Trends in driver incentive programs: the industry speaks

  Image: Shutterstock

Image: Shutterstock

After listening to numerous earnings calls in both the first and second quarters of 2018, FreightWaves’ John Kingston noted that among discussions of financial results, there was a significant amount of time spent commenting on the market for drivers. Retention, training, and the capacity crunch are undeniably hot button issues in 2018, and, in response, SmartDrive and FreightWaves collaborated to distribute a survey to uncover trends in driver incentive programs.  

FreightWaves spoke with Gordon Klemp, the president of the National Transportation Institute—whose company regularly surveys the driver market and whose findings are considered one of the industry benchmark—and Mike Posz, the director of safety at Fraley & Schilling, an Indiana-based trucking company that works in partnership with SmartDrive.

“When we began 2018, we saw it as an important year. So far that’s playing out on cue. We don’t see a point in the future where we solve the driver squeeze problem—it’ll be with us for a long time. We have, for the first time, a pay cycle that will last about 10 months. Drivers are going to be increasingly hard to get,” said Klemp.

According to the National Transportation Institute, Q2 of 2018 sees driver median pay on the move. “In a market that is net-short drivers, we were not surprised when we saw driver increases to continue with momentum into 2018. We were surprised to see some for-hire carriers announce second moves after changes they made in the December—March timeframe, said Klemp.

“It appears from our conversations with carriers that everyone is looking for the sweet spot in their market, but it’s complicated by the growing difficulty of finding qualified drivers and the quickly shifting driver compensation landscape, as well as the need to buy time to adjust freight rates to support needed pay increases,” Klemp noted.

“We’re having trouble finding drivers to fill jobs, but even worse, due to low unemployment rates, we don’t have people who want to drive—most of them already have jobs! The cycle is going to evolve: beginning with creating interest in people who want to drive, training them, and then placing them. It’s a matter of making all of that happen from start to finish,” said Klemp. Overall, the results of the survey lead us to believe that unemployment rates won’t be changing soon.

Minimum pay is also going up pretty rapidly—”putting some pretty big numbers out in front of drivers and potential drivers,” Klemp noted. “From 2008-2010, we experienced no sign on bonuses. In 2012-2013, they started to creep back into the industry, and now we’re seeing them more and more,” said Klemp. “Nobody likes ‘em, everybody does ‘em, so they’ll be around for the foreseeable future,” Klemp concluded on the topic of bonuses.

Mike Posz discussed the impact of safety on driver incentive programs, noting the strategies that Fraley & Schilling has found to be successful. “At Fraley & Schilling, everyone on our team is in charge of making safety a daily practice. We can’t drive the truck for our drivers, but we trust that they’re doing everything they can to make safety a value,” Posz explained.

Fraley & Schilling has instituted additional rewards and recognition programs for drivers, awarding bonuses for safety and production, and has ultimately found that when safety is a value and not simply a priority, “the outcome is better, safer, more productive, and ultimately, more profitable,” according to Posz.

To listen to a recording of our conversation on driver incentives, click here. For access to the slide deck, click here.