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Driver Pay – The Pay Rate is One Factor in Total Compensation

Posted 7:11 PM by

Several months ago KSM Transport Advisors (KSMTA) published a blog post entitled “Driver Recruiting is a Marketing Effort.” In the post, David Roush, president of KSMTA, defined the “product” carriers offer drivers as the package of tangibles and intangibles the driver perceives he or she is receiving from the carrier. This article builds on that foundation and focuses on the mutually beneficial intangibles that provide monetary value to both the driver and the carrier.

Today, the trucking industry and the shipping public are at a crossroads when it comes to attracting and keeping qualified, productive drivers. The industry has experienced several driver pay rate increases in recent months and that trend is expected to continue in the foreseeable future. Gordon Klemp, publisher of the National Survey of Driver Wages (NSDW) recently stated, “The changes we have seen in Q3 represent a rate of change for dry vans, which is a factor of two larger than any quarter in the 19 years we have published the NSDW.”

The “rate” of pay is what attracts drivers in the hiring process; however, there are other factors within the carrier’s control that influence the gross wages earned by the driver. These factors are mutually beneficial and provide the driver the best future and the carrier the best chance to retain high quality drivers. There are many factors that directly or indirectly influence the driver’s total compensation and job satisfaction besides the “per mile” rate such as the following: 

1)     Reliable, Well Maintained Equipment

  • Keeping tractors and trailers in top shape goes a long way to keeping the driver productive without unforeseen delays and service failures; maximizing the driver’s compensation.
  • A well designed maintenance program allows the carrier to minimize the total cost of asset ownership.

2)     Driver-Friendly Freight

  • Do not underestimate the impact of the loading and unloading experience in shaping the driver’s view of his or her job.
  • Work with shippers and receivers to minimize the time and hassle involved; encourage drop trailers where the weekly turns provide an economic benefit.
  • It is better for all parties if the driver is paid for driving rather than being paid for not driving (loading/unloading, extra stops, layover, etc.).

3)     Well Designed, Optimized Freight Network

  • Drivers like predictability and consistency in their job.
  • The driver’s total pay is maximized if he or she keeps moving.
  • An optimized network allows for minimal delay between loads, an opportunity to pre-book the best loads in advance, and loads that provide the best overall productivity for the driver and margins for the company.
  • It is much easier for carriers to plan for driver time off.

4)     Comprehensive Compensation Package

  • Evaluate the total pay opportunity for the driver; not just the mileage pay rate.
  • Develop meaningful, manageable, and measurable Pay-for-Performance factors to supplement the base pay and reward results that improve the carriers operating metrics and margins.
  • Consider guarantees or minimums (proper implementation of the first three points above will help with being able to provide guarantees without a great deal of risk or downside).

It may be necessary to increase the base pay rates to attract and hire new drivers in the future but do not underestimate the impact of maximizing compensation by providing intangibles that yield a higher paycheck for the driver and increased margins for the carrier.

About the Author
Kirby McLinn is the director of analytics at KSM Transport Advisors, LLC, part of the Katz, Sapper & Miller Network, where he provides analysis support in the freight network optimization and financial management areas. Connect with him on LinkedIn.

 

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