Trucking

“What made this year unique was the conditions our industry was forced to work in,” said Chris Spear, President of American Trucking Associations. “Consumers have witnessed now, firsthand, what we do all the time. Unfortunately, it takes a worldwide pandemic for that to come to the surface, but the recognition is so well-earned and deserved.”

Throughout 2020,  the response and action made by the trucking industry in regards to the COVID-19 pandemic has shown a revamped perception of the public in regards to truckers and their efforts. This perception is expected to carry on in the coming years, which, many industry experts believe, will likely boost trucking’s infrastructure policy efforts–and their support–on Capitol Hill.

“2020 was a very defining year for trucking,” Spear added.

There have been, of course, a myriad of obstacles truckers have had to defy throughout 2020, including adapting to restrictions made in order to help prevent the spread of the coronavirus, like social distancing and more virtual communication, as well as rest break, meal, and shower location limitations or even closures.

“Year-to-year, we’re accustomed to challenges, but I think the environment we had to perform in was so different–it was something we had to adjust to,” Spear continued. “There’s been a mental toll that this has had on everyone, particularly for drivers being out on the road, away from their families. They can’t telecommute. This is their office. This is where they do their jobs.”

Fortunately, many people across the nation made their appreciation for truck drivers heard, especially during events like Truck Driver Appreciation Week which gained traction across social media and saw companies, groups, and individuals offering food, drinks, discounts, and other goodies to truckers in an effort to show gratitude for their boosted efforts throughout the pandemic and all that was asked of them.

As the country saw truckers stepping up to help deliver the exponentially higher numbers of home deliveries, shipments to medical centers and hospitals, and stock needed in grocery stores and restaurants, their appreciation kept truckers pushing forward.

“In every community across the country, there have been hot meals being made for our drivers, police escorting drivers to where they can get a shower, kids handing out cookies to drivers at truck stops,” said Spear. “You just can’t make it up. It’s such a heartwarming story.”

Spear believes that this recognition, albeit more than ever before, will have lasting effects through this year and beyond.

“It is so different than any other year,” he said. “I believe we will be able to ride this crest into 2021 and it will pay forward. We need to ensure that the public recognizes the importance of our industry and what we do”

Now, the trucking industry’s vital responsibilities include ensuring the shipments of new COVID-19 vaccines to citizens throughout the United States.

“A number of our members, those particularly that are equipped with air logistics capabilities–UPS and FedEx are perhaps two of the most notable in terms of providing support globally–this is what they do, they do it day in and day out,” said Spear.

He also noted that truckers, and other professionals in the transportation sector, are doing their best to bring this new resource to where it’s needed as fast as they can.

“It’s not just the ground; it’s also air. Here we are again, not only making sure we survived the pandemic, but as we transition, we’re that bridge to recovery that stems from the vaccine. Our industry will play a key role so Americans have it as quickly as possible.”

Now, as more and more bills are brought to Washington and other state capitals in attempts to grow, expand, and improve the trucking industry, Spear believes that the industry’s now-glowing reputation will help these efforts become successful more easily.

“Our message is not aligned solely with one political party over another,” Spear explained. “Our message, our narrative, our story speaks to Americans. Our story should resonate with either party, no matter who is in charge. They should have an incentive to work with us. When you are 7.6 million strong, one in 16 jobs in the U.S., where the top job in 29 states is a truck driver, and you’re moving 71% of the economy–you need us. Now, we’re transitioning to distribute the vaccine–they need us.”

ATA is hopeful that President Biden’s administration will push forward major infrastructure legislation as the pandemic eases, and Spear notes that his team has been working with Congressional leaders on Capitol Hill as often as possible.

“We will–in April, May, June–switch gears to an infrastructure bill,” said Spear. “We’ve already been working with the Biden transition team and House Democratic leaders. I have a good understanding of what that bill will look like and the provisions we need to be aggressive to get a fully-funded bill done. It will be good for the economy, [and will help with] the job [losses] we have experienced in 2020, putting people back to work, and I can’t think of a better way to do that than with an infrastructure bill.”

All in all, ATA is looking forward to action in the new year.

“I am very optimistic about where we are heading,” Spear said.

“The challenges presented in 2020 have left carriers questioning what truck drivers want and examining whether their offerings fit the bill,” said Conversion Interactive Agency recently in a tweet. As the trucking industry continues to experience the ongoing driver shortage, studies are showing that financial security is a top factor in trucker recruitment and retention.

“There’s been a lot of carriers that have looked at different pay models, bonus models, and incentive pay, so we were really interested in seeing what the drivers thought,” said Professional Driver Agency operations director, Scott Dismuke. “What we hear from drivers on a daily basis is really about predictability, and the predictability of pay for their own security and for that of their families.”

In a recent survey conducted by Professional Driver Agency and Conversion Interactive Agency based on responses from 1,197 participants, a majority–81.1%–of drivers prefer a guaranteed pay model, with fewer respondents preferring a pay-per-mile model and even fewer preferring incentive-based pay.

“Whether they use a pay-per-mile model or guaranteed pay model or if they incorporate sign-on bonuses, I think that the key is they have to deliver on the expectations that the driver has,” said Conversion Interactive Agency vice prescient of marketing, Priscilla Peters. “So, they have to deliver on what they’re selling.”

Drivers overwhelmingly preferring guaranteed pay isn’t a surprise, Dismuke said. Truckers typically want a sense of pay security, a desire which has only grown stronger with the unprecedented challenges of the COVID-19 pandemic.

“I know a lot of carriers are having trouble finding drivers right now,” said Dismuke. “Schools are shutting down for the most part, and you don’t have a lot of new drivers entering the market. So keeping drivers you have right now, in particular, has become super important.”

Also important for truckers in regards to industry incentives–adequate time at home (50.8% of truckers think equipment problems hurt their work-life balance), and sign-on bonuses, which 42% said would be a great perk in the on-boarding process.

“From a recruiting standpoint, increased competition and drivers choosing opportunities with better home time [are current challenges],” said U.S. Xpress vice president of driver recruiting, Jacob Kramer. “Retention-wise, carriers across the board are increasing pay, so we’re seeing more drivers jump to a higher rate. The industry-wide driver shortage has exacerbated both challenges.”

Now, with a smaller-than-usual number of new drivers, and with training programs closing or social distancing, the applicant pool is limited and demand is higher than ever.

“I would contend that earlier on in the year, what we saw was unease,” said Schneider senior vice president and general manager of van truckload and dedicated, John Bozec. “Then, as the year unfolded, we started seeing things like driver schools close permanently or on a temporary basis.”

Schneider is currently working to deploy new technology to make sure fleets have high-quality equipment to make a trucker’s job easier and make retention more likely.

“All of that combined together is designed to retain our existing drivers,” said Bozec of the strategy. “Pay always matters. Pay matters to us. It matters for really everyone. But it has to be everything. To attract new drivers, we have to continue to tell the story of why this is a great industry.”

Equipment issues can also lead to a trucker having less time at home or having to log fewer miles, which could decrease retention rates as well, according to Dismuke.

“It’s so important from a retention standpoint to know the drivers that are having issues so you can go in and address those,” he said. “Because, if you don’t, they’re going to be gone.”

U.S. Xpress’ Kramer, though, explained that his company may have found the golden ticket to recruiting–using innovative technology to connect more easily with drivers and to create more strategic recruitment methods.

“Even during this challenging time, we’re surpassing our recruiting goals week-over-week compared to 2019,” he said. “We’re doing that through improved technology and innovative media strategies, including artificial intelligence, to recruit new drivers. Our approach is to meet drivers where they are.”

According to the American Transportation Research Institute’s recent update to its “Analysis of the Operational Costs of Trucking,” overall trucking operations costs have decreased. These findings come from 2019 financial data representing motor carriers across all fleet sizes and sectors.

The new report indicates a freight decline taking place during the last six months of 2019. Because of this, along with fuel prices dropping during the same period, the marginal cost of trucking fell as well.

Per mile, the average motor carrier marginal cost was $1.65 in 2019, a 9.3% decrease from the cost per mile of $1.82 in 2018.

“In 2018, trucking encountered record demand and the highest tonnage in the last 20 years,” said ATRI in its November report. “In the contraction that followed in 2019, a number of independent factors were at play to lower the operational costs of trucking.”

For the report, ATRI split costs into two separate categories–vehicle-based motor carrier costs and driver-based motor carrier costs. Fuel, repair, maintenance, licenses, tolls, insurance premiums, and truck lease and purchase payments made up vehicle-based costs, and wages and benefits made up driver-based costs.

The majority of major line item costs saw an overall decrease from 2018 to 2019, with the biggest drops taking place within truck insurance premiums (which dropped by 19%), and repair and maintenance costs (which dropped by 16%). Fuel costs saw a slightly smaller percentage decrease of 9%.

Additionally, around 15% of fleets took advantage of alternative fuel during 2019, 2% more than in 2018. For these alternative fuel methods, compressed natural gas options had the highest rate of adoptions in both years, and battery/hybrid models had the lowest rates of adoption.

Finally, the industry saw a slight drop in driver wages and benefits, coming to 69.3 cents per mile in 2019 from 77.6 cents per mile the year before. Still, overall benefits and wages are above 2016’s numbers–a year when the trucking industry saw more freight softening. Carriers continue to use higher wages as a way to attract and retain drivers, although the numbers dropping, even slightly, are no help to the current driver shortage.

However, many fleets have found loopholes.

“We’re still mining data to some degree, but it does look like the increase in starting and retention bonuses probably comes close to offsetting any declines we saw in wages,” assured Dan Murray, Senior Vice President of ATRI. “That was just sort of a new approach to compensate the drivers without necessarily raising wages.”

The decline in driver wages, according to Murray, comes from the trend of offering retention and starting bonuses as well as an uptick in entry-level driver on-boarding, as new truckers typically make less than more senior drivers.

Retention bonuses rose by more than 81% between 2018 and 2019, with the average starting bonus also increasing from $1,562 to $1,846 (18%), according to the analysis.

These bonuses are a panic-induced response to the driver shortage continuing on within the entire trucking industry, explained Sean McNally, spokesman for American Trucking Associations. The industry was short 60,800 drivers at the end of 2018, ATA estimates.

“These bonuses showed a recognition of the need to adequately compensate drivers by fleets, and that helped offset some of the economic softening toward the end of the year,” said McNally.

Still, ATRI’s report indicates that driver wages are likely to see a huge boost during 2020 due to increased trucker demand throughout the COVID-19 pandemic. With stay-at-home orders causing many more Americans to shop online, and with the surge in demand for medical equipment, resources, and personal protective gear, truckers have been working harder–and for longer hours–than ever before.

“I think e-commerce is growing stably, but in 2020 it will see huge leaps,” Murray predicts. “The million-dollar question is, ‘Is it temporary, or have we made a permanent change to eating, sleeping, [and] breathing on the internet?’ We don’t know at this stage.”

Regardless, transportation and logistics group CliftonLarsonAllen’s Brandon Knight said fleets need to be keeping as close an eye as possible on their current expenses.

“Given the chaos and volatility of freight markets these days, it is more critical than ever that trucking fleets closely monitor their cost centers,” he said. “ATRI’s Operational Costs report is an important benchmarking tool for fleets of all sizes and sectors.”