Pay attention. There’s going to be a test. Back in December, several large American carriers announced some of the biggest per-mile pay hikes drivers and owner-operators have seen in years, plus increases for non-driving work, such as loading and unloading, and extra money for the hassles of crossing the border. Among them was Contract Freighters of Joplin, Mo., which increased pay for owner-operators and company drivers with at least one-year’s experience by three cents a mile. Said CFI’s chairman and CEO, Glenn Brown: “This is the most aggressive driver pay increase in CFI’s 52-year history and we believe it will ensure that CFI will continue to retain and attract the safest and most professional drivers in the trucking industry.”
Now for the test: What do those raises mean to you? The answer: if you’re going to be looking for good drivers, you had better be ready to compete.
You’d have nothing to worry about if you could offer the moon, stars, and a few extra days off at holiday time, but you do have to make a buck. Not only that, but with trucker pay packages so complicated, with bonuses of every kind topping up the per-mile rates, how can you even track what the competition’s up to?
And no, you’re not the only one who has a hard time figuring things out. David Leroux, a technical advisor on labour standards with the Client Education & Training Branch of Human Resources Development Canada’s Labour Program, says that 78 per cent of the complaints his department receives come from the trucking sector. “It’s the nature of the industry,” Leroux says. “The compensation packages are part of the problem. There are so many complexities in the way a driver is paid today — how they tally up pay, how they keep records, and how they don’t keep records. And then there are the differences between federal hours-of-service standards and Labour Canada’s hours-of-work rules. There’s more than enough going on here to create some real confusion.”
Given the worsening driver shortage, you owe it to yourself — and your drivers and shareholders — to know what’s what.
The fact is, you might not be able to advertise top per-mile rates. But it might not matter. How you construct and present your remuneration packages play no small part in decreasing your driver turnover. Your packages should be clear, realistic, honest, and transparent. If a driver understands that by working hard, minimizing stops, and passing inspections he can turn a 32-cents-per-mile base into something more like 52 cents a mile, he’ll be more than happy to sign on.
Conversely, if your driver works under the misguided notion that 32 cents will be easily upped to 52 cents and then finds out it isn’t so simple, or that only drivers with far more experience than he has can get it, he’ll walk. When you’re hiring, you should be able to tell prospects what they’ll be making at the end of a week and what they’ll have to do to earn it. The problem is exacerbated by drivers’ concerns over American hours-of-service rules, which we’ll get to later. But first, let’s look at a typical pay package. Judging from the help-wanted ads, driver pay in Canada ranges from 35 cents per mile for an employee to well above $1.10 a mile for an owner-operator. Some packages are simple, others as complicated as knot theory.
In reality, the pay a driver takes home will not vary as widely as the ads will have him believe. It’s the canny carrier who makes the package as easy to understand as possible. There’s no need to offer an inflated base rate if you make it possible for motivated drivers to earn almost twice that rate. Richard Cripps, a Toronto-based company driver at XTL Transport, says his base rate is 32 cents, but XTL pays him $10 every time the truck stops; $10 per hour to wait on top of the $10 stop fee; $25 for border crossing; $25 for DOT inspections; or $50 plus a meal voucher for DOT inspections he passes. Cripps gets $10 for every trailer he drops at a customer’s door, and he gets bonuses of between two and four cents for mileage over 2500 per week or 10,000 per month.
“When you divide my gross pay by the miles I run, it usually works out to between 47 and 53 cents a mile,” he says. “And I can make 40 bucks an hour just shunting trailers around. The only catch is that I have to log all the time properly.”
Never underestimate the earning power of proper logging. And when you’re interviewing drivers, don’t forget to remind them.
Since deregulation, drivers have heard about one too many carriers who can’t make payroll, so don’t be coy; tell candidates exactly what kind of business you’re in, whether you’re profitable, and what they can expect. Drivers should know better to expect drop pay if you run pin-to-pin, but far better that they find out ahead of time so they don’t quit in mid-trip. This also applies to what the driver might earn for tertiary work. If you only pay for the second and subsequent pick up or delivery, or if most of your loads are single-pick and single-drop, tell the driver. Because if you pay for two paid drops a week at a rate of $25 per, your man has the chance to gross another $2500 per year, or 2.5 cents per mile.
Many of your competitors are not only increasing pay rates, they’re spicing up their packages with incentives and bonuses for good fuel mileage, high weekly or monthly mileage, or safety and compliance performance. Before you extend the carrot, though, make sure it’s attainable. Legally. Otherwise, your drivers will get discouraged and cynical. Can a driver really win the mileage bonus at the same time as he’s making all the pick-ups and drops? Must he sleep with the truck shut off in winter or when stopped at a traffic light to make the fuel bonus? If he scratches a fender, is the safety bonus forfeited? What are the thresholds of tolerance on compliance issues? There are times when “adjustments” often need to be made. If so, will making those adjustments compromise the bonus?
Other non-driving extras could include a personal benefit plan, telephone calling cards, a power wash at the terminal for owner-ops’ trucks, parts and fuel at discount prices, etc. Any extra products or services that can be translated into a cash equivalent should be quantified as part of the pay package.
If, for example, a driver estimates that he’ll claim about $2,000 in prescription drugs, dental services, or vision care from the benefit plan, that could be said to be worth about two cents a mile.
Some fleets offer year-end profit-sharing plans which, depending on the financial success of the operation, could be worth several cents per mile as well. When you’re presenting this kind of possibility to a new recruit, be prepared to give examples at real life.
Amidst the recent round of driver wage increases is this gem offered by Little Rock, Ark.-based flatbed carrier Maverick Transportation. In addition to a few cents per mile more, they plan to offer a per-diem option of 8 cents a mile — $40 on a 500-mile day. Call it a meal allowance, or a daily tax-free allowance for travel expenses. Driver pay would be adjusted downward and the per diem offered in lieu of the higher mileage rate. The option reduces a driver’s taxable wage so he ultimately pays less in taxes.
However you package your driver pay, present candidates with a simple spreadsheet or at least a chart that outlines how benefits can be accrued.
Here’s how paid extras can add up to a mitt full of dough. Assume annual mileage of 110,000 miles: Base mileage: 35 cents = $38,500 Picks and drops: four per week @ $25 x 50 weeks = $5,000 Two-cent safety bonus: $2,200 Two-cent fuel bonus: $2,200 Wait time: $10/hr x 10 hrs/wk = $5,000 Layover: $100/day x 10 days = $1,000 Trailer spotting: 20 @ $10 per = $2,000 Paid extras total = $17,400 Tally it up and the yearly earning are $73,300, or 66 cents a mile!
Your new driver won’t often see that kind of money all in one place, but you can show him how fast the extras add up.
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