Celadon offers paid vacation to attract new drivers


The freight markets have become incredibly interesting lately. The spot market saw one of its greatest peaks since DAT started publishing its spot rate index. In fact, before we had a near-time spot market index that everyone considered the benchmark, it was almost impossible to get visibility into the state of the whole freight market. But things have changed. We are no longer blind.

But an issue that keeps restricting capacity is the lack of qualified drivers to drive for fleets, especially ones that have strict hiring standards. Most, if not all of the top 300 carriers would qualify for this description. We have argued that there is no driver shortage, but rather an economic issue. Some have taken exception to this, suggesting it oversimplifies the problem. And based on fleets we speak with, they believe that only raising pay creates a mutually assured destruction element in the industry, forcing everyone else to raise pay and sign on bonuses, without actually addressing the real problem--getting new drivers into the industry.

Drivers as a group are getting older every year, and fewer people are entering the industry. It’s a major problem with no end in sight. But some carriers are thinking differently about the problem and getting creative. They are targeting younger folks with programs to encourage a lifestyle balance between work and home life.

Millennials are both a blessing and a curse, depending on whom you ask. They represent the largest single population of workers but are relatively untapped to drive trucks. They are smart with technology and enjoy the adventure of the open road, but they also disdain two things that driving a truck requires: long hours and being away from home. And they place an enormous amount of value on work-life balance, something our industry has been remiss in addressing. Things like forced dispatch, a lack of career growth, and an absence of paid vacation are things that prevent our industry from attracting the right people.

But things are changing. One carrier, Celadon out of Indianapolis, is addressing this head on. They have implemented a paid vacation program for drivers. The incentive starts to kick in after a driver reaches 30,000 miles, earning them between $700 and $1,000 in cash (depending on driving experience) and a weeks worth of vacation. After 120,000 miles, a driver would receive up to $4,000 in a cash bonus, again depending on driving experience, and four weeks of paid vacation. Even better, the 120,000 miles does not have to be in a calendar year. With that kind of cash, a millennial can take an all expense trip to a number of destinations, including Bali, Caribbean, Hawaii, or entertain their family with a week-long vacation at Disney.

Most interesting is that the program is offered in the company’s OTR solo, team and expedited divisions, an area of the fleet that has an average of 610 to 630 mile length of haul. This happens to be the tweener market that was being heavily serviced by small and independent operators running hot and over hours. With the ELD mandate effectively cutting off the excess capacity in that market, Celadon will have an opportunity to significantly raise their rates to shippers. And if they can seat their trucks, the program will soon pay for itself.

Thom Albrecht, Celadon’s new CFO, suggests that implementing the program could reduce turnover by as much as 40%. He cites historical data based on a similar offering the company ran in the mid-2000s when turnover dropped from 110% to approximately 70%. The company scaled back the program as a result of the Great Recession, but grandfathered in drivers that were still with the company. A decade later, they still have around 100 of those drivers or approximately 15% of the capacity seated under the legacy offering.

The program will cover a small portion of the fleet--roughly 650 of the company’s 4000 trucks will operate under it--but it’s the most under pressure for drivers. Historically, it has been difficult for large carriers to attract drivers to this market or compete against fleets that ran hot, because they could not offer the same amount of miles. Those days appear to be coming to a close with the ELD mandate.

Based on an estimate that it costs over $8,000 to recruit and seat a driver, the program will pay for itself within the first six months of a driver staying on board. Additionally, since it is back-end loaded, the financial risk to the company is quite small.

All of this is positive news for the company. Celadon has experienced a lot of negative press over the past year, mostly related to accounting issues and SEC fraud investigations. Celadon’s stock tumbled from a high of $27.24 on March 20, 2015 to a low of $1.85 on May 5th, 2017. After the new management team was put in place, investor confidence in the company began growing once more, and the stock has recovered to today’s price at $6.50. Company officials told FreightWaves that the company is heads-down focusing on “back to basics” execution.

“Everything is being re-examined from safety to customer service, pricing, network redesign, maintenance, fuel optimization, customer and industry mix, even billing and collections,” Albrecht told FreightWaves.

Basically, the turnaround team is doing a complete rebuild of the storied company. As always, any executive team that invests in drivers should be applauded for their efforts. Hopefully, the new vacation initiative will be successful, allowing the executive team to get back to dealing with pretty much everything else.

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