Strong Tie Insurance December 7, 2020 Commercial Truck Insurance Contents hide 1 The Pandemic’s Effect on the Trucking Industry 2 4 Reasons Companies are Increasing Truck Driver Pay 2.1 Mass Exodus 2.2 Changing Demographics 2.3 Finding Qualified Drivers 2.4 Increasing Demand 3 Trucking Companies Reporting Increasing Pay Rates 4 Consumer Costs on the Rise 5 Choose the Right Commercial Trucking Insurance Due to a growing shortage of drivers and an increase in demand, truck drivers are experiencing pay surges across the nation. This is a far cry from the headlines in early May when almost every commercial trucking company slashed trucking jobs due to a pandemic that had devastated the economy. Let’s take a look at where we’ve come from and why truck drivers are in such high demand. The Pandemic’s Effect on the Trucking Industry The American Trucking Associations’ chief economist Bob Costello spoke with Talk Business, “The COVID-19 pandemic has had an unprecedented impact on many parts of the economy, and trucking is no exception.” Trucking companies cut over 88,000 jobs in April, according to the Bureau of Labor Statistics. This number represents the biggest loss of trucking jobs in any one month on record, resulting in a rise in the unemployment rate. As the pandemic escalated and shutdowns ensued, manufacturing came to a standstill. Despite the fact that truck drivers were considered essential workers, there just wasn’t anything to move. Even before the pandemic struck, the trucking industry was in trouble. The first three quarters of 2019 saw almost 800 trucking companies go out of business, the result of a decline in manufacturing and the spot market as well as escalating insurance costs. Commercial insurance is required by law in order to operate a truck on the highway. In light of the trucking industry’s struggles, one has to wonder: Where did the sudden boom, and the related truck driver shortage and increased pay, come from? 4 Reasons Companies are Increasing Truck Driver Pay As with most economic ventures, the recent increase in truck driver salaries and average hourly earnings come down to supply versus demand. Mass Exodus Potentially tens of thousands of truck drivers left the industry in 2019, whether due to layoffs or retirement. Then, COVID-19 struck, and an increasing number of layoffs ensued along with drivers concerned about continuing work amidst stay-at-home orders. In an interview with Yahoo Finance, US Xpress CEO Eric Fuller stated that as many as 150,000 drivers left the industry in 2020. Over 1.3 million people in the trucking industry remained unemployed as of August 2020 at an unemployment rate of 8.4%. Changing Demographics Long-haul truck drivers are a diminishing breed. An increasing number of today’s drivers want to be home at night following a long day of driving. Increasing health concerns and growing truck insurance claims have left the road-weary fleet trucker looking for respite and signing on with local companies instead of national fleets. Finding Qualified Drivers In order to get a Class A Commercial Driver’s License (CDL), drivers must have a minimum of 160 hours of combined classroom and behind the wheel training, and complete testing. Due to the surging number of COVID-19 infections, most state motor vehicle offices are open by appointment only. In some areas, that means a wait of several weeks to a month before obtaining an appointment for testing. Truck driving schools have also felt the effect of COVID-19 with restricted capacity leading to reduced classroom sizes and a shortage of qualified drivers. This year has seen about 100,000 fewer CDLs issued than 2019. Another cause for driver shortages is the federal Drug and Alcohol Clearinghouse, which became effective in January. This electronic database tracks drivers that have tested positive for prohibited drug or alcohol use or refused to take required tests. A commercial trucking company is required to report any positive tests and make queries to new and existing employees. Jeremy Reymer, CEO of DriverReach, a driver recruiting firm, told Transport Topics that the new Drug and Alcohol Clearinghouse has disqualified an estimated 30,000 drivers. Increasing Demand In a nutshell, demand for truckers is outpacing availability. Stocked shelves at retailers never fully recovered since the COVID-19 hoarding first began in spring. Shortages of toilet paper, cleaning supplies, and canned goods have left barren shelves once teeming with products. Between retail and the increasing number of e-Commerce online orders, demand is spiraling up. Skyrocketing online shopping has resulted in a 163% increase in online sales across major retailers when compared to the same period last year. Sales are high, inventory is low, and the truck driver and the cargo they carry are in demand. Spot rates, the on-demand market that does not have pre-arranged, long-term contracts, are on fire. Business Insider reported that spot loads cost retailers almost 30% more during the first week of September when compared to the same period last year. Trucking Companies Reporting Increasing Pay Rates For those carriers that have not already implemented an increase in trucker pay, they will be doing so soon. According to Fuller, the existing driver shortages warrant a pay increase up to 20% this year, with much more needed in 2021. The U.S. Bureau of Labor Statistics reports the median pay for truck drivers in 2019 was $45,260. The following are just a few of the carrier fleets that are increasing hourly earnings and wages for their drivers. Stevens Transport is increasing pay by as much as 14%. Other trucking services increases pay as well as home-time options. Paper Transport Inc. reported that regional drivers will receive a minimum weekly guarantee as well as an average pay increase of 7%. Others in the trucking industry are looking to appeal to the truckload driver include the following: Pride Transport – This family-owned carrier announced a pay increase of four cents per mile as well as a $10,000 sign-on bonus paid out over the course of two years. CoreTrans – This Somerset, Kentucky-based operation put a new pay plan in place where drivers can earn up to 53 cents per mile and instituted a 12-2 schedule. Under this plan, drivers can take 48 weekend hours off after working for 12 days. Schneider National – The executive vice president of this transportation and logistics company, Dave Geyer, shared with Transport Topics, “These shippers are seeking solutions from Schneider at higher rates for the expedited transit time, and Schneider is passing the rate increase on to our team drivers.” In addition to increased wages, carrier fleets are adding significant benefit packages. Ryder System intends to provide $30 million in bonuses to its frontline employees. Consumer Costs on the Rise Of course, increasing freight costs will undoubtedly be passed on to the consumer. The last time truckload fleets experienced a shortage of drivers that led to an increase in shipping costs, both Hormel Foods and Tyson Foods had to increase prices. While increasing prices may not be welcomed by consumers, the surge in demand for shipping services and the increasing jobs is a welcome relief for the freight transportation industry that has seen their fair share of hardship. Choose the Right Commercial Trucking Insurance We are here to help large commercial fleets, as well as independent operators, make the right decision when it comes to ensuring that your company and drivers are adequately protected. For a no-obligation quote for commercial insurance and general liability insurance for truckers, contact us at Strong Tie Insurance today. Truckers Pay Surge as Driver Shortage Continues to Grow was last modified: June 28th, 2023 by Strong Tie Insurance Related posts:Important Insurance Advice For New Commercial Truck DriversWhat Kind of Insurance Coverage Do Trucking Companies Need?How Often is Trucking Cargo Damaged?