According to a 2017 study by the American Transportation Research Institute (ATRI), labor has ranked as the top cost for motor carriers. It all boils down to a few key factors: driver shortage, rapidly increasing pay, and a changing driver demographic. Unfortunately, trucking companies have good equipment collecting dust because they can’t find the drivers to use it.
Oftentimes, companies lose drivers to local businesses that can guarantee home time every night. And some are being lured away from trucking by the growing domestic oil production industry, which provides significantly higher pay opportunities. Still others are completely turned off by the challenges of truck driving and choose another career path.
Filling those empty slots can seem like an uphill battle, and desperate times call for even more desperate measures. Some companies are offering drivers more than one pay raise each year in response to the driver shortage and low retention rates. As a result, wages and benefits reached a 5-year high in 2017, and they continue to climb. The ATRI found that driver wages amount to one third of all motor carrier expenses. Those look like steep figures, but here’s where the benefits outweigh the costs—higher pay combined with a better work environment improve retention rates.
The changing truck driver demographic also affects the cost of labor. In 2014, over half of trucking employees were 45 years and older, while less than 5% were 20 to 24 years old. The aging driver population and ongoing baby boomer retirements agitate the situation further, adding steady fuel to the fire. How can trucking companies battle the blaze and cut labor costs? Here are some practical suggestions:
It’s clear that labor costs for trucking companies are both sizeable and complex. Increasing turnover and slipping retention rates are pushing companies to raise pay as they compete for much-needed drivers. With an aging workforce and ongoing retirements, the industry is in desperate need of younger drivers to take their place.
How can you meet those challenges? Employees who are well-compensated are more likely to stick with your company. Improving the work environment, giving your drivers room to grow, and putting their job feedback to good use also encourage strong company loyalty, which will cut labor costs in the long run. Company savings and a happy workforce—sounds like a win-win to us!
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