This month we continue our new feature, “Ask the Fleet Expert.” We have asked leading experts to answer your questions on a variety of subjects in a monthly blog post. The experts answering your questions include:
- Dean Croke, DAT
- Chris Henry, CarriersEdge
- David J. Osiecki, Scopelitis Transportation Consulting (STC)
Question 1: Do you find drivers choose a carrier with a sign on pay and incentive payouts over carriers that do not?
A: The allure of sign-on bonus and other one-time lump-sum incentives has worn off for both carriers and for quality drivers. Almost every carrier that I have spoken to that has ‘tested’ out sign-on pay, has reported limited success in attracting the right driver(s) for their network, and their company. However, there is a major difference between one-time sign-on bonuses (typically with multiple strings attached), and long-term incentive compensation structures that reward safety and productivity. Once a carrier finds the right formula for incentive-based compensation, it can dramatically affect both the bottom line and their overall risk profile. In short, a good incentive-based compensation can be a win-win for companies and drivers. Some of the key elements of an effective driver incentive-based compensation structure are:
- Transparency – The driver needs to be able easy calculate the outcome, if they achieve the expectations set by the plan. If the formula for achieving a target requires too many inputs or variables, the frustration will turn into lower productivity and an erosion of trust.
- Controllable Variables – Only use variables that are within the control of the driver. A lower rate per mile for a particular lane is not the driver’s fault. However, maintaining safe speed and proper following distances are definitely within their control.
- Pull from the Top – Increasing the average productivity and risk profile of a carrier starts with establishing the benchmarks of possibilities within the current driver base. Once you’ve determined the “test” set of variables, run the incentive-compensation program in “test” mode for six months. This will allow you to work out all the bugs in the plan, but also identify the top-performing (perhaps top 25%) drivers in the fleet. Celebrate these drivers publicly, make the others realize what is possible. There will inevitably be a rising tide of increased performance.
Question 2: Or do you feel most drivers would rather have an overall higher pay increase without incentives?
A: In order to get a driver in a seat these days (and keep them there), you must be willing to pay a competitive wage as a table stake. However, the range of performance between worst and best (e.g. productivity, inspections, mileage) can be significant. Giving everyone the same pay regardless of performance rewards mediocrity. Adding a lucrative incentive-based compensation package on top of competitive base rate/wage is a winning formula.
Answered by Chris Henry, VP Customer Experience & Recognition Programs, CarriersEdge
Chris Henry was recently named as vice-president of customer experience and recognition programs for online driver training program CarriersEdge. Henry has spent his entire 20-year career in transportation, most recently serving as manager for the Truckload Carriers Association’s (TCA) Profitability Program. He was also vice-president of carrier profitability at FreightWaves. Henry earned an MBA from the University of Massachusetts and a Bachelor of Commerce degree from Nipissing University.
Question 3: What do you think “peak” season will look like this year? Will we see a rebound?
- The economic recovery appears to be moving sideways as the COVID-19 virus continues to impact different regions, counties and cities at different times. There’s a strong chance we’ve already had our peak season as shippers who experienced inventory control failures and stock outages in March, April and May, rushed to re-stock depleted inventories in June and July. A lot of this inventory for back-to-school and summer retail shopping came from Asia via West Coast ports where we observed a surge in imports in July.
- This freight volume has gradually made its way into all of the large on-demand fulfillment freight markets across the country ready to meet online shopper demand. During the lockdown and now as more people adjust to working and eating more at home, we’re seeing a lot of one-off purchases that have been a part of the recent surge in imports. There’s only so many bicycles, bike helmets, camping chairs for eating out, patio furniture, new office chairs, new carpet, and computer monitors people can buy. Any rebound in the freight economy will be influenced heavily by the next stimulus package, which makes it difficult to predict where consumer demand is headed. What’s certain though, is that shippers are not prepared to see a repeat of recent massive supply chain disruptions during the upcoming holiday shopping season, and that’s why the peak-shipping season we normally see between now and October may have already occurred in July.
Answered by Dean Croke, Chief Industry Analyst, DAT
Dean Croke has a long history in the trucking industry. Now at DAT, Dean was previously Chief Insights Officer at FreightWaves, where he was active in vehicle telematics, data analytics, data science and standards development at BiTA. Prior to joining FreightWaves, Dean was Vice President of Data Products at Spireon and head of Omnitracs Analytics prior to that. He has over 40 years of experience in trucking, fleet ownership and management, supply chain management, data analytics and insurance risk management. Dean still holds a CDL and has completed over 2 million miles as an over-the-road driver in Australia prior to moving to the U.S. in 2000.