Driver Pay Jumps 1.6% in Third Quarter
Longhaul truck driver pay rose in the third quarter as the truckload market tightened over the summer, setting the stage for a lift in salaries in 2018, according to the National Transportation Institute.
The National Driver Wage Index rose 1.6% year-over-year to 156.26, the strongest growth rate since the first quarter of 2016. The dry van index jumped nearly 2.5% to 152.54, flatbed rose 1.4% to 159.29 and refrigerated increased 1.1% to 156.95.
Last year, the combined index rose just 0.3% compared with 2015. The institute uses a base of 100 to represent conditions in 1994.
“We expect these trends to continue into the fourth quarter. We are at the edge of the cliff that has been talked about for some time but never reached,” NTI CEO Gordon Klemp said on a conference call with Stifel, Nicolaus & Co.
He cited two factors fueling the freight market and competition to keep drivers happy.
One, gross domestic product grew at a 3% annualized rate in the third quarter. If estimates hold after additional revisions, it would be the first time the economy expanded at least 3% in consecutive quarters since mid-2014.
Two, the unemployment rate fell 0.1 percentage point to 4.1% in October, the lowest level since December 2000.
“If we can sustain a vibrant economy, we’ll probably go negative on capacity pretty quickly,” Klemp said. “I don’t see the driver pool changing any time soon, so I think it’ll be quite an adventuresome exchange on drivers and compensation and freight rates.”
In the third quarter, average truckload pay increased 1 cent to 2 cents per mile, minimally, and 4 cents to 7 cents in high-demand markets such as Chicago, Fort Wayne, Ind., and Allentown, Pa.
Carriers are offering sign-on and referral bonuses to lure drivers from their counterparts. Many sign-on bonuses range from $5,000 to $10,000, although Boyd Brothers Transportation, a Daseke Inc.-owned flatbed carrier, last month announced a $14,000 offer.
Bulldog Hiway Express and Hornady Transportation, two other Daseke fleets, introduced new pay scales. Bulldog guarantees a minimum of $1,000 a week in its flatbed division and emphasizes the “work-less earn-more” philosophy, according to CEO Phil Byrd. The plan sets a minimum of 50 cents per mile on an average of 2,000 total miles per week and $300 additional weekend pay after two consecutive weekends on the road.