The LTL (less-than-truckload) companies were nearly immune to the acute driver shortage faced by the US trucking industry until 2017. Truckload companies have been facing driver shortages for quite some time. In 2017, LTL companies also began experiencing driver shortages. According to the American Trucking Associations, the shortage is currently at ~51,000.
Companies are incurring huge costs to attract, train, retain, and keep their driver workforce. Driver shortages still seem critical despite sign-on bonuses, predictable schedules, union protection, and a better work-life balance.
Employee costs in the second quarter
Let’s consider employee costs as a percentage of total operating costs. That will throw light on the labor efficiency of these carriers. The above graph shows that almost all the major truckload (XTN) carriers were able to lower their employee costs in the second quarter. We haven’t considered Landstar System (LSTR) in the comparison. The company offers asset-light integrated logistics solutions and purchases trucking services from third parties that do the freight hauling.
Among these truckload companies, Schneider National (SNDR) exercised greater control over its employee costs. Its salaries, wages, and benefits expenses, which include driver and non-driver pay, were 27.5% of its total operating costs in Q2 2018 compared to 30.6% in Q2 2017.
SNDR was followed by Knight-Swift Transportation (KNX), which saw a 190-basis-point reduction in its employee costs in the second quarter. Its employee costs as a percentage of total operating expenses declined to 30.8% from 32.7% in Q2 2017.
J.B. Hunt Transport Services (JBHT) saw a 0.8% decline in its employee costs in the second quarter to 24.2%, from 24.9% in Q2 2017.
Werner Enterprises’ (WERN) employee costs declined 60 basis points to 34.5% in Q2 2018, from 35.1% in the second quarter of 2017.
In the next part, we’ll look at the bottom-line growth for the major truckload carriers in the second quarter.