Survey shows carriers agree driver raises needed, but only 66 percent willing
Among carriers who say they might raise wages, 59 percent expect the increase to be less than 5 percent.
The Trucker News Services
WINDSOR, Colo. — Nearly two-thirds of carriers surveyed in this quarter’s Transport Capital Partners (TCP) Business Expectations Survey indicated they plan to increase capacity, a number that has remained fairly constant since August 2010 and one way to fill seats is raise driver pay.
But the same survey revealed that the number of carriers expecting to raise driver pay has fallen from 79 percent in August 2012 to 66 percent in August 2013.
What’s more, TCP said among those carriers planning to raise wages, the expectations are very modest. Fifty-nine percent expect the increase to be less than 5 percent.
“Many observers believe higher driver pay is needed to bring more drivers into the industry. But, until shippers are willing to pay more, carriers will be unable to meaningfully increase compensation levels,” Richard Mikes, TCP Partner, said, noting that expectations for increasing pay did not differ between large and small carriers.
Mikes noted that the balance between freight and trucks remains tight.
“It seems we must face up to the fact, early on, that drivers are truly a brake on truck supply, as well as on truck orders,” Mikes said.
The number of carriers expecting capacity additions of less than 5 percent has inched upward, from 22 percent in February 2011 to 45 percent today. For those intending to add more capacity (i.e., 6-10 percent), the trend has been downward, from 25 percent in February 2011 to 15 percent today.
Smaller carriers are more conservative than larger carriers in their buying plans. Twenty-three percent of larger carriers intend to add more than 6 percent capacity, compared with only 15 percent of smaller carriers.
With smaller carriers also less optimistic about volumes, it is unsurprising that they are less likely to add capacity, TPC said, noting the smaller carriers may also be having a harder time finding financing for expansion than their larger competitors.
“Tight credit remains a challenge for a lot of businesses, particularly for truckers, and especially those not well positioned,” said TCP Partner Steven Dutro.
Among carriers intending to add capacity, the most common methods have shifted. The percentage of carriers intending to add capacity through the use of independent contractors has decreased by 50 percent (from 30 percent to 16 percent), over the last three years.
Twenty-six percent of carriers indicated that acquiring equipment financed or purchased on a Trac Lease was their preferred method for growing capacity. This is down from 34 percent last quarter, but was the most commonly reported method reported in this survey.
Continued reluctance to add new capacity stems, in part, from the fact that the number of unseated trucks continues to grow.
The number of carriers reporting 6-10 percent of their equipment unseated grew from 10 percent in August 2011 to 26 percent in August 2013. Carriers reporting fully seated equipment declined, albeit slightly, from 25 percent to 22 percent. Smaller carriers are much more likely to seat all their trucks than larger carriers — 33 percent vs. 17 percent.
“Typically, smaller carriers, have lower employee turnover due to shorter hauls and a more direct, personal approach,” Dutro said. “However, as smaller carriers cut health care benefits, this advantage may not last.”
Fifty percent of larger carriers reported 1 to 5 percent of their trucks unseated, a number that does not bode well for future capacity for shippers.
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