Publicly traded fleets cite difficult driver market, but not because of ELDs

The current situation is “as tough a driver market as any of us has ever seen.” – James Reed, president and CEO of USA Truck.
The implementation of the electronic logging device (ELD) mandate has not resulted in an exodus of owner-operators for Landstar System. While that might be a surprise to some, a review of earnings releases and conference calls among publicly traded fleets found a theme that is anything but shocking: it remains difficult to find and retain truck drivers.Truckload carrier Landstar is a bit unique in that it relies strictly on owner-operators, which it calls business capacity owners (BCO). “During the 2017 fourth quarter, we experienced the lowest truck turnover in 10 quarters and had the highest net BCO truck additions since the 2015 second quarter,” CEO Jim Gattoni said during a Feb. 1 call with analysts. “And all of our active BCOs had installed ELDs by the December deadline. ”James Reed, president and CEO of USA Truck, said the current situation is “as tough a driver market as any of us has ever seen.” In response, the truckload fleet has implemented several new measures, including changing quarterly bonuses to a monthly payout. “The best thing we can do to retain drivers, is get them more miles and keep them busy in their trucks,” said Reed.

Covenant Transport said it was encouraged by the response to its new $40,000 bonus program at its expedited subsidiary aimed at teams and solo drivers willing to convert to teams. CEO David Parker said the largest-ever pay hike at its Southern Refrigerated Transport subsidiary was being put into place ahead of securing contractual rate increases. That has “only happened twice in 20 years for us. So it’s rare that we’re doing this,” he said. Richard Cribbs, chief financial officer, said by mid-year Covenant’s fleet will be 50% automatic transmissions, which is also aiding in hiring.

Knight Transportation said the driver shortage will continue to hurt the ability to increase capacity. CEO Dave Jackson noted there is pent-up wage pressure, and that drivers are likely to see about 25% of the expected rates increase in the coming quarters. To potentially gain access to new drivers, executives with Schneider National said they were monitoring drivers choosing the leave fleets that were not yet ELD-compliant. Schneider, which boosted pay for some drivers on Feb. 11, is likely to further boost compensation. Patriot Transportation said in its earnings statement it was focused on adding “business in markets where we can hire drivers.” Patriot said compensation and benefits were 5.7 cents per mile higher as a result of pay increases and higher training costs than a year earlier.

David Congdon, CEO of less-than-truckload firm Old Dominion Freight Line, said that while the “driver shortage is real,” the fleet has been able to hire experienced drivers. That has been accomplished in part by ramping up internal driving schools, and trying to promote people from within that want to move into driving, Congdon said. Conversely, YRC Worldwide said it was several hundred drivers short. Darren Hawkins, president of YRC Freight, said the company was investing in technology to speed the hiring process. They are also bringing on board more recruiters and driver instructors to its tuition-free schools, and focusing on its dock-to-driver program.

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