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TCP survey: HOS to cut productivity, wages to climb, entry-level drivers sought

Transport Capital Partners’ (TCP) fourth-quarter survey results show new Hours of Service are impacting productivity, carriers actually think wages will climb, and more entry-level drivers are expected to be sought by fleets.

Increases in rates and improved accessorial charges have yet to materialize for many carriers. And they will look to increased productivity as a means to raising their bottom lines, TCP stated. However, the new HOS regulations appear to have significantly impacted that avenue, the group added.

Seventy-eight percent of carriers reported HOS as having some impact on productivity. Forty-one percent expect the impact will be less than 5 percent. But an almost equal number (37 percent) say the new regulations will have more than a 5 percent impact. Amazingly, almost six months after the changes were implemented, 16 percent of carriers still have not determined the impact.

With a loss in productivity (i.e., miles) under the new HOS regulations, it would seem to follow that driver wages would also fall. However, capacity increases and the need to find more drivers will inevitably push carriers to raise wages. But in this environment of static rates, do carriers really believe they can raise driver wages?

The answer, according to this survey, is “yes.” Seventy-two percent of carriers expect to raise wages, albeit modestly (from 1-5 percent). The expectations are not even across the board: 81 percent of larger carriers think wages will increase 1-5 percent compared to only 50 percent of smaller carriers. Thirty-five percent of smaller carriers think wages will increase 6-10 percent compared with only 14 percent of larger carriers.

"We surmise the pressure of unseated trucks and higher turnover levels may be driving some carriers to higher pay increases," notes Steven Dutro, TCP Partner.

With the many changes taking place in the regulatory and economic environment, carriers are also reviewing their labor policies. Currently, less than 30 percent of carriers hire inexperienced entry-level drivers. Larger carriers are twice as inclined to spend the time, money and effort to develop entry-level drivers than are smaller carriers (33 percent vs. 15 percent).

Only a third of carriers presently use entry-level drivers. It appears that number is set to grow, with slightly over half of all carriers expecting to soon be training and utilizing inexperienced, entry-level drivers. Larger carriers expect this option at a rate of more than 2:1 over smaller carriers (64 percent vs. 25 percent).

While a slight majority of carriers are interested in utilizing entry-level drivers, a stunning 84 percent of carriers are willing to support allowing younger, properly trained drivers to enter the driving pool.

“We believe this means they support other carriers hiring and training younger driver so that they can then poach them later,” comments Richard Mikes, TCP Partner.

Carriers indicating they wish to exit the industry in the next six months remained at 11 percent, the same as last quarter but down slightly from 13 percent a year ago. However, 15 percent of smaller carriers are thinking about exiting the industry in the next six months if revenues do not improve. This number contrasts with 10 percent of larger carriers.

Those carriers wishing to sell their company in the next 18 months dropped to 11 percent —  the lowest it has ever been. More smaller carriers want to sell than large carriers (19 percent vs. 8 percent). Even with all the reports of carrier acquisitions this quarter, the overall number of carriers wishing to buy a company in the next 12 months dropped slightly from 47 percent to 42 percent, with buyers concentrated among the larger carriers at 50 percent vs. 27 percent.

“TCP experience shows pricing continues to be a focal point, with buyers remaining conservative and hesitant to pay ‘blue sky’ except for carriers with excellent operations or significant strategic benefits,” states Mikes.

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