How the Driver Shortage Impacts Truckload Carriers’ Employee Costs


Aug. 28 2017, Updated 7:37 a.m. ET

Employee compensation

Previously, we analyzed the 2Q17 operating margins of the major truckload carriers. In this part, we’ll dig into the operating expenses of these carriers. For any company, employee costs comprise a major component of operating expenses.

In the truckload sector, compensation expenses are next to purchased transportation costs as a percentage of operating expenses. Amid a driver shortage and government regulations regarding the number of working hours allowed, compensation costs have become significant for truckers.

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What the American Trucking Associations said

The American Trucking Associations (or ATA) is an apex body that represents the road freight industry in the US. The ATA noted that there were ~48,000 vacant trucker positions in 2016. It is estimated that the driver shortage could inflate to ~170,000 drivers by 2025. 

The driver shortage has resulted in higher wages for the available drivers across the US. The American Transportation Research Institute says ~35% of trucking’s operational costs per mile comprise drivers’ pay.

The rise in employee wages and compensation costs has forced these truckload carriers to curtail these costs through a variety of measures such as driver retention. These carriers are looking at driver retention rates while keeping in mind the overall operating costs. 

The average driver age is creeping upward, which could result in more drivers retiring from trucking in the coming quarters. This trend could stress trucking companies’ operating costs, resulting in reduced profitability for the truckload carriers.

The trucking industry (XLI) is experimenting with driverless trucks. Less-than-truckload majors such as United Parcel Service (UPS) have been testing the use of drones to deliver packages. However, there are solid hurdles for the driverless trucks era going forward. The International Brotherhood of Teamsters, a major labor organization in the US, has been fighting against the implementation of legislation on autonomous trucks in the US.

How employee costs fared in 2Q17

The chart above shows that with the exception of Werner Enterprises (WERN), J.B. Hunt Transport (JBHT), Swift Transport (SWFT), Knight Transportation (KNX), and Heartland Express (HTLD) reported a fall in employee expenses in 2Q17. 

Werner Enterprises’ staff compensation costs have risen 1.1% in the same quarter. Knight Transportation reported the highest fall of 2.8% in workers’ compensation expenses in 2Q17.

In the next part, we’ll look at the truckload carriers’ fuel expenses in 2Q17.


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