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Heads or Tails?

by Jim Park
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Odd, isn't it, that carriers are having such a tough time finding good drivers? With so many of them hanging around right now, you'd think carriers would be having a field day picking and choosing.

Despite plenty of evidence to the contrary, it seems more than a few drivers and owner-operators might still believe this.

A phenomenon called the driver shortage reared its head about a decade ago. Then, it was something the visionaries worried about. They saw it coming. The Americans saw it coming too, and it became a problem down there five or six years ago. It's really becoming a serious problem in Canada only now.

As you've read on these pages in the past, carriers are warning shippers of an impending capacity crunch - a real shortfall of equipment to serve the needs of Canada's manufacturing community. It's not that there isn't enough hardware, but a shortage of the software needed to run it. Drivers, that is.

David Bradley may have said it best. The president of the Ontario Trucking Association was speaking about the driver shortage to a gathering of shippers in December 2003. "There's not a lot of excess capacity out there," he told them. "There's no point in us [carriers] going out and buying more new trucks, there just aren't the people to drive them."

It's hard to get a handle on just how severe the shortage is, and while the real shortage may not be as dire as it seems, it will get worse. A study conducted by the Canadian Trucking Human Resource Council (CTHRC) in 2004 predicts the number of new entrants to the industry will more or less satisfy demand for new drivers over the next couple of years. However, by 2007, all bets are off.

Part of the problem is the shortage perceived by individual carriers taking part in these surveys. The estimates are sometimes clouded by the belief that if capacity existed, market share could be increased. If they had the trucks and the drivers, they could move more freight. If they have trucks, but no drivers, they perceive a shortage. So if each of 10 carriers suggested they could use another 10 drivers, we'd have a perceived shortage of 100 drivers. Real? Maybe, maybe not.

And there's another factor making the extent of the shortage more difficult to determine: churning, or turnover. Carriers are hiring drivers at a great rate, but they're robbing them from their competitors. And drivers aren't doing much to slow the turnover rate because they see quitting one carrier and rehiring with another as just part of the game.

The recruiting exercise has made churning seem like an attractive option compared to sticking it out and working through the problems or clearing up the misunderstandings. Carriers all paint their packages as the best of the best, and drivers, having honest difficulty in wading through the smoke and mirrors, have begun to believe that things can't be that much different from one carrier to another. After all, there's only so much money in a ton of freight. Right? Not exactly.

Perception is Reality
Part of the problem lies in making sense of what are arguably some of the most complex pay-and-benefit packages in any industry in Canada. That's often what separates one carrier from another, but it's hard to tell on paper.

Steve Lutes works in the safety and compliance department of Ayr, Ont.'s Liberty Linehaul Inc. His drivers are well paid, but he says he's constantly having to explain how Liberty's package stacks up against a competitor offering what appears to be a higher rate.

"That's a frustrating thing. You try to design packages that deal with the issues you have, but the more splintered you make the package, the harder it is to figure out," he says. "When you start with a base of 35 cents, and add the bonuses and paid extras that we offer to accommodate the odd stuff we get into sometimes - and stack that against a mileage rate of 40 cents - it gets confusing."

Money, of course, is an issue, but when was the last time you heard a driver say they were making enough money? The thing is, we'd all like more, and it's easy to fall victim to the perception that the next guy might be doing better - unless you sit down and work it all out.

In your search for the perfect driving job, do you look beyond the mileage rate, or just take the published rate at face value? Derek Deferro of Winnipeg made a startling discovery recently when he conducted a detailed pay-package comparison of several carriers he was considering.

"I found quite a difference in the pay schemes as listed in the recruiting ads, but at the end of the month, two carriers came up as good possibilities. Closer comparison soon showed me which carrier was the better choice," says Deferro. "It wasn't dollars that swayed me, either. I concluded that I could settle for $200 less per month with weekends at home, as opposed to being away 12-14 days at a time. The high-mileage job I looked at offered a better mileage rate, but with hours of service, a layover or two, and non-paid waiting, it wasn't quite as good as it first appeared. The short-turnaround job paid almost the same. I worked a bit harder, but I had more time at home."

Deferro says when he went job hunting, he asked the carriers to produce trip sheets for a couple of random drivers, and he compared what they had done over a 30-day period.

"I couldn't have worked it out on paper," he says. "The trip sheets really helped in the comparison."

Liberty's Lutes says when drivers perceive a problem with their pay, it becomes a problem. To that end, he says he works with his drivers to reinforce the strength of his pay package.

"We show them how they make money here," he says. "The drivers are out there reading the ads, and they get worried when they see big numbers at other carriers. We go through what our drivers make in a week, we show them how they make it, and we show them a gross per-mile or per-hour rate. That's where we make the case."

The fact remains, there are only two numbers that really count in this discussion: how much you make, and how much it costs you to make it.
You can take a number like $1000 per week and divide it by hours or by miles, or by a combination of miles, hours, picks and drops, or whatever. At the end of the week, it's still $1000. If you can make $1000 in 60 hours ($16.66/hr), or $1000 in 80 hours ($12.50/hr), which is the better deal? Or how about $1000 in 90 hours ($11.11/hr)?

The difference here is in the packaging. The first example, $1000 in 60 hours, might represent actual logged time at a carrier that held tight to the HOS rules. The second might represent the total number of hours worked if the carrier wasn't inclined to pay for waiting time and the driver logged it off-duty.
Any way you look at it, it's a thousand bucks. My preference would be the first example.

Demand and Supply
What does $16 an hour have to do with the driver shortage? It's an arbitrary example, obviously, but for drivers who are looking to make a move to another carrier it illustrates how confusing pay packages can get, and how easy it can be to make a mistake.

Deferro did a good job in capitalizing on the shortage of drivers. He said two of the carriers were unwilling at first to reveal their trip sheets. Ironically, one of those was the one he chose, based on the time at home. He was firm in wanting to make the comparison, and wasn't about to find out the hard way that he'd made the wrong choice.

The other thing he did right was to start looking before he had to make a move.

"I took my time with this, about three weeks in all, once I'd made the initial call, scheduled interviews and did my comparisons," he says. "I didn't have to change jobs, but when I found out there were options that suited me better, I decided to leave."

As Deferro discovered, comparing pay packages pays. It's useful to examine the package from several perspectives: start with weekly, monthly, and annual earnings. You might find that the work is seasonal, meaning better earnings at certain times of the year, so see if the annual numbers stack up.

If the take-home pay is suitable, look at what you have to do to earn it. Trip sheets should show how the money was made, and it should be clear whether the carrier has a fair package with achievable bonuses and a realistic work routine. If a carrier is promoting an unusually high mileage rate, ask under what circumstances that rate was earned, i.e., a 10-drop trip to New York City, or a simple pin-to-pin round-trip to the coast and back.

Extras like picks and drops can add up, but if the carrier hardly ever does LTL, it's not going to pay that well at year's end. Or, if the mileage rate is high, but the available miles are low, it's not going to pay, either. That's where the real-life trip sheet comparisons come in handy.

And with a shortage of drivers about to become a crisis in Canada, it's worth sitting down with a few carriers to see what they have to offer. The pots are becoming sweeter, but you'll never know unless you ask. And at the end of the day, the carrier you're with right now may just be the best deal around, but again you may never know unless you ask.

We'll be going deeper into how to compare carriers over the next several months. There's a lot to be taken into account, and it's not all financial. Stay tuned.