Truck lines navigated through a multitude of challenges in 2020, among them Covid, skyrocketing insurance rates, new regulations, and an ever-crumbling infrastructure. Rebuilding the driver workforce remains the toughest.
Gary Frantz is a contributing editor for DC Velocity and its sister publication, Supply Chain Xchange. He is a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
The year 2020 presented many defining moments—and unprecedented challenges—for the trucking industry. The last vestiges of the old paper logbooks finally disappeared as trucks nationwide upgraded to standardized electronic logging devices. Drivers and fleets adjusted to new hours-of-service rules regulating how long they could drive, when to take rest breaks, and when to shut down for the night (or day). States increased tolls and fees. Rising insurance rates and “nuclear verdicts” drove some carriers out of business. Congestion and a crumbling national infrastructure made the job that much tougher.
Then the pandemic hit, further roiling the industry but also shining a well-deserved spotlight on truckers as heroes of the supply chain, stepping up to ensure medical supplies, equipment, and essential goods continued to be delivered during the public health crisis.
Through it all, one fundamental question continued to dog the industry: Where are the drivers? Once again in 2020, trucking saw more experienced, veteran drivers call it a career, exacerbating a shrinking driver pool as far fewer younger men and women entered the profession to replace the retirees. Covid-19 also played a part. In exit interviews, some older at-risk drivers cited worries about the job’s exposure to the public amid rising infection rates, while others left the business to care for family members or relatives who had contracted the virus.
FINDING TOMORROW’S DRIVERS
What can shippers and motor carriers expect as they navigate through 2021? Many of the same challenges from last year, with reinvigorating the driver workforce at the top of the list.
For truck lines to be able to provide sufficient capacity to meet the market’s continued demand, it’s all about getting more professional drivers behind the wheel, notes Greg Orr, executive vice president of U.S. truckload for TFI International. Retention and making sure drivers are utilized efficiently and are paid for every hour they work and mile they drive are the key priorities, he notes.
At Joplin, Missouri-based CFI, a TFI truckload subsidiary with some 2,150 trucks, 7,300 trailers, and 2,300 drivers, “we’re really focused on the driver experience, giving them support at all times, reducing downtime, and keeping them moving,” Orr says.
With new recruits, CFI has adopted what Orr calls a “white glove” service, essentially an aggressive orientation program “designed to create a positive experience for the new driver, with constant engagement to ensure they’re developing successfully. It’s like a concierge service,” he notes, adding that new recruits spend their first 90 days on the road with an experienced driver as a mentor.
A similar program of outreach, support, and communication is in place for current drivers as well. The focus (along with competitive pay): keep them engaged and connected; recognize, and help them overcome, the challenges of the job; and most importantly, show them respect and appreciation for the work they do. The result: CFI’s turnover ratio is down 15 percentage points from last year.
Demand for freight trucking services soared in the second half of 2020 and will likely continue strong through most of 2021, Orr believes. “We are starting the day with 105% to 115% [of available capacity] pre-booked,” he notes, adding that in the current market, CFI is rejecting more than 400 loads a day for lack of capacity. “There’s a ton of freight coming in from the ports and from [domestic] manufacturing. This will ultimately challenge a lot of distribution networks.”
IS PAY BY THE MILE BECOMING OBSOLETE?
Average length of haul (read available pay miles) is decreasing for truckload carriers as e-commerce–influenced distribution networks shrink point-to-point moves and become more regional in design, with more smaller warehouses sited closer to each other and end-users. That’s raising the question of whether the industry’s traditional model of pay by the mile for most truckload driver earnings needs to be changed or perhaps blended with other forms of pay.
“Pay is market driven. You have to be competitive,” says Todd Jadin, vice president of talent management and employee relations for Green Bay, Wisconsin-based Schneider Inc., one of the nation’s largest truckload carriers. “Time is such a key component of a truck driver’s day. We have to look at ways to deal with time and distance components,” he says. “How do you align those to make sure you’re giving the driver a market-competitive wage?”
Moves toward salary pay, daily rates, and guaranteed pay are finding increased traction among some carriers. The most important factor, Jadin believes, is “providing a predictable work schedule” with commensurate predictability in pay. “Take out the variability where possible,” he advises, and build “good, solid, respectful relationships with drivers.” Jadin expects driver pay to stay on an upward trend in 2021, adding that “you will continue to see innovative and unique ways to address driver pay.”
Can a truckload carrier fully switch its drivers from mileage pay to salary? For Ed Nagle, president and chief executive officer of Walbridge, Ohio-based Nagle Companies, the answer is yes. “We are an irregular-route carrier that runs a fair amount of multistop loads in the refrigerated sector,” which, he explains, is one of the least driver-friendly segments of the market.
In Nagle’s business, detention—primarily at consignees’ facilities—is a huge problem. Drivers might have had three to five stops per load but because of shippers missing their appointments and unloading delays, they were experiencing 15 to 20 hours a week of wasted time and excess detention, he says. Under the mileage pay structure, drivers earned a bonus over 2,000 miles a week—yet were penalized for delays not of their doing. “Drivers felt pressure to get those miles in even with the [excessive] detention. We were losing drivers, and the general mood among drivers was not the best,” he recalled.
Nagle made the decision in 2017 to move his drivers to salary pay—and hasn’t looked back. He switched to a model based on linehaul revenue per truck per week. “Most of our major costs were [relatively] fixed, so whether it was 250 miles or 450 miles, that truck had to generate a certain amount of revenue per day. It was on us [the management team] to convey that to our customers,” which also led to conversations on how to reduce excess detention.
Today, new drivers at Nagle start with a base salary of $1,400 a week and within six months, depending on performance, can earn an increase to $1,500 a week. They can also qualify for safety and fuel-efficiency bonuses of up to $4,400 per year.
Four years on, Nagle has no regrets about his decision. “More than anything else what our drivers love most about the salary is the financial predictability,” he says, noting that the move brings his company’s pay practices more in step with other industries. “What other professional has a 20% swing in their weekly paycheck based on mileage or when the paperwork was received?”
BUILDING A BASE
In addition to rethinking pay practices, carriers have had to get creative in their recruitment strategies, particularly when it comes to millennials. “It’s been challenging bringing new blood back into the truck driving industry,” says Dave Bates, senior vice president, operations for less-than-truckload (LTL) carrier Old Dominion Freight Line (ODFL). “Seems these younger kids don’t want the manual labor-type work. … They don’t like the look of driving a truck. They’d rather have a computer-based job.”
That hasn’t stopped Thomasville, North Carolina-based ODFL from doubling down on its in-house driving training schools to refresh and grow its driver workforce. The schools draw primarily from ODFL dock workers, who, if they express an interest and are a good cultural fit, are invited to attend the school. The program consists of classroom and behind-the-wheel instruction, leading to a commercial driver’s license exam, which, if passed, enables them to join the ranks of professional LTL drivers—with a significant increase in pay.
The company currently has about 150 students in training and another 100 candidates ready to start, Bates notes. In this market, Bates has found that to acquire new drivers, “we are basically going to have to build them ourselves.” He adds that for already-experienced driver applicants, “[knowing how to] drive a truck will get you in the door for an interview; the hard part is proving you have what it takes to be an ODFL driver and that you fit our culture. That’s the most important thing to us.”
ODFL and other LTL carriers have one recruiting advantage over their truckload counterparts in that the LTL model allows drivers to be home every night and sleep in their own bed, Bates notes. Yet it is still a physically and mentally challenging job, where drivers might bump 15 to 20 customer docks a day.
Bates says ODFL’s focus has been on ensuring competitive, market-based wages, increasing about 3.5%, on average, a year since 2009, as well as sweetening other parts of the total compensation package. “We try to do something to improve the package every year,” he says, noting that in 2020 that included adding two holidays and increasing the company contribution to employee 401(k) accounts.
He added that during the initial surge of Covid-19, the work environment became that much more challenging as shippers, fearing the virus’s spread, would not let drivers enter offices or use break rooms or bathroom facilities. In some cases, wait times also became extended, with drivers having to wait in line over six hours to make deliveries to some big-box retailers.
Over the intervening months, however, instances of drivers being denied basic amenities at shippers’ docks abated. Businesses mostly worked out the kinks of their Covid safety protocols, use of personal protective equipment (PPE) became widespread, and both shippers and drivers became more comfortable with the new environment of personal hygiene, masking, social distancing, and no-touch deliveries.
IT’S STILL ABOUT THE MONEY
John Luciani, chief operating officer for LTL solutions at West Chester, Pennsylvania-based truck line A. Duie Pyle, echoes the basic point being made consistently by many trucking executives. “The industry across the board has to find ways to increase driver pay. That’s one sure thing that will attract more [people] to the industry,” he says, noting that in addition to competitive wages and benefits, Pyle also provides a career path by developing some of its own drivers through its “driving academy.”
With turnover under 10%, A. Duie Pyle considers employee engagement and retention practices a function of its culture and one of its strong suits. Yearly adjustments to its compensation package help support strong new-hire rates as well. In addition to a market-competitive annual pay increase, the company last year shortened its LTL wage progression to top pay from two years to six months. “That’s especially helped with recruiting experienced drivers that worked at other carriers and were reluctant to walk away from top scale they were earning there,” he notes.
Luciani added as well that one sometimes overlooked factor in driver retention is the type of freight you haul. “It’s an opportunity cost” as well as an employee satisfaction factor, he says. “We focus as much on what we don’t put on the truck as what we do,” he adds, noting that the freight that’s the most difficult for the driver to handle is often the costliest to service as well. It’s a “quality of the work” issue that when properly managed, can ensure higher profitability and happier drivers.
At the end of the day, higher pay, respect for their skill and perseverance, and recognizing professional drivers for their value to a working economy will tip the scales. That also means that shippers will have to do their part by partnering with their carriers to eliminate detention time that results in money-costing delays.
PAYING THE “RIGHT PRICE”
Despite carriers’ efforts, the compensation issue continues to bedevil the industry. “Driver pay is still lower than it needs to be,” observes Jeremy Reymer, president of Driver Reach, which provides recruiting and compliance software to trucking firms, noting “they only have so much capacity to earn in a given day or week.”
Satish Jindel, president of research firm SJ Consulting Group, agrees. Asked about the trucking industry’s ongoing labor challenges, Jindel says the issue isn’t a shortage of drivers; it’s an issue of an industry’s “not paying the right price” to attract qualified drivers. “No one else in our society can really understand the quality-of-life issues these warriors on the road experience every day,” he says. “Every minute they have to be alert. No other job requires that level of concentration. If the industry paid what people are willing to drive for, we wouldn’t have a shortage.”
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”