On the Road to Success

An Andy Ahern blog

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REPOST: The Trucking Industry Needs More Drivers. Maybe It Needs to Pay More.

In order to find a long-term solution to the massive shortage of long-haul truck drivers, it is pertinent look for the root cause of the problem. And many pinpoint the dilemma to the low salary offered to the drivers. Neil Irwin of The New York Times dissects further this possibility.

Image Source: nytimes.com

Swift Transportation’s 20,000 workers haul goods in almost 14,000 big-rig trucks that travel the interstates and back roads of the United States every day. The company’s performance is closely tied to the nation’s economy, which has been looking increasingly sunny lately.

So it was surprising last month when Swift’s stock plummeted nearly 18 percent in a single day. The tumble came for an odd reason. It wasn’t because there was too little business — but rather, too much.

“We were constrained by the challenging driver market,” the company said in its quarterly earnings announcement. “Our driver turnover and unseated truck count were higher than anticipated.”

In other words, Swift had plenty of customers wanting to ship goods. But in a time of elevated unemployment, it somehow couldn’t find enough drivers to take those goods from Point A to Point B. How is that possible? The reasons for that conundrum tell us a great deal about what has been ailing American workers and why a full-throated economic recovery has been so slow in coming.

Trucker Pay Has Fallen When Adjusted for Inflation

The industry complains of shortages of truck drivers, but in real terms tractor-trailer drivers made less in 2013 than they did a decade earlier.

Average annual pay, heavy and tractor–tailer truck drivers, in 2013 dollars

Consider this: The American Trucking Associations has estimated that there was a shortage of 30,000 qualified drivers earlier this year, a number on track to rise to 200,000 over the next decade. Trucking companies are turning down business for want of workers.

Yet the idea that there is a huge shortage of truck drivers flies in the face of a jobless rate of more than 6 percent, not to mention Economics 101. The most basic of economic theories would suggest that when supply isn’t enough to meet demand, it’s because the price — in this case, truckers’ wages — is too low. Raise wages, and an ample supply of workers should follow.

But corporate America has become so parsimonious about paying workers outside the executive suite that meaningful wage increases may seem an unacceptable affront. In this environment, it may be easier to say “There is a shortage of skilled workers” than “We aren’t paying our workers enough,” even if, in economic terms, those come down to the same thing.

The numbers are revealing: Even as trucking companies and their trade association bemoan the driver shortage, truckers — or as the Bureau of Labor Statistics calls them, heavy and tractor-trailer truck drivers — were paid 6 percent less, on average, in 2013 than a decade earlier, adjusted for inflation. It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job.

Millions of able-bodied Americans need work, yet there aren’t enough middle-income jobs for them. That is especially the case for men without advanced educations, who have seen their wages depressed over the last few decades. Trucking would seem to be an excellent option.

It’s not an ideal job for everyone. There is no question that trucking is hard work, necessitating long hours and longer stretches away from family. But that’s why it is well compensated, at least in comparison to other jobs not requiring college degrees. The average pay for a long-haul trucker is just shy of $50,000, according to the A.T.A., and an experienced trucker with a good safety record can make significantly more than that. The work typically offers lavish benefits that are increasingly rare for nonunion blue-collar employees.

The job can be learned fairly quickly. In some industries, companies complain of shortages of workers for jobs that require years of advanced training, like certain engineering specialties. Trucking is not one of those industries, however.

A person can get a commercial driver’s license after a course that can be as brief as six weeks of intensive study. Moreover, there were actually fewer truckers working last year (1.585 million) than five years earlier (1.673 million). Some of the missing workers could presumably be coaxed back into the industry if the money were right.

Long-haul tractor-trailers parked outside Baltimore. While the trucking industry complains of too few qualified drivers, wages for those behind the wheel have fallen 6 percent, when accounting for inflation, over the past decade. Credit J.M. Eddins Jr. for The New York Times

To be sure, the trucker-shortage picture is more complex than this, notes Bob Costello, the A.T.A.’s chief economist. He says these complications make a straightforward story of truckers simply being underpaid not quite fair.

For example, new safety requirements mean that individual truckers drive fewer miles than a decade ago: An average long-haul truck can now cover 8,000 miles a month, down from almost 11,000 in 2007, according to the trade association. This helps account for downward wage pressure. And the trucking companies themselves are typically working on thin profit margins and serving customers on long-term contracts, which means that if they simply raised pay sharply to recruit more truckers, they could end up losing money.

But every industry has its special challenges, and the trucker shortage — and falling inflation-adjusted wages over the last decade — are part of a bigger story.

The reasons are the subject of endless debate, and you can pick the one you prefer to emphasize: technological change, globalization or a decline of union power. But wages of workers without advanced skills have been under downward pressure in the United States and across the developed world over the last generation. The deep recession and slow recovery have only made the trend more pronounced.

That has led to a mind-set in which executives sometimes think of line workers as merely resources to be tapped at the lowest price. Companies have been able to keep wages low: It’s hard to demand a raise when your colleagues are being laid off or there is a long line of job seekers. Some corporations may have come to view this as a natural state of affairs.

By now, wage income is as low a percentage of gross domestic product as it has been since 1947, while corporate profits are at postwar highs. These are two sides of the same coin. Money that once accrued to workers now goes to shareholders.

Yet there are some indications that this state of affairs may not last: The shortage of truckers is one piece of evidence that the balance of power is shifting. In recent earnings calls, executives from companies as varied as JetBlue and the Dr Pepper Snapple Group have expressed worry about rising wage pressures.

The trucker shortage is already resulting in higher wages in parts of that industry. There have been $2,000 signing bonuses from companies looking to poach truckers and, as Kevin P. Knight of Knight Transportation mentioned in that trucking company’s latest earnings call, per-mile pay increases have been working out to 5 to 10 percent jumps in driver pay.

Executives may bemoan higher pay for workers because it could cut profit margins. But after a generation in which the median American household has seen flat to declining inflation-adjusted income, wage increases are a welcome corrective. When workers begin to have more leverage in salary negotiations, it is a sign of an improving economy, not a liability that businesses should be complaining about.

Ahern and Associates helps manage the efficiency and profitability of the trucking industry, especially during trying times. Follow this blog to learn how the trucking industry face head on such difficulties.

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REPOST: Firm keeps on trucking

Recycle force is proof of how good the trucking business is.  Read this article from Northamptonshire Telegraph for further details:


Image Source: northantstelegraph.co.uk

Recycle Force has added three Scania hook-loaders, provided by TruckEast Ltd, to their existing fleet of 14 HGVs.

Recycle Force was founded in 2004 by Rob Kirk as a one-van hazardous waste collection operation. Following heavy reinvestment of profits, Rob was joined by Trevor North, and expanded into trade waste and wheelie bin collections. This expansion included relocating to new premises on Earlstrees Industrial Estate, as well as acquiring more vehicles. In recent years, Recycle Force has gone from strength to strength, enjoying consistent growth, with turnover this year expected to be in excess of £8m.

Currently, Recycle Force processes more than 3,000 tonnes of recyclable materials per month including cardboard, papers and plastics. Recycle Force is keen to work with other local businesses and employ local people, and as a result of extended contracts with Kettering Council and Corby Council to deal with the region’s waste, will be creating new jobs at their Corby site in the coming months.

Recycle Force’s recent expansion has included the purchase of three new trucks from TruckEast Ltd, the Scania dealer for the Eastern counties. TruckEast’s managing director, John Biggin, said: “TruckEast are delighted to be supplying the first new Scanias into the Recycle Force fleet. The Scania P-series are the first new trucks purchased by the company since it was formed.”

It was the exceptional levels of service TruckEast has provided over the last five years that prompted Trevor to consider adding new Scanias to the fleet through the firm. He said: “Scania is our marque of choice and the support from TruckEast in the early days was critical to keeping our vehicles on the road. We’re now starting a vehicle replacement programme, beginning with the new Scania vehicles.”

Since 1987, Ahern and Associates has specialized in helping buyers in the acquisition of trucking and logistics companies and in reducing overall operating costs of trucking business.  For more information, visit this Facebook page.

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REPOST: How GPS Transformed Trucking and Made the Open Road a Lot Less Open

In just a short span of time, technology has “transformed truckers from free-range rebels to carefully monitored employees.” Raymond Fisman and Tim Sullivan write in The Wall Street Journal about how advancements in monitoring technologies, such as GPS, redefine the work of American truckers.


Image source: wsj.com

One icon of American popular culture of the 1970s was the long-haul trucker, a free-range rebel in jeans and a Peterbilt hat. Think Burt Reynolds in Smokey and the Bandit, hauling a load of Coors beer eastward from Texas. Or Clint Eastwood (and his orangutan Clyde) in Every Which Way but Loose. Or of the truckers in the song “Convoy,” tearing up their log sheets, triumphing over Smokey, and rockin’ into the night. The reckless spirit of the American West firmly relocated itself from pioneer to cowboy to trucker, at least for a little while.

Fast-forward 30-some years: That untamed maverick is harder to find and the open road has gotten a lot less open. In one short generation, technology, from onboard computers to GPS systems, transformed truckers from free-range rebels to carefully monitored employees whose lives are a lot more like cubicle-bound office workers than the iconoclasts of yore.

In the days before GPS, a driver could, if he chose, take leisurely breaks at truck stops then make up the time by racing at 80 miles an hour down the highway, endangering himself, other motorists and company profits.

So most companies that had to get stuff across the country refused to take on the risk and hired freelance drivers who owned their own rigs. Owner-operators, the logic went, would be responsible because they had to account for the cost of wear and tear on their trucks—and the consequences of reckless endangerment. Or, at the very least, any screw ups would cost the driver, not the company.

But this situation of owner-operators hauling on a contract basis was less-than-ideal for companies. Drivers did little to help out with loading or unloading at the warehouse or taking care of special loads, something the company could ask drivers to do if they were full-time employees.

Along came better monitoring via onboard computers or GPS. This fundamentally changed the playing field. Companies could keep reckless behavior in check and benefit from more coordination and extra help at the warehouse. Companies dumped the freelance operators and once again hired their own. (A 2004 study confirms this.)

Call it a victory for the productivity-enhancing effects of information technology, and a loss of autonomy and independence of the trucker on the open road.

Gary Bojczak, who worked for a construction company in northern New Jersey, discovered the personal effects of these tradeoffs. Earlier this year, Bojczak got his 15 minutes of fame (and a $32,000 fine) for jamming the satellite signals of a newly installed air traffic control system at Newark Airport. Bojczak hadn’t procured his illegal GPS jammer for the purposes of disrupting civil aviation. He merely wanted to keep his boss from tracking his whereabouts at all times.

If workers aren’t doing anything wrong, one might argue, they shouldn’t mind being tracked.

And the benefits – at least for the company’s bottom line – are being felt across many industries, particularly those involving tasks like stuffing envelopes or making telemarketing calls where performance can be monitored real-time. Increasingly sophisticated software is able to detect employee misbehavior even in the absence of direct monitoring by flagging suspicious patterns in, say, the drink and meal transactions of restaurant servers. (One recent study found that such surveillance technology increased restaurant revenues by 7%.)

But, perhaps, like Bajczak, we all feel entitled to our privacy and security, whatever our bosses might think, and the effects on productivity be damned.

And maybe – just maybe – workers might feel more empowered and motivated if left alone to do their jobs a little more often.

Andy Ahern of Ahern and Associates, one of the most progressive consulting companies in the country, is a respected trucking executive. Like this Facebook page to receive regular updates about the trucking industry.

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REPOST: Overweight trucks not only illegal, but hazardous to county roadways

Apart from attracting accidents, overloaded trucks wear down roads, too, creating more problems for the commuting public. Lawerence Synett of Northwest Herald discusses how some localities are addressing this issue.

A select group of law enforcement officers in McHenry County monitor trucks.

They comb county and municipal roadways identifying overweight trucks and other violations with loads that are not only illegal, but also safety hazards.

“When a truck is overweight, they take longer to stop, and they wear roads down quicker by putting all that weight on one section at one time,” said John Birk, deputy chief at the McHenry Police Department. “This damage can be seen through raised asphalt, cracking and potholes.”


Image Source: nwherald.com

It is the responsibility of trucking companies and their drivers to adhere to the long list of state and local laws, which include weight and size restrictions, as well as equipment and safety requirements, to name a few.

Enforcing trucking laws has improved over the years with education and training for the trucking industry and law enforcement agencies alike, local experts agree. That effort has led to decreased citations and safer roadways.

The McHenry County Sheriff’s Office issued 191 citations for overweight trucks between 2009 and 2012. That includes fines totaling more than $422,000.

The department has one dedicated truck enforcement officer who also handles accident investigations and several deputies with specialized truck enforcement training.

The most overweight citations (74) were issued in 2010, which brought in more than $191,000 in total bonds. Last year, the sheriff’s office issued 48 citations, and through June of this year, 12 overweight trucks have been ticketed.

The largest bond was issued in 2006 at a hefty price tag of more than $36,000, and the smallest – $95 – was issued in 2009 when 53 citations were doled out.

The money collected is then broken down and distributed to the court system, Illinois State Police, the state of Illinois and whoever maintains the roadway where the violation was committed.

“Commercial motor vehicles and roadway safety are key to our economic recovery,” Undersheriff Andrew Zinke said. “If drivers are operating illegally or unsafely, it is our responsibility to educate them and protect our community.”

Load weight limits for 18-wheelers cannot exceed 80,000 pounds — one truck placing wear and tear on the roadway equivalent to 9,600 passenger cars doing the same thing.

The fine structure is based on two categories – overweight on registration and overweight on gross weight. Other safety violations include bad tires, spilling on the roadway or no valid safety test, which is required every six months for trucks weighing more than 8,000 pounds.

The McHenry Police Department’s Truck Enforcement Unit issued a total of 50 citations for overweight on registration and four citations or overweight on gross weight in 2011 and 2012. That also includes about 655 citations for safety violations.

The unit carries two portable scales as well as equipment capable of leveling out the truck. Officers are trained in the state and local requirements, as well as other “red flags” often associated with violators, such as bowed-out tires, flattened-out springs or tires rubbing against each other.

“It’s an experience thing,” McHenry Police Department Truck Enforcement Unit Officer Mark Fisher said. “You get better with time.”

The majority of violators simply don’t know the state and local requirements, which in McHenry includes weight restriction on Riverside Drive and Orleans Street.

“Education is the most important piece in this,” Fisher said. “You get a lot of smaller companies that don’t know the law. They need to understand what they are doing wrong and how to correct it, instead of it just being a revenue source.”

The unit, as well as other agencies, is a member of the Illinois Truck Enforcement Association, which bridges the gap between the trucking industry and law enforcement personnel to make sure state requirements are followed.

Keeping a load legal is part of the training offered at Eagle Training Services in Lake in the Hills, although the laws are not part of state testing for a commercial driver’s license, said Jeff Clark, managing partner at the truck driving school.

“Most companies will have some type of training, but a well-run school goes beyond the minimum requirements,” Clark said. “Most quality schools cover weight and how to adjust a truck to compensate for that weight.”

Trucking companies still will overweight trucks, leaving the responsibility of a legal load up to the driver, the last line of defense before hitting their routes.

“Sometimes the shipper loads something that is overweight, but it is still the driver’s responsibility,” Clark said. “It can be a very confusing picture for the driver, but it’s still up to them to know the laws.”

The city of Crystal Lake averages around 20 overweight citations annually, and in Huntley, two citations have been issued since 2009. The city of Woodstock does not have certified truck enforcement officers.

Trucking executive Andy Ahern supports measures that promote road safety. Subscribe to this Facebook page to receive regular news on the trucking industry.

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