Swift stepping up to the plate, plan for higher driver compensation
Swift Transportation official say they believe higher driver pay will pay off in the long run.
By Lyndon Finney
The Trucker Staff
Editor's Note: The following is an editorial written by The Trucker Editor Lyndon Finney.
Every quarter, for-hire trucking companies file a report with the Securities and Exchange Commission around income, expenses, profits and losses, among other things.
For the most part, the trucking media look at the numbers and the details behind the numbers.
So we were surprised — and extremely pleased — to read in Swift Transportation’s second quarter report that the company is in effect giving up some of its profits in the coming months to address the driver shortage with bigger paychecks for its drivers.
Apparently, there were a lot of other folks surprised by the announcement.
The company’s stock fell 14 percent to $21.20 per share after the announcement with the number of share traded at over 10.6 million compared with just over 1.5 million the day before when the price finished at $25.81 per share.
The $21.20 per share figure is the lowest the price has been since last February.
While the announcement may have shaken up some stockholders, drivers ought to be flooding toward a company that’s willing to deal with the driver shortage head-on with more compensation.
“In summary, we are continuing to make progress on our goals with utilization improvements, rate increases, Dedicated growth and Intermodal growth in the second quarter,” the report read. “We are also accelerating the progress we are making with CRS (Central Refrigerated Services) post systems integration and have laid the foundation for the cost synergies previously identified.
“In addition, we took a significant step forward in reducing the cost of our outstanding debt by entering into a new credit agreement with more favorable terms and additional capacity to facilitate the call of our 10 percent.”
Then came the real news of interest to professional truck drivers.
“Despite these improvements, we were constrained in the truckload and CRS segments by the challenging driver market,” Swift said. “Our driver turnover and unseated truck count were higher than anticipated. Therefore, we sold more trucks in the second quarter to offset the impact of idle equipment, which drove additional gains on sale of equipment this period. After assessing the current and expected environment, we believe the best investment we can make at this time, for all of our stakeholders, is in our drivers. Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money. We believe we can accomplish this through improved productivity and enhanced pay packages.
“Based on results we have seen thus far, we believe our drivers will stay with Swift, which will further improve the company's productivity and safety. These operational improvements, combined with rate increases from our customers, should help pay for the investments we are making in our drivers; however, we expect to have cost headwinds in the latter half of 2014 as the investment in our drivers will be more immediate and the benefits are expected to be derived over time.
“We believe by making these investments now, we can deliver on our goals for
2015 and beyond. In the near-term, we expect our Adjusted EPS (Earnings Per Share) in the third quarter of 2014 to be in the range of $0.33-$0.37. The fourth quarter is expected to be more robust with various seasonal business opportunities, operational improvements, contractual wins and pricing gains, which should drive Adjusted EPS in the range of $0.47-$0.52, resulting in a full year range of $1.24-$1.33.”
At the top of our voices we commend CEO Jerry Moyes, COO Richard Stocking and CFO Gennie Henkels for making this bold move.
We hope more carriers will follow suit — and do so quickly.
The Trucker staff can be reached to comment on this article at firstname.lastname@example.org.
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