The economic outlook was top of mind for fleet executives attending the American Trucking Associations Management Conference & Exhibition. And it emerged, for the second consecutive year, as the top concern shared by trucking industry professionals.
The American Transportation Research Institute (ATRI) released its 20th annual list of top industry issues at MC&E. After the economy, the list of the top five concerns was rounded out by: truck parking; lawsuit abuse reform; insurance cost and availability; and battery-electric vehicles.
But it was the economy that was the top concern and a major topic of conversations at the convention. The good news is, it’s about to get better for trucking – or at least, not worse. That, according to ATA chief economist Bob Costello.
He gave his annual economic update during a breakfast session, and joked he was initially concerned when he saw attendees were served tomatoes with their breakfast. But none were used as projectiles even though Costello noted trucking conditions will improve only modestly over the course of the coming year.
“I think you’re not going to be thrilled with my presentation, but you’re not going to go away depressed either,” he opened with. He anticipates trucking will return “back to normal” which is an environment that hasn’t been felt since pre-pandemic.
“The main drivers of truck freight are going to get no worse, and in some cases could get a little bit better,” Costello said, citing macro-economic factors and an anticipated further trimming of excess capacity as carriers – many of whom are operating at a loss – pack it in and exit the market.
The economy is also a concern for professional drivers, especially as it relates to their pay. While truck parking ranked as the top concern among drivers, compensation came second, and the economy third.
This concern over compensation has also also evident during CarriersEdge’s Best Fleets to Drive For nomination process. CarriersEdge CEO Jane Jazrawy, speaking at a session titled Great Workplaces in a Terrible Economy, said driver pay was far and away the biggest concern expressed by surveyed drivers.
Drivers anxious about pay
“Pay is the biggest issue with drivers,” she said. “And for contractors it’s the lease terms. Drivers are really anxious.”
And who can blame them? Costello noted the consumer price index – or the cost of goods purchased by consumers – has climbed nearly 22% since 2020. Know of any fleets who’ve increased driver pay by 22% over the same period? It’s not likely. And how could they?
Costello noted carriers are also dealing with rising costs related to labor, new equipment, insurance, tires and maintenance. In fact, operating costs for truckload, LTL and specialized carriers – excluding fuel – surged 9.7% in 2021 and again in 2022, before rising another 6.6% in 2023. Their costs have risen 35% while average revenue per mile climbed just 16.2% over the same period.
“It’s unsustainable,” Costello said. “Demand is down. Rates are down. Costs are up. It’s a horrible place to be.”
So, what’s a fleet to do? Jazrawy said there’s only so much that can be done about driver compensation in the current environment. But the second major concern voiced by drivers can be addressed with little to no financial investment. It’s communication. And Jazrawy said frequent communication with drivers can go a long way toward alleviating their concerns about the top issue – pay.
Communication important
She noted surveyed drivers seemed fairly “forgiving” when there is sufficient communication from leadership and drivers know their employer is doing everything possible to keep them busy and adequately compensated.
Certainty around the minimum miles they’ll get also alleviates some of this pay anxiety. Bradley Gottemoeller, vice-president of Continental Express, said his fleet focuses on guaranteed minimum miles for drivers.
“You can pay a driver $30-$35 an hour, but if you’re not going to give drivers 40 hours a week, they’re still going to take home less pay,” he noted.
Continental assures hourly drivers they’ll get those 40 hours and those paid by the mile get about 2,000 miles a week. Guaranteed minimum pay is a trend Jazrawy said continues to increase among the Best Fleets to Drive For.
We are two years into a trucking recession but Costello said while he’s not forecasting a strong recovery next year, a return to pre-Covid level normalcy is likely in the cards. And for now, I think everyone would welcome normal.