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Why the industry is hopelessly screwed


I recently got into an argument with a complete stranger on a trucking industry online chat board. Hard as it may be to believe that I would publicly disagree with someone I don’t even know, the lively discussion that followed cemented a long-standing theory of mine: This industry is hopelessly screwed.

The discussion started when a driver raised the hourly pay issue. Several people threw in their opinion that hourly pay would solve the industry’s problems.

Numerous people added comments, but one former driver made a lot of points that, initially, I agreed with. He didn’t like hourly pay, for the simple reason that it’s hard to properly regulate such a thing in unsupervised circumstances. This is one of the same reasons I doubt it could ever work for anything other than scheduled day trip work. 

He preferred percentage pay, using the theory that it “weeds out the slackers.” I agree with that too, for owner/operators.

At that point, in my mind, this gentleman went off the rails, and after we responded back and forth a couple times, he stopped answering. It’s incredible how many people end a debate at the first sign that their argument doesn’t hold water.

He went on a rant about driver pay, and how trucking companies really couldn’t be expected to raise driver remuneration. Constantly increasing government regulations, increasing tax liabilities, and, to quote him, “overhead, overhead, overhead!” made margins so tight that higher pay was next to impossible.

And that’s when he lost me. I asked a simple question: Why are margins so tight? Whose fault is that? Even pre-2008, in a solid economy, carriers with a shortage of drivers were constantly underbidding each other, to attain even more poor-paying freight.

I was on the receiving end of this equation, losing work to carriers whose gross rates were comparable to what my owner/operators were paid, making the customers question why my rates had been so high.

Blame shippers all you like, but you don’t have to haul their freight if it doesn’t pay, so ultimately, low margins are the fault of the trucking companies, period.

I challenged the former driver to tell me one other industry, either in manufacturing, distribution, or service, that self-absorbs increased overhead. I challenge readers to do the same.

While this industry will spend millions researching the latest fuel-saving techno-toys so we can lower operating costs – therefore working for the same rates during times of increased overhead – every other industry simply raises their prices accordingly.

If the latest gizmos show operating cost savings, the company considers that a bonus, possibly offsetting slow sales, but not offsetting the cost of doing business.

When mad cow disease struck, the price of beef went up.

The summer of 2014 saw a disease that attacked pigs, and the price of pork went up. If the price of wheat goes up, so does the price of your breakfast cereal. When property taxes and heating fuel prices increased, our local truck repair shop raised the door rate $5 per hour.

I could go on forever, but I’ve made my point.

Ours is the only industry that seems determined to work for such painfully slim margins, and then justifies it with foolish arguments.

In the discussion, as always, someone raised the tired argument that increased freight rates would raise consumer prices and stall the economy. Always an impressive argument, and always a complete line of crap. Does anybody ever do the calculations on that statement? I did. Take any freight rate, and add $1,000 to a truckload. Your big screen TV will cost between $2-3 more. The lumber and brick for a typical new $200,000 home will raise the cost to $202,000. Take measurements of any product on skids, and you’ll find similar insignificant increases, like the aforementioned box of cereal, increasing by about 16 cents.

A typical sized load of new cars translates to your new wheels costing $90 to $120 more.

Would any of these examples bring the economy to a screeching halt, or even slow it down? Of course not. Larger price fluctuations than this occur every day, just due to market influences.

However, I can argue all I want and those with more control of this industry than I’ll ever have will either dismiss it or refer to analysts’ reports that state otherwise.

I, like most of you, don’t work in a world where analysts run the show. I deal in the real world, where I have to respond to the cost of doing business with comparable pricing to still remain profitable, and not just in incremental numbers.

The whole idea of starting my own business was to make a living, at a level reflective of the investment and risk involved.

This requires adapting to reality, rarely by following a pack mentality or making excuses for odd business practices, which is why I say, unapologetically, “We’re screwed.”

***

Bill Cameron and his wife Nancy own and operate Parks Transportation. Bill can be reached at williamcameron.bc@gmail.com.


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8 Comments » for Why the industry is hopelessly screwed
  1. steve w says:

    you are right truck driver pay needs to go up and all trucking companies should limited to one foreign mechanic and 3 foreign drivers and one foreign office worker per company. The OTA needs to look at why truck driver get non trucking jobs.

  2. meslippery says:

    Bill I disagree with( This is one of the same reasons I doubt it could ever work for anything other than scheduled day trip work. )
    Paid by the hour would solve many issues for company drivers. Lets assume all paid hours are logged on duty,Who wants to waste hours and get stuck in Gary Indiana for the week end.
    Most drivers want to go home and get enough hrs. with out having to screw the dog.

  3. rick gregoire says:

    We have been screwed for years and we are about the only industry that takes it with only a wimper.Shippers keep saying they will go out of business if we raise the rates to a profitable level.Maybe they should eliminate the transportation factor by building mini factories next to each of their customers and string conveyor belts directly to the docks.In that way they won’t have to worry about the costs involved in getting their goods to market.It’s about time we quit subsidizing their inability to price their products realistically.

  4. Lee says:

    Bill……in total agreement with you ( as I am on pretty much all your well written articles ). The industry is screwed. And that saddens me to say because I’ve spent a life time in it and happen to love it, …we once had a shiny past, now we have a grim present and at this rate a dismal future All your suggestions on how to fix it are correct, and painfully obvious, and make a ton of sense, which is exactly why it won’t happen. ….. And as long as government has their hands in the pie with regulations and increasing scrutiny, this industry is in a hopeless slide that will be difficult if not impossible to steer out of

  5. Kurt says:

    The trucking industry continues to fight it’s way to the bottom. As they scream driver shortage, rates fall!

  6. Professional Driver says:

    I like the written content of this story but it is sad to think that we are screwed in the trucking industry. Wages will never go up as long as the trucking industry imports temporary foreign workers. I sit here in my home as a professional driver of 25 years and can’t find a job because of either drivers with minimal experience (less than 2 years) and the temporary foreign workers working for much less than I can work for. In my quest for finding meaningful employment I find continual frustration to see job ads seeking truck drivers through the temporary foreign worker program. The wages are they are offering are disgusting at $37,000 to $ 41,510 per year on a full-time bases. And as you know it is also base on maximum hours through the Hours of Service regulations. Yes the industry is screwed because the trucking industry is doing the screwing to its most valuable commodity, its Canadian drivers.

  7. Bruce says:

    Hourly Pay? In some instances, this works fine. Mostly jobs which have the driver home daily. Long Haul drivers PAID hourly? Would be extremely hard to control. Paid % of Load? 25% of *0* is still zero, can you really trust your employer to be honest with the remuneration? *Been there done that, didn’t work.* If you are paid % of load, the trucking company can play games, with paper-work to make the load pay less, just broker the load around a few times, then state the load only paid such; Driver paid by the mile, this is the easiest way to pay the driver, and that’s why most companys pay this way; (The driver gets screwed as the company uses estimated mileage charts, map miles, which on a trip of 1500 miles can shave off 150 miles actually driven. How many companies do you know that pay off the odometer? (The driver gets screwed when “Road Detours” cause extra miles that of course are NOT paid.)
    Here is a MAJOR CONCERN: In Canada when a truck driver is injured on the job. “Workers Compensation” becomes involved. They direct injured to physiotherapy programs, were complaints of severe pain are denied investigation. These Compo physiotherapy programs use the “NO PAIN – NO GAIN” scenario, specific complaints of severe unrelenting pain are denied investigation. Injured Truck drivers with BACK INJURIES, are deliberately denied “Timely Medical investigation-Timely Medical Treatment” Compensation benefits are terminated within 30 to 90 days, and the driver is frequently “Starved Back To Work” on mind-altering medications which make their jobs UNSAFE for themselves and others, if you think this does not happen, you are living in a bubble; I suffered severe workplace injury, my specific complaints were denied investigation. 2 x-rays taken 1 week apart, both questioned spinal fractures at different spinal levels, yet I was denied further investigation, my requests for MRI deliberately denied. I was ramrodded through physiotherapy, like I wasn’t even injured. I was told my x-rays were sent for 2nd opinion, BUT NEVER WERE:

    Multiple requests to workers compensation for specialist appointment were deliberately denied, in Canada, a General Physician is NOT allowed to order MRI through the Health Care System, ONLY a specialist has this privilege, so non-medical claims adjusters deny specialist appointments, this way your workplace injury can be denied “Timely Diagnosis”

    TOO make a long story short, 5 trips to emergency, 28 doctors, almost 2 years to diagnosis, thoracic spinal fracture. (When I finally did get diagnosed, and finally received MRI, I was then sent to a “Retired Neurosurgeon” for opinion. He stated, he wasn’t sure the fracture was healed, or might have healed misaligned due to return to work while fracture was trying to heal; “further stating he doubted surgery would help at this delayed stage” my other specific complaint of severe pain, was denied any investigation, it was Blatantly Ignored, 6 orthopedic surgeons, 2 neurosurgeons, appointments over the next 3 years, all ignored my specific complaint of 2nd spinal injury, even though the x-ray questions spinal fracture. Not 1 of these specialists ordered a single MRI or CT Scan or performed a physical examination; My 2nd spinal injury was diagnosed 5+ years after injury, then it was again denied investigation by workers compensation. “My Injury Claim File” by workers compensation is filled with, Falsified-Fabricated-Fictitious, lies…. I requested full disclosure of my injury claim file workers compensation chose to deny me full disclosure. I luckily found a Pro Bono Lawyer who offered to help me, requested full disclosure, which proved many physicians contracted to Workers Comp are LIARS. God Help you if injured on the job in Canada, because Workers Compensation will due or say anything to “Contain Costs”
    Canada is home of; Medical Insurance Fraud – Racketeering;

  8. Lee says:

    To Bruce….. Although you strayed pretty far from the article, your story or similar is repeated by many injured drivers and workers of all types in this province day after day. Maybe truck news could help everyone and do its part ?. Perhaps an article on you or others like you that have had the same issues. Myself being one of them. WSIB in my opinion is nothing but a legally run scam that has absolute zero Interest in the injured worker and soley operates to profit like any corporation. Anyone reading this that thinks that’s exaggeration,or a joke? ? Just find yourself hurt on the job one day and see for yourself what REALLY goes on when you need their assistance. Bruce’s letter is all too common. I think it’s high time an independant panel investigated these crooks for how they really perform. My story too would knock your socks off, and no doubt there are thousands of other truck drivers out there that would have similar news if some light were shed on the subject C’mon truck news… How about we do a little digging ??? Does anyone have the gumption to expose these frauds ???

    Of all professions out there that can end up with back injury , trucking must be at or very near the top of the list. Sure there are back pain ” fakers ” out there, but WSIB must realize that not everyone is a phony. If you come from this line of work, surely the WSIB must realize that your chances of pain or injury must be possible . These men and woman need help, and one would think that after lifetimes of paying into this ” insurance ” plan, that if it was truly needed it would be there for you. Well, time to wake up everyone, its Not.

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