Driver shortage and increased demand pushing driver pay higher

For years, the trucking industry has been sounding the alarm about a driver shortage, talking about a deficit of drivers numbering in the hundreds of thousands.

Those warnings have arrived at the industry’s doorstep.

With a pandemic-induced rise in online shopping, trucking companies are seeing increased demand for truck capacity and are having to sweeten the pot to find enough drivers to meet demand.

Trucking giant Schneider National, the fifth largest trucking company in the U.S., recently raised the ante with news that they are willing to pay more than $90,000 per year and include $10,000 bonuses to get and keep qualified drivers.

Schneider National said team truck drivers, those with two drivers in the cab, received a pay bump of two to four cents per mile last month. For drivers who average from 5,000 to 6,000 miles per week, that means a pay boost of up to $6,240 a year per driver. That has pushed annual pay for many Schneider drivers above $90,000, the company said.

Team truck drivers ensure the truck — and the goods they are moving across the country — is always moving. When one driver reaches the federal limit on how long they can spend at the wheel, their partner swaps in.

Schneider is now offering its solo drivers $5,000 to team up with another driver. Team drivers new to Schneider can snag bonuses of up to $10,000 per person. Through mid-January, the company is offering team drivers an $200 extra per month.

A trucking recession last year and this spring forced tens of thousands of truck drivers to leave the industry, many of them opting for retirement. But now that loads are increasing — a sign that the economy’s creeping back to some level of normalcy — their former employers are feeling their absence.

“The trucking industry had a slow period for a while — then, all the sudden, boom,” Cathy Roberson, the founder of research firm Logistics Trends & Insights, told Business Insider.

Drivers for smaller firms are also seeing significant increases.

“If we see that level of demand go up next year, the industry is not going to be able to meet it. This year we believe there will be a 15-20 percent increase in wages for drivers, though all that is going to do is reshuffle the deck of drivers that exist today and it’s probably not going to bring a lot of new people back into the industry,” U.S. Xpress CEO Eric Fuller told Yahoo Finance.

To hold onto drivers, smaller companies are increasing base pay for independent contractors and some are adding to their fuel surcharge programs, putting more money into the driver’s pockets. Finally, some companies have cut truck lease payments by as much as $400 per month to keep drivers where they are.

“The pandemic has influenced the speed in which shippers are accelerating products through their supply chain,” a Schneider spokesperson said in a statement. “These shippers are seeking solutions from Schneider at higher rates for the expedited transit time and Schneider is passing the rate increase on to our team drivers.”

The American Trucking Associations latest Driver Compensation Study showed driver pay has climbed as rising demand for freight transportation services has increased competition for increasingly scarce drivers.

“This latest survey, which includes data from more than 100,000 drivers, shows that fleets are reacting to an increasingly tight market for drivers by boosting pay, improving benefit packages and offering other enticements to recruit and retain safe and experienced drivers,” said ATA Chief Economist Bob Costello.

Fleets responding to the survey also reported offering significant benefit packages to attract drivers including paid leave, insurance, meals and other incidentals and retirement plans. For example, more than 90 percent of truckload carriers, less-than-truckload carriers and private fleets surveyed offered drivers paid leave and health insurance.

“What these figures show is that being a truck driver can be a path to a middle-class lifestyle for millions of Americans,” Costello said. “With the long-term impacts of the COVID-19 pandemic and subsequent economic crisis not yet fully clear, we can say that a career in trucking could be a well-paying solution for some of the millions of Americans who have lost their jobs so far this year.”