Dive Brief:

• Heartland Express will give drivers pay increases, according to a Wednesday news release. The carrier will bump pay by an average of 6% across the current driver fleet, but increases go as high as 12.2%, depending on region and related home time, fleet officials said.
• The pay raises will extend to new hires, too. New hire rates will start as high as 56 cents per mile for drivers with one year of qualified experience to 60 cents per mile for 10 years of qualified experience, Heartland Express officials said. The fleet said it pays drivers who have been with the company for a long period of time, along with other factors, up to 65 cents per mile.
• The pay raises come as fleets struggle with a driver shortage that is tightening capacity and driving up TL spot rates.

Dive Insight:

Fleets are doling out pay raises for multiple reasons, such as a slowed pipeline for new drivers coming through training schools because of COVID-19. Some industry observers predicted driver pay raises months ago as they observed capacity tighten and training slow.

Other reasons are ones that have dogged the TL industry for years, in part because of long hauls and time away from home. In the first half of 2020, turnover for large TL fleets — with at least $30 million in annual revenues — was 88%, Bob Costello, chief economist for the American Trucking Associations, said in an email. Small TLs was 65%, and LTLs, which give short-haul drivers more time at home, was 12%.

Costello estimated in July 2019 that the shortage could grow to 100,000 drivers in five years, and 160,000 drivers in 2028.

The turnover and other issues could bump up TL averages. The low-end of pay is 48 cents per mile, although top pay can be as high as 83 cents per mile, according to the Truckload Carriers Association.

"I would be shocked if there weren't pay increases announced in Q4," said Max Farrell, CEO of WorkHound, in September. "[Fleets] are trying to figure out how they can get a competitive advantage in pay."

And as predicted, those Q4 pay raises have begun.

Schneider reported on its blog in September that it upped its pay for drivers, giving new team drivers with at least one year of experience an increase of 4 cents per mile. Drivers with less than a year of driving experience would get a 2-cent increase when starting with Schneider, the fleet said.

U.S. Xpress reported in a September forecast that freight volumes would put upward pressure on wages.

"As the economy slowly recovers, freight volumes will rise and drivers will become an increasingly precious commodity," the U.S. Xpress report reads. "In recent months, the industry has seen significant increases in driver turnover, which is exacerbated by lower CDL school enrollment and the recently launched Drug and Alcohol Clearinghouse."

Now, the Q4 pay raises for long-haul drivers will accelerate. Likely, firms will be public about them, as they seek to inform drivers.

"I think this is just the start of over-the-road driver wage increases," said Craig Fuller, CEO of FreightWaves. "With strong demand in industries that compete for employees — construction, on-demand apps, last mile, parcel, and warehousing — carriers are going to have to pay up for drivers. Additionally, these pressures will come from other carriers as well and the temptation of seasoned drivers to start their own fleet."

Fuller said the carriers that are able to recruit and retain their drivers will find opportunity for significant rate increases.