Knight-Swift (NYSE: KNX) is the most recent trucking company — and the largest one in the latest round of increases — to boost driver pay.
Companies have been announcing increases in driver pay since the end of last summer. For every company that makes a public announcement, it is unknown how many are increasing pay rates without a public declaration.
In the case of Knight-Swift, the numbers it announced early Wednesday appear to put it in the range of other recently disclosed increases. The company noted this was not an initial increase, referring to “multiple pay increases and incentives over the last six months.”
In the latest round of pay hikes, Knight-Swift said that experienced drivers, depending on that experience, will be able to begin driving at more than 50 cents per mile. Depending on the part of the country the job is based in, the starting pay can be 60 cents per mile.
The company also said that for independent contractors, contract rates will be increased by 3 cents to 5 cents per mile, depending on the line of business.
The Knight-Swift announcement quoted CEO David Jackson as touting what he said was the company’s more regular pay, implicitly criticizing those that “have attempted to make big splashes with overdue pay changes.” Knight-Swift, by contrast, has “quietly been increasing pay at an unprecedented pace for several years,” he said.
‘New wave of hiring initiatives’
Separately, XPO (NYSE: XPO) said Wednesday it was launching “a new wave of hiring initiatives” for its LTL business. XPO said it was looking to fill more than 1,400 positions, including about 750 CDL driver jobs and 700 dockworker positions. It also said it had 100 slots to fill for people who would work as a dockworker while training to qualify for a CDL license.
In a recent report, the transportation research team of Amit Mehrotra said the freight market is strong enough to enable companies to take on the pay increases without significant financial damage. “All told, we are of the view that trucking companies are net beneficiaries of the current supply-demand imbalance given their leverage in pricing to likely offset, if not more than offset, labor cost and productivity headwinds,” the team wrote.
An apples-to-apples comparison among the recent pay increases is difficult. Companies choose in their announcements to highlight what they want to feature and as noted, most companies don’t make an announcement at all.
For example, Forward Air (NASDAQ: FWRD), in its recent announcement of a pay increase, said it was giving independent owner-operators a 5 cents-per-mile increase. That would be near the top end of the increase Knight-Swift said it is providing to owner-operators. Forward Air’s starting pay is 55 cents per mile for single drivers, right in the middle of the 50 cents-plus to 60 cents touted by Knight-Swift.
Cheema Freightlines, which operates primarily on the West Coast, said its recent increase of 4 cents put its rate at 56 cents per mile for drivers with at least eight years of experience. Again, that’s in the middle of the 50 cents to 60 cents range. The Cheema pay increase announcement also said drivers that had 10,000 miles of safe driving under their belts could get a 2 cents-per-mile monthly bonus.
Bay & Bay said it was increasing its company driver rates by 4 cents per mile and put a target of 58 cents per mile for the potential of new drivers with experience, closer to the top of the 60 cents-per-mile range.
Given that per-mile rates are important but might not be seen as the “bottom line,” some company announcements are promoting the possibilities under the new rates. For example, Knight-Swift said in discussing increases for its student drivers that those new faces behind the wheel can “choose from multiple paths” to make more than $60,000 per year. Trainers of those drivers can make more than $100,000.
Meanwhile, Cheema in its announcement said that its highest-paid company driver earned almost $90,000 last year and that the company expected that number in 2021 to rise to $100,000.
There are other considerations that make absolute comparisons difficult. Knight-Swift boasted about the improvements to its network, with better amenities at company facilities, and touted its “largest and most rapidly growing trailer fleets.” Alabama Motor Express, in an interview with FreightWaves about its own pay increases, discussed its medical package, which it sees as superior to other companies.
One recent announcement of a pay increase in which the numbers appear to be somewhat higher than the rest of the industry is at Crete Carrier. In late March, it announced an increase set for May 1 that would put starting pay at 59 cents to 65 cents per mile, depending on experience. It said that the top 50% of the company’s drivers would average $89,300 per mile. (In December, an announcement of higher pay said it was the third in three months.)
On a recent edition of the Drilling Deep podcast, Todd Amen, the president of ATBS, said the average tax return for independent owner-operators that his company processed for 2020 earnings was about $67,500, more even than in the strong year of 2018. But he said ATBS, which provides financial services mostly to independent owner-operators, processed numerous returns in which the income was in excess of $100,000.
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Don Jennings
pay by the hour and you can end the cycle of constant hiring. sitting in traffic breakdown at the dock all needs to be paid. cpm is forcing drivers to rush which ends up causing accidents. 27 to 30 an hour with overtime after 40 is the way it needs to be. anything else the driver is getting robbed.
burninDinosaurs
I’m paid 21 cents per mile with my current company.
Is that good?