Canadian trucker XTL says hourly driver pay program is paying off

The hours go by fast. (Photo: Jim Allen/FreightWaves)

The hours go by fast. (Photo: Jim Allen/FreightWaves)

Last summer, facing 18 trucks with no drivers, drivers who were leaving rather than comply with the U.S. electronic logging device (ELD) mandate for cross-border runs, and customers wondering how behind-the-wheel talent was going to be recruited and retained, Toronto-based asset-based and non-asset-based carrier XTL Transport, Inc. decided to try something new – pay all its trans-border drivers by the hour instead of by the mile.

Eight months later, the program, purportedly the first of its kind in Canada, is still in effect. The 18 seats now have posteriors in them. Overall, the company’s drivers are happy with the arrangement, according to Andrew McVerry, XTL’s director of business development. Shippers, after being briefed on the initiative, have warmed to it, although it is still too early to determine how much it has moved the needle in the relationships, McVerry said today on the sidelines at the Transportation & Logistics Council’s annual meeting in Memphis.

Drivers receive their hourly pay for all on-duty time, which includes meal and rest breaks. The pay rate does not differentiate between U.S. and Canadian currencies, McVerry said. The pay rate varies depending on the drivers’ experience, he added. He did not disclose specifics in regard to pay scales. The company’s typical length-of-haul is 500 to 600 miles. Hourly wages are considered more tolerable to drivers who run  short- to intermediate-haul lanes because they generally don’t travel long enough to make per-mile wages attractive.

The primary objective of the strategy was to mitigate empty cab issues, McVerry said. The secondary goal was to offset the cost of delays to the drivers incurred at shippers’ docks and at border crossings, he added. The full implementation of the ELD mandate, which occurred in April 2018, added to the pressure because it threatened to curb drivers’ hours even though they might have spent several on-duty hours either waiting at docks or stuck in traffic congestion

XTL has 450 drivers, of whom 40 percent are company employees. About 185 drivers receive the hourly pay. The company generates about 60 percent of its C$200 million in annual revenue from the transborder market. Most of its revenue comes from its asset-based trucking business.

According to McVerry, XTL’s labor costs increased after it switched to the hourly pay structure. Its customers have experienced rate increases, though McVerry did not say that was a result of the higher labor expenses. He believes the conversion to the hourly pay plan, and the increase in rates, made some shippers feel that they had a stake in making their dock operations more efficient.

A shift away from per-mile driver rates has been discussed for a while. Yet few have taken the plunge. One that has is Central Oregon Trucking, a unit of Daseke and a company that is considered one of the country’s top flatbed carriers. In June 2018 it unveiled a new pay structure, dubbed “Weekly Driver Salary Pay,” that guaranteed solo drivers a weekly paycheck of at least $1,250. The company promises drivers at least 2,430 miles each week, which means they will receive a minimum gross weekly paycheck amount but does not cap them at $1,250. Drivers are allowed to drive further and earn more if they choose.