The Trucking Industry Needs More Drivers. Maybe It Needs to Pay More.
Swift Transportation’s 20,000 workers haul goods in almost 14,000 big-rig trucks that travel the interstates and back roads of the United States every day. The company’s performance is closely tied to the nation’s economy, which has been looking increasingly sunny lately.
So it was surprising last month when Swift’s stock plummeted nearly 18 percent in a single day. The tumble came for an odd reason. It wasn’t because there was too little business — but rather, too much.
“We were constrained by the challenging driver market,” the company said in its quarterly earnings announcement. “Our driver turnover and unseated truck count were higher than anticipated.”
In other words, Swift had plenty of customers wanting to ship goods. But in a time of elevated unemployment, it somehow couldn’t find enough drivers to take those goods from Point A to Point B. How is that possible? The reasons for that conundrum tell us a great deal about what has been ailing American workers and why a full-throated economic recovery has been so slow in coming.
Consider this: The American Trucking Associations has estimated that there was a shortage of 30,000 qualified drivers earlier this year, a number on track to rise to 200,000 over the next decade. Trucking companies are turning down business for want of workers.
Yet the idea that there is a huge shortage of truck drivers flies in the face of a jobless rate of more than 6 percent, not to mention Economics 101. The most basic of economic theories would suggest that when supply isn’t enough to meet demand, it’s because the price — in this case, truckers’ wages — is too low. Raise wages, and an ample supply of workers should follow.
But corporate America has become so parsimonious about paying workers outside the executive suite that meaningful wage increases may seem an unacceptable affront. In this environment, it may be easier to say “There is a shortage of skilled workers” than “We aren’t paying our workers enough,” even if, in economic terms, those come down to the same thing.
The numbers are revealing: Even as trucking companies and their trade association bemoan the driver shortage, truckers — or as the Bureau of Labor Statistics calls them, heavy and tractor-trailer truck drivers — were paid 6 percent less, on average, in 2013 than a decade earlier, adjusted for inflation. It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job.
Millions of able-bodied Americans need work, yet there aren’t enough middle-income jobs for them. That is especially the case for men without advanced educations, who have seen their wages depressed over the last few decades. Trucking would seem to be an excellent option.
It’s not an ideal job for everyone. There is no question that trucking is hard work, necessitating long hours and longer stretches away from family. But that’s why it is well compensated, at least in comparison to other jobs not requiring college degrees. The average pay for a long-haul trucker is just shy of $50,000, according to the A.T.A., and an experienced trucker with a good safety record can make significantly more than that. The work typically offers lavish benefits that are increasingly rare for nonunion blue-collar employees.
The job can be learned fairly quickly. In some industries, companies complain of shortages of workers for jobs that require years of advanced training, like certain engineering specialties. Trucking is not one of those industries, however.
A person can get a commercial driver’s license after a course that can be as brief as six weeks of intensive study. Moreover, there were actually fewer truckers working last year (1.585 million) than five years earlier (1.673 million). Some of the missing workers could presumably be coaxed back into the industry if the money were right.
To be sure, the trucker-shortage picture is more complex than this, notes Bob Costello, the A.T.A.’s chief economist. He says these complications make a straightforward story of truckers simply being underpaid not quite fair.
For example, new safety requirements mean that individual truckers drive fewer miles than a decade ago: An average long-haul truck can now cover 8,000 miles a month, down from almost 11,000 in 2007, according to the trade association. This helps account for downward wage pressure. And the trucking companies themselves are typically working on thin profit margins and serving customers on long-term contracts, which means that if they simply raised pay sharply to recruit more truckers, they could end up losing money.
But every industry has its special challenges, and the trucker shortage — and falling inflation-adjusted wages over the last decade — are part of a bigger story.
The reasons are the subject of endless debate, and you can pick the one you prefer to emphasize: technological change, globalization or a decline of union power. But wages of workers without advanced skills have been under downward pressure in the United States and across the developed world over the last generation. The deep recession and slow recovery have only made the trend more pronounced.
That has led to a mind-set in which executives sometimes think of line workers as merely resources to be tapped at the lowest price. Companies have been able to keep wages low: It’s hard to demand a raise when your colleagues are being laid off or there is a long line of job seekers. Some corporations may have come to view this as a natural state of affairs.
By now, wage income is as low a percentage of gross domestic product as it has been since 1947, while corporate profits are at postwar highs. These are two sides of the same coin. Money that once accrued to workers now goes to shareholders.
Yet there are some indications that this state of affairs may not last: The shortage of truckers is one piece of evidence that the balance of power is shifting. In recent earnings calls, executives from companies as varied as JetBlue and the Dr Pepper Snapple Group have expressed worry about rising wage pressures.
The trucker shortage is already resulting in higher wages in parts of that industry. There have been $2,000 signing bonuses from companies looking to poach truckers and, as Kevin P. Knight of Knight Transportation mentioned in that trucking company’s latest earnings call, per-mile pay increases have been working out to 5 to 10 percent jumps in driver pay.
Executives may bemoan higher pay for workers because it could cut profit margins. But after a generation in which the median American household has seen flat to declining inflation-adjusted income, wage increases are a welcome corrective. When workers begin to have more leverage in salary negotiations, it is a sign of an improving economy, not a liability that businesses should be complaining about.
ABF Reports 14 Percent Revenue Increase
Fort Smith-based ArcBest Corp. reported a 14-percent increase in revenue for this year’s second quarter led by performances at its two largest operating companies, ABF Freight and Panther Premium Logistics.
ArcBest’s second-quarter 2014 revenue was $658.6 million compared to revenue of $576.9 million in the second quarter of 2013, an increase of 14 percent. Second-quarter net income was $17.2 million compared to second-quarter 2013 net income of $4.9 million. On a per-share basis, this represents ArcBest’s most profitable quarter in six years, a news release states.
At ABF Freight, second-quarter revenue rose to $492.9 million from $446.8 million, while operating income increased to $22.8 million from $5.5 million in second quarter 2013. Cost as a percentage of revenue improved to 95.4 percent following implementation of the new labor agreement in November 2013, compared with 98.8 percent in the year-ago period.
ArcBest’s emerging, non-asset-based businesses, including Panther, grew combined revenues at a rate of 28 percent. During the second quarter, these businesses equaled 27 percent of total consolidated revenue compared to 24 percent during the same period last year. Second quarter 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) at the non-asset-based businesses was $10.2 million, an increase of 47 percent compared to EBITDA in the second quarter of 2013.
“Our second-quarter results improved significantly from both the first quarter of 2014 and the year-ago quarter, which was welcome news as we emerged from the harsh winter weather earlier this year,” ArcBest President and CEO Judy R. McReynolds stated in the release.
McReynolds noted as the economy picked up in the second quarter, ABF Freight saw better pricing conditions and a positive impact from the new labor agreement with the Teamsters union.
“Panther reported one of the strongest quarters in its history,” she stated. “We are also seeing more customers buying at the enterprise level, when they require two or more ArcBest services.”
McReynolds said the company’s new brand identity, logos, advertising campaign and tagline, “The Skill & The Will” — which were launched on April 30 — have been well-received by customers and employees. A new website, TheSkillandTheWill.com, will be launched in early August to tell the stories of customers who have “benefited from employees’ willingness to go above and beyond, every day, to solve complex logistics challenges,” and “the broader story of the company’s culture through the eyes of the customer,” McReynolds said.
- See more at: http://swtimes.com/business/arcbest-reports-14-percent-revenue-increase#...Fort Smith-based ArcBest Corp. reported a 14-percent increase in revenue for this year’s second quarter led by performances at its two largest operating companies, ABF Freight and Panther Premium Logistics.
ArcBest’s second-quarter 2014 revenue was $658.6 million compared to revenue of $576.9 million in the second quarter of 2013, an increase of 14 percent. Second-quarter net income was $17.2 million compared to second-quarter 2013 net income of $4.9 million. On a per-share basis, this represents ArcBest’s most profitable quarter in six years, a news release states.
At ABF Freight, second-quarter revenue rose to $492.9 million from $446.8 million, while operating income increased to $22.8 million from $5.5 million in second quarter 2013. Cost as a percentage of revenue improved to 95.4 percent following implementation of the new labor agreement in November 2013, compared with 98.8 percent in the year-ago period.
ArcBest’s emerging, non-asset-based businesses, including Panther, grew combined revenues at a rate of 28 percent. During the second quarter, these businesses equaled 27 percent of total consolidated revenue compared to 24 percent during the same period last year. Second quarter 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) at the non-asset-based businesses was $10.2 million, an increase of 47 percent compared to EBITDA in the second quarter of 2013.
“Our second-quarter results improved significantly from both the first quarter of 2014 and the year-ago quarter, which was welcome news as we emerged from the harsh winter weather earlier this year,” ArcBest President and CEO Judy R. McReynolds stated in the release.
McReynolds noted as the economy picked up in the second quarter, ABF Freight saw better pricing conditions and a positive impact from the new labor agreement with the Teamsters union.
“Panther reported one of the strongest quarters in its history,” she stated. “We are also seeing more customers buying at the enterprise level, when they require two or more ArcBest services.”
McReynolds said the company’s new brand identity, logos, advertising campaign and tagline, “The Skill & The Will” — which were launched on April 30 — have been well-received by customers and employees. A new website, TheSkillandTheWill.com, will be launched in early August to tell the stories of customers who have “benefited from employees’ willingness to go above and beyond, every day, to solve complex logistics challenges,” and “the broader story of the company’s culture through the eyes of the customer,” McReynolds said.
- See more at: http://swtimes.com/business/arcbest-reports-14-percent-revenue-increase#...Fort Smith-based ArcBest Corp. reported a 14-percent increase in revenue for this year’s second quarter led by performances at its two largest operating companies, ABF Freight and Panther Premium Logistics.
ArcBest’s second-quarter 2014 revenue was $658.6 million compared to revenue of $576.9 million in the second quarter of 2013, an increase of 14 percent. Second-quarter net income was $17.2 million compared to second-quarter 2013 net income of $4.9 million. On a per-share basis, this represents ArcBest’s most profitable quarter in six years, a news release states.
At ABF Freight, second-quarter revenue rose to $492.9 million from $446.8 million, while operating income increased to $22.8 million from $5.5 million in second quarter 2013. Cost as a percentage of revenue improved to 95.4 percent following implementation of the new labor agreement in November 2013, compared with 98.8 percent in the year-ago period.
ArcBest’s emerging, non-asset-based businesses, including Panther, grew combined revenues at a rate of 28 percent. During the second quarter, these businesses equaled 27 percent of total consolidated revenue compared to 24 percent during the same period last year. Second quarter 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) at the non-asset-based businesses was $10.2 million, an increase of 47 percent compared to EBITDA in the second quarter of 2013.
“Our second-quarter results improved significantly from both the first quarter of 2014 and the year-ago quarter, which was welcome news as we emerged from the harsh winter weather earlier this year,” ArcBest President and CEO Judy R. McReynolds stated in the release.
McReynolds noted as the economy picked up in the second quarter, ABF Freight saw better pricing conditions and a positive impact from the new labor agreement with the Teamsters union.
“Panther reported one of the strongest quarters in its history,” she stated. “We are also seeing more customers buying at the enterprise level, when they require two or more ArcBest services.”
McReynolds said the company’s new brand identity, logos, advertising campaign and tagline, “The Skill & The Will” — which were launched on April 30 — have been well-received by customers and employees. A new website, TheSkillandTheWill.com, will be launched in early August to tell the stories of customers who have “benefited from employees’ willingness to go above and beyond, every day, to solve complex logistics challenges,” and “the broader story of the company’s culture through the eyes of the customer,” McReynolds said.
Shares Of A Major US Trucker Are Crashing After Management Says It Can't Find Drivers For Its Trucks
Shares in Swift Transportation, the largest truckload carrier in North America, were down 14% Friday after management warned it was going to have to invest more to address a driver shortage.
The New Jersey-based firm now says it's going to have to spend more on wages and training to hold onto and attract ore drivers.
...We were constrained in the truckload and (central refrigerated systems) segments by the challenging driver market. Our driver turnover and unseated truck count were higher than anticipated. Therefore, we sold more trucks in the second quarter to offset the impact of idle equipment, which drove additional gains on sale of equipment this period. After assessing the current and expected environment, we believe the best investment we can make at this time, for all of our stakeholders, is in our drivers. Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money.
It now sees "cost headwinds" going into the second half of the year.
The American Trucking Association has warned the country is short 30,000 drivers, and that the gap could climb to 200,000 in the next decade.
U.S. DOT: YRC fleet nears federal intervention level
YRC Freight's fleet is in a worse state of repair than most of its main competitors' fleets, according to figures from the U.S. Department of Transportation.
In fact, the state of the YRC Freight fleet's vehicle maintenance is close to a threshold requiring federal intervention according to statistics from the DOT's Federal Motor Carrier Safety Administration.
Click here to read more at the Kansas City Business Journal.
Daimler Demonstrates a Self-Driving Truck
For Daimler, the truck driver of the future looks something like this: He is seated in the cab of a semi, eyes on a tablet and hands resting in his lap.
Daimler demonstrated its vision Thursday along a stretch of the A14 autobahn near Magdeburg in eastern Germany, the culmination of years of innovation. It says the vehicle — called the Mercedes-Benz Future Truck 2025, a nod to the year the carmaker hopes it will be introduced — is capable of responding to traffic while driving completely autonomously down a freeway at speeds of up to 85 kilometers per hour, or 52 miles per hour.
Click here to read more at The New York Times.
IBT Picks Roadway labor relations man for YRC Board
Late Friday, the Overland Park-based less-than-truckload carrier (Nasdaq: YRCW) and the International Brotherhood of Teamsters announced that the union-nominated and the company-approvedDavidson will join YRC's nine-member board.
Davidson will fill the seat Harry Wilsonvacated in March. Wilson, the chairman and CEO of New York-based MAEVA Group LLC, resigned from the board after seeing the company through a financial restructuring in early 2014. Between February 2013 and March 2014, YRC paid MAEVA $12.5 million for its services.
Click here to read more at The Kansas City Business Journal.
Fix the Highway Trust Fund
The Highway Trust Fund pays for the upkeep of our roads, bridges and public transit. Yet for more than two decades, Congress has failed to increase its funding. The fund hasn't kept up with inflation, let alone the urgent needs for the modernization of our transportation systems. Now a crisis, years in the making, is coming to a head.
Time is running out for Congress to fund the Highway Trust Fund, and hundreds of thousands of jobs are at stake—700,000 jobs to be exact. That’s more than double the number of jobs created last month. To be quite frank, the backbone of our entire economy is at stake.
Click here to read more at the AFL-CIO.
Daimler Trucks Debuts Self-Driving ‘Future Truck 2025’
Daimler Trucks debuted its self-driving “Future Truck 2025” during an on-highway test drive on a section of the autobahn near Magdeburg, Germany.
The truck uses the company’s Highway Pilot system to drive completely autonomously at speeds up to 53 mph. The system could be launched in production vehicles as early as 2025 if conditions permit, according to Daimler.
“Autonomous driving will revolutionize road freight transport and create major benefits for everyone involved. With the Future Truck 2025, Daimler Trucks is once again highlighting its pioneering role in innovative technologies and opening up a new era in truck transport.
“We aim to be the No. 1 manufacturer in this market of the future, which we believe will offer solid revenue and earnings potential,” Wolfgang Bernhard, the member of Daimler’s board of management responsible for Daimler trucks and buses, said in a statement.
YRC Freight Proposed Change of Operations
UPDATED June 26, 2014: YRC Freight has submitted a proposed change of operations to the IBT which would re-open distribution centers in Memphis and Houston, and reclassify Seattle as a distribution center. The change will be heard on July 23, and the company wants implementation on August 17.
One effect of this change would be to allow the use of purchased transportation in and out of these three terminals.
119 dock, switcher, road, mechanic, and office jobs will be affected. Losing terminals will be Dallas, Nashville, Jackson, Miss., Little Rock, and Portland, Oregon. The company is proposing a follow the work bidding process. Memphis retains the “retreat rights” from a previous change.
Click here to read the proposed change of operations.
ABF Road Driver Bret Subsits: 'Supporting Hoffa was The Biggest Mistake of My Life'
