While Schneider’s announcement of higher driver pay may have been more prominent given its size, smaller companies had been raising their pay levels for several weeks prior to the Schneider announcement.
Dave Ables, president and CEO of Minnesota-based Dart Transportation, is one of the companies that got a jump on others with an early August move on several fronts. In an interview with FreightWaves, Ables said the steps he took were mostly aimed at the independent owner-operators Dart employs, as well as drivers who are operating on leases.
Dart is a family-owned company that last year celebrated its 85th year in the business. It has roughly 2,000 tractors and operates in all states in the lower 48, primarily east of the Missouri River, Ables said.
The increases were implemented in August, Ables said. “It’s advantageous for us to be at the forefront,” he said. And while Ables said he believes Dart was one of the first companies to raise driver compensation, he said a second increase is possible given the conditions he’s seen in the market.
The changes implemented by Dart included an increase in base pay for independent contractors to $1.05 per mile from 95 cents per mile. For drivers on a percentage basis, the size of the percentage they took home from a load increased to 68% from 65%.
Changes also were made to the company’s fuel surcharge program, Ables said, which should put an additional 8 cents per mile into the hands of drivers. Finally, payments for drivers operating under leases were cut by $400 per month, dropping the average lease payment to $2,200 from $2,600.
While that last step would extend the date when the lease is fully paid for, Ables said there are “some guys who just want to stay in their lease forever. At the end of the period where a balloon payment would be required to fully own a truck, they just move into a new lease.” But for now, “they’ve got more cash in their pockets,” Ables said, as a result of the shift.
Since the changes went into effect, turnover in the company’s lease operators has declined to an annualized rate of 38%, which is about half normal turnover rates, Ables said.
Shannon Crowley, vice president of risk management at reefer carrier John Christner Trucking, based in Sapulpa, Oklahoma, implemented a pay increase that was less complex than that at Dart. Crowley is in charge of recruitment at John Christner.
Crowley said the company’s roughly 850 tractors are overwhelmingly operated by independent owner-operators.
Christner has a base rate for independent contractors of $1 per mile, a level that has been in place since 2018 when it was increased from 95 cents during a time when many companies were increasing their pay levels. On top of that, Christner Trucking added a market premium that can fluctuate up or down depending on market conditions.
In the latest move, that premium went to $1.05 per mile from $1, the first increase in two years. Crowley said the premium had gotten up to 5 cents two years ago but came down to flat before the recent increase.
That $1.05 figure puts John Christner and Dart at the same per-mile level for independent contractors.
The Schneider move can’t be compared to that $1.05 per-mile basis easily. Its announcement, published a week ago but said to have been in effect since late August, is for team drivers, where two drivers share the driving for one vehicle, allowing the truck to be on the road more and not stopped by hours-of-service limits. Those drivers are company drivers, not independent owner-operators.
The team drivers at Schneider can now make up to 61 cents per mile. The increase is 4 cents per mile for experienced drivers and 2 cents per mile for less experienced drivers.
“It’s probably not quite as crazy as we were in 2018,” Crowley said of the current market for drivers. He described tightness in the market for drivers as “market-specific.” He cited the West Coast as an area where the market for drivers was particularly strong “but we’re starting to see it spread a little more so that leads me to believe it’s the broader trucking economy,” Crowley said.
For a company like John Christner or Dart to be out in front in moving its compensation up, regardless of what ways it is doing that, there needs to be incoming information that led it to make such a consequential decision. Crowley said turnover is a good barometer of whether pay levels are adequate to hold on to drivers.
Crowley added that a company like Schneider has so many different types of transport, from company drivers to independent contractors and from flatbeds to dry vans, that it’s difficult to compare its situation with somebody who is specific to a certain type of market, like reefers and John Christner. “Comparing apples to apples is incredibly difficult and complex,” Crowley said.
It’s not just turnover, Crowley said, describing a market that needs pay increases as one “when the spot market starts to separate out and it’s getting difficult to source capacity.”
Ables of Dart said one of the more interesting aspects of the current market is that he’s seeing more requests from shippers for firm capacity. “Some of the biggest shippers are saying, ‘It’s going to cost me more so let’s secure this capacity,’” Ables said. “They’ve done the research and they’ve concluded it is really tight.”
Ables cited three specific factors that he said are making this market particularly tight for drivers: the Drug and Alcohol Clearinghouse; the now-expired $600-per-week supplemental unemployment benefit; and the possibility that some drivers who lost their jobs when the pandemic first hit “didn’t come back.”
More articles by John Kingston
PPP money lowered freight rates during pandemic’s darkest days: Convoy
Labor Department tackles employee classification; AB5 may not be affected
Schneider shifts to some off-site orientation for its new drivers