which can then be distributed to shippers whose practices might be leading to long wait times. “The data we have can be shown to shippers that what is happening on price to shipping locations that are not friendly,” she said. A driver with multiple choices on routes presumably might skip an end destination if he knows that operations at the terminal are disorganized and a lengthy detention is in store, or seek a higher price. “We want to create that transparency for drivers about what they are going into,” she said, noting that JB Hunt is also talking to shippers about the best way to display that data.
James McDaniel
I for one don’t care anything about your company and driver shortage. I once spoke with a recruiter from your company and they told me I had to spend 2 to 3 months on the road,and only get a few days off. And I couldn’t bring my spouse. What part of being married don’t they understand. JB Hunt has been a joke to every driver I ever spoken with since the 70s. I drive for a small company and I don’t have to deal with not getting my miles. My pay is good good and i can bring my spouse. Plus great home time. Start treating your drivers with some respect and maybe you won’t has such problems.
Bob
Companies like yours will never attract good drivers. All good seasoned drivers have good jobs and we won’t leave. We drive nice Peterbilt and Kenworths that do the speed limit. We get great pay and benefits, we go straight out and turn around and come back home. We don’t spend weeks away from home.
You can’t offer me anything to come work for you. I have been a company driver at the same place for over 25 years. Good luck trying to find drivers. We have a waiting list of drivers
Greg Dorn
Maybe you could turn them trucks up to 70 or 72 mph, let the driver get more miles since the E Logs have ruined everything, maybe you could do trailer relays so the driver could get home more often and the extra fees involved within the company have done nothing to help the driver’s pay. E Logs don’t take into consideration weather delays, traffic delays, construction delays and more. If I can’t drive a truck at 75 mph since the national speed limit is 70 mph I won’t drive it. Make the driver stay alert by actually driving the Damn truck instead of holding the steering wheel! !!!! You big companies need to realize you hire fresh drivers that are broke and know nothing about truckin, as soon as they get experience most leave yall for faster trucks, more home time and better pay. You guys need to stop sending drivers on a long run and sticking them doing shit loads 3,000 miles from home for 2 or 3 weeks. Without drivers you’re company is nothing !!! Oh if the trucks were faster you might compete with the railroad a little more.
Mike
Start paying the drivers for what they are truly worth possessing a Federal License. The industry has been under paid for decades . The trucking companies are making huge profits at the expense of the drivers, yet they hold a loaf of bread under theirs arms crying wolf
Bo
I could care less about the the, my problem is too many policies. The hos is laughable especially with this nonstop 14 hour rule, when a driver maybe sitting or sleeping in the sleeper birth 3 or 4 or more hours, but it counts against driving time. The ELD rule is a joke. Also home time, in todays world we are doing something past generations didn’t do. We want to be there for our families and raise our children. There’s enough other jobs out there now people can walk away from trucking and work in a plant or mill and be able to take care of families and be home every day.
Lawrence Carr
Driver retainment has always been an issue. How about addressing why you can’t keep us. You have a sensor for every activity and a write up for the driver when it doesn’t meet your standard. And,before you sling mud at me I was there 2 years accident free and still left because of them annoying sensors. Other than that JB was a great company and I made great money but it was either the sensors or me. So beep this……just my opinion.
Harvey Riggs
Driver shortage my ass! It’s a bad driver pay system, with a low mileage pay not taking into account long detention times where they don’t pay detention till 3-4hours after arriving. Sign-on bonuses are a joke. If a companies pay system was worth anything, driver would not need a sign-on bonus to decide to go there. They try to tie on performance bonuses that have clauses that give the company a way out without paying it.
Plus you have multiple companies all trying to be the one to cover the same freight to get the load. So say you have 5 companies calling out driver shortage over the 1 load they are all trying to fill.
You have companies trying to setup the loads as team loads and can’t get driver who want to team.
You have companies who expect you to be out for 2 week – 3 week at a time and they call their home time 2 -3 days, but ends up only being 34 hours for 2 days & 60 hours for 3days, which does not equal full days off.
You have companies who create such a volatile work environment with the way they think of drivers are machines, instead of a human-being. You try to pull over for a rest mid-run, they are calling you up asking why your not moving.
Also the current generation is not the same as before and companies are not changing to meet their desires in a job.
Not to mention the stupid regulations being places on the the industry.
But there is NO DRIVER SHORTAGE!!! It’s a gloated shipping company pool! Too many companies all trying to cover the same loads and trying to steal drivers from another company to get the loads. Shipping companies undercutting to get the loads, but then can’t cover them, because they don’t have the drivers.
Brokers getting loads without being able to cover them, then re-brokering it at a cheaper rate to make a profit.
The whole trucking industry is a mess and it’s the driver suffering, not the companies!