Are driver wait times nullifying carrier pay increases? Are driver wait times nullifying carrier pay increases

Are driver wait times nullifying carrier pay increases?

As carriers continue to try to attract drivers by enticing them with more pay, delays caused by disruptions in the supply chain that show no signs of letting up could be eating away at those incentives.

The American Transportation Research Institute (ATRI) points out that while there is no standard definition of “excessive detention” in the trucking industry, it is generally accepted that any delay over two hours is reasonably defined as excessive.

Where carriers are able to negotiate compensation for shipper-attributable delays, the American Trucking Associations has noted, it is common for delay charges to accrue after two hours at the customer’s facility. But ATA has also acknowledged that because trucking is so competitive, many carriers do not have the leverage to pass detention-time costs on to their customers.

Surging wait times

Since June, average wait times for some of the largest truck-centric industries have been hovering at the two-hour mark. Recently, however, those wait times began shooting past two-and-a-half hours, according to data compiled by FreightWaves (see chart).

“Wait times trended worse during the first and second quarter, remained the same through the middle of the third quarter, but they’re starting to climb again as we move into the peak season,” confirmed Kevin Nadeau, Founder and CEO of True Load Time, a web based application created to address truckload detention and inefficient loading and unloading. 

Are driver wait times nullifying carrier pay increases? SONAR Detention time Top 5 Oct 2021 Resize
Top five longest average wait times in minutes by industry, Sept. 2020-Sept. 2021:
Blue = internet/direct marketing retail; Orange = distributors/retailers; Yellow = oil & gas; Purple = food; Pink = automotive.
To learn more about FreightWaves SONAR, click here

With congestion at ports continuing to back up into the surface transportation links to the supply chain, pay gains made by truckers could begin eroding and continue to do so for months.

“I’ve had guys calling me telling me that what used to take two hours to load or unload is now taking four or even six hours,” Lewie Pugh, vice president of the Owner-Operator Independent Drivers Association, told FreightWaves. “The trucking companies might be bumping up pay another 5 cents a mile, but if I’m sitting at an unloading dock most of my day, that’s not doing anything for me. There’s no doubt that the longer wait times we’re seeing in the supply chain are offsetting pay increases.”

Desiree Wood, an independent owner-operator and president of the advocacy group REAL Women in Trucking, said that due to increased congestion along the supply chain, shippers and warehouses have extended the hours after which detention is paid.

“It used to be two hours, but now it’s after three hours, and sometimes even after four hours,” Wood told FreightWaves. “And when the facility does finally start to pay, that money often doesn’t make its way down to the driver.”

But Steve DeHaan, President of the International Warehouse and Logistics Association, whose members consist mostly of third-party logistics companies with multiple customers at a single location, said that increased wait times are often not the fault of the warehouse facilities or the shippers.

“If you’re a truck driver and you’re given a specific dock time, you have to meet that,” DeHaan told FreightWaves. “If you’re early our members will usually take you for loading or unloading as soon as they have availability, but if you’re late you will have to wait for an opening,” and that can be a bigger problem with the current supply chain backups, he said.

Falling wages

According to a pre-pandemic study conducted by the U.S. Department of Transportation’s Office of Inspector General (OIG), detention time was estimated to reduce drivers’ annual earnings collectively by $1.1 billion to $1.3 billion, and between $1,281 and $1,534 per driver. That translated to a reduction of between 3% and 3.6% in a driver’s average annual income.

The study noted, as pointed out by the ATA, that some of that loss is offset by carriers that charge shippers detention fees and then pay their drivers a portion of the money recouped.

“On the other hand … our estimates may understate the loss of income faced by drivers and carriers because small carriers report experiencing detention more frequently than larger carriers and receiving compensation from shippers less frequently,” according to the OIG report.

Pugh says the compensation issue could be resolved if Congress eliminated an exemption in the Fair Labor Standards Act. The exemption was codified in 1935 and was intended to prevent drivers from taking on too many hours. But Pugh and OOIDA have argued that the law has evolved into an excuse for keeping driver pay low.

“If you remove the exemption, carriers will have to start paying them for their time — including when drivers are sitting idle at a shipper or a receiver,” he said, adding that it would also improve safety. “If you’re paid by hour instead of by the mile, you don’t have to make up pay by speeding through work zones or pushing past hour-of-service limits because of this ‘beat-the-clock’ mentality.”

Government intervention down the road?

While there currently is no push in Congress to make changes to the FLSA, buried in the 2,700-page bipartisan infrastructure legislation is a provision that directs the Federal Motor Carrier Safety Administration to contract with the Transportation Research Board to conduct a study of the impacts of various methods of driver compensation on safety and driver retention, including looking at hourly pay and payment for detention time.

In addition, the FMCSA itself initiated in 2019 a formal Request for Information on truck driver detention times that occurred during loading and unloading.

The request received close to 600 comments, with some commenters, including the ATA, questioning whether FMCSA had the authority to regulate a market-based problem with insufficient evidence to show that safety is affected.

It may be a moot point, as sources at DOT told FreightWaves that FMCSA is not likely to move ahead on the issue anytime soon.

“We keep trying to attract drivers by bumping up pay but at the end of day, truckers just want to drive,” Nadeau said. “We want drivers to be efficient and maximize the hours they have available to drive, and if we can get a handle on that this industry will be much more attractive. From a compensation standpoint, a lower pay rate per mile can be equal to a higher rate per mile if turn times are reduced. Truckers want to be able to make money that compensates them for their time and allows them to be home on the weekends.”

Click for more FreightWaves articles by John Gallagher.

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