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Driver pay is due for an overhaul

How drivers get paid (or don’t) is the most polarizing topic in our industry. Most over-the-road trucking fleets pay their drivers on a per mile basis, with additional incentives for longevity, sign on, and safety. Respectful fleets have a fair detention program, local duty pay, and driver assist package.

How drivers are paid has not changed much since deregulation, albeit with occasional innovations and tweaks by some fleets getting creative. One such scheme is the one that Covenant announced this past week to get drivers to team up.

But there are still major fundamental problems with how drivers are paid. Before deregulation, truck drivers were in the top 10% of all blue collar careers. Today drivers are in the bottom 10%. One would assume this explains a lot about driver turnover and they would be correct. But raising pay rates is not enough.

What our industry needs is a complete overhaul of driver pay that pays drivers for time spent on a load and not just the miles driven. The reason this has never been possible is because fleets have never charged customers for actual transit and dwell times on a load.

Typically, line haul rates are negotiated well in advance of a tender; fuel surcharges are based on an index; and detention/accessorials are buried somewhere in a contract or confirmation sheet.

The last item, detention, is not only the least likely to get honored, it is also the hardest to track and collect. Disagreements about whether a driver had truly arrived on time, was held up, and kept on site at a shipper are all subject to dispute. Combine this with the hoops required for a driver to communicate and document these issues, it’s no wonder that it is the most painful collection exercise in trucking.

Other issues in driver pay are problematic. Deadhead, re-positioning, rerouting, out of route, weather delays, traffic, etc all cause significant changes to the economics of a load.

What if the industry paid drivers on a time model vs. mileage model? The amount of hours it took to execute a load would be tracked and then compared against a percentage of total allocated. A load that took seven hours on-duty would be 50% of the daily rate.

Here is how that will work: 

Daily rate x % of available hours used up = driver pay for the load

The reason this is difficult today is that it has been nearly impossible to track execution hours in a way that is fair to the fleet, shipper, and driver in a way that no one believes that they are getting screwed. But new technology will change this.

Soon telematics devices will be written into blockchain, meaning that all trackable elements of the load’s circle of service can be recreated without manipulation. This means that both the driver and fleet might have a trustless relationship, but still have mutual trust in payout settlement.

And best of all, the same records can be used to recreate the environment that caused the driver to burn his available hours. Was it weather, traffic, shipper delays, or did the driver ditch the best route and hit up the casino?

And with this same ledger, carriers can bill and collect for issues that were caused by the shippers themselves.

Changing to a per day rate (or hourly) could be the magic bullet to curve the unseated truck problem. Drivers want to make a great, but predictable living; carriers want to maximize the utilization of their trucks; and carriers want to have the right to hold shippers accountable for their inefficiencies.

The best news is that over 850 companies in the transportation space are thinking about this and other issues which our industry struggles with and advocating to use technology and common standards to solve for them. The organization is called BiTA and we are meeting in May in Atlanta. The second BiTA meeting is taking place on the front end of Transparency18, freight’s version of the Consumer Electronic Show.

Helping solve driver turnover and lifestyle challenges will be a huge topic of conversation, along with many others. Out of this meeting we hope to create a technology framework to address driver turnover through technology and best practices. If you would like your voice heard, we would love to have you join us in Atlanta and as part of our super-fast growing organization.

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  1. David O

    I could see some carriers looking at a route of 440 Miles, saying "8 hours driving @ 55 MPH", but since you can do 65, hitting this goal should be easy. But when traffic and weather turn what could be 6h46m @ 65, into 10 hours or more (eg. chicago, atlanta, snow, etc) and the carrier claiming that 8 Hours pay is reasonable due to whatever reason they come up with.

    With any system that pays based on a calculated metric, the driver always has a hard time getting their company to pay for what the company asks for. Household Goods miles is one example of carriers shorting their drivers on pay, even when the carrier asks the driver to the the ‘Longer’ Route because it takes less time, but not paying for the longer route, because we could have taken the ‘Shorter’ route, even if it adds time.

  2. Jeff Clark

    Drivers’ pay has been evolving, albeit slowly. 25 years ago drivers were lucky to get detention pay after 4 hours. Now, we are seeing drivers getting paid automatically after as little as 1 Hour. I would be willing to bet within the next year we will see drivers getting paid for all on duty time.

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Craig Fuller, CEO at FreightWaves

Craig Fuller is CEO and Founder of FreightWaves, the only freight-focused organization that delivers a complete and comprehensive view of the freight and logistics market. FreightWaves’ news, content, market data, insights, analytics, innovative engagement and risk management tools are unprecedented and unmatched in the industry. Prior to founding FreightWaves, Fuller was the founder and CEO of TransCard, a fleet payment processor that was sold to US Bank. He also is a trucking industry veteran, having founded and managed the Xpress Direct division of US Xpress Enterprises, the largest provider of on-demand trucking services in North America.