Professional Driver Crisis Squeezes Tank Truck Carriers in Icy Embrace

Aug. 1, 2000
AT LEAST 5,000 tractor-tank trailer rigs sat idle last year because their companies couldn't find enough qualified drivers to put behind the wheel, says

AT LEAST 5,000 tractor-tank trailer rigs sat idle last year because their companies couldn't find enough qualified drivers to put behind the wheel, says Buddy Sexton, president of Quality Carriers Inc, Tampa, Florida. And that's just the number he estimates from talking to his colleagues. The true number may have been much higher.

Unfortunately, the situation in 2000 doesn't appear to be improving. As a matter of fact, it seems to be worsening. If this story were about the seasons, the situation would be a tale of winter with the driver pool locked in an icy embrace. Ironically, carriers have been caught in a Catch-22 situation. While the overall economy has increased business, carriers have been hard pressed to meet the demand.

"The driver shortage, and the capacity constraints it brings, is a very complex issue that pains both carriers and shippers alike," says Sexton.

The driver shortage is further chilled because a majority of drivers currently employed are nearing retirement age. The National Tank Truck Carriers (NTTC) estimates that the average age of drivers within its membership companies is about 50. Add in the current low unemployment rate, as well as the constant driver movement from company to company, and it's easy to see why carriers are concerned.

To meet the bulk truck demand over the next 10 years, approximately 80,000 professional drivers will be needed - and that doesn't include the additional numbers that will be required if the current hours-of-service proposal is implemented by the Federal Motor Carrier Safety Administration (FMCSA).

Although the final outcome of the hours-of-service proposal has yet to be decided, the initial plan is based on five new categories of truck drivers: longhaul, regional, local-splitshift, local, and incidental. Today's logbooks no longer would be required. They would be replaced by mandated computerized electronic recording devices on trucks operated by longhaul and regional drivers. Some form of time-work records would be required for the other categories, but could be main-tained by either the driver or the employee.

Butch Bingham, president of Bulkmatic Transport Company, Griffith, Indiana, believes that if the new proposal is adopted it would not only cause serious transportation problems, but would discourage people from joining the driver ranks. He, like many others in the industry, says the changes in hours regulations would require drivers to spend additional time away from home because of the off-driving-time mandates.

While the driver shortage strikes all trucking companies, the tank truck industry is especially hard hit because many tanker drivers need additional professional qualifications in order to handle hazardous materials and the intricate equipment required for loading and unloading. Further, the requirements don't stop there. Today's drivers must be able to use sophisticated technological tools, such as computers installed in their tractors and at terminals. Holding a commercial driver license without having other skills doesn't begin to satisfy the requirements for a job with a tank truck carrier.

"The most difficult aspect of recruiting is the lack of qualified drivers," says Keith Lewis, senior vice-president at Liquid Transport Corp, Greenfield, Indiana. "We have many drivers who will submit an application and desire to go to work for us, but do not meet our hiring standards-mostly because of safety and driving violations, or lack of over-the-road experience, all of which will not be compromised."

Carriers say that many of their new hires are recruited by their drivers. "The best ones come from our driver referrals," says Steve Niswander, vice-president of safety and compliance at Groendyke Transport Inc, Enid, Oklahoma. "Another thing we have noticed is that those drivers who stay with us for up to a year to 18 months are more likely to remain with the company for longer periods."

In addition to in-house recruiting, Groendyke uses various programs, including 30-second television recruitment commercials in the Oklahoma City viewing area. The Internet has become another recruiting tool. Carriers use their own web sites to attract prospective drivers, and independent driver-search dotcoms have been established by Internet companies.

Don Grossett, vice-president sales and marketing at Liquid Transport, noted that has installed computer workstations at truckstops where drivers can access employment information from the dotcom's clients. Although a relatively new means of recruitment for carriers, it is producing applicants.

As the driver shortage has intensified, employment agencies have begun to specialize in driver recruitment services. Newspaper and trade magazine advertisements also play a role in recruitment. Some carriers are seeking drivers through billboard ads along major highways and are manning recruitment booths at conventions and truck shows where drivers are in attendance.

There has been some discussion of recruiting drivers from other countries, but tank truck carriers are concerned, once again, about hazardous materials qualifications. Some also cite language problems when prospective drivers are not proficient in English.

Locked into the driver crisis, carriers may be unable to meet shipper orders. As a result, revenue falls. At the same time, expenses rise when drivers walk out the door. There are administrative costs involved in separating the employee from the company, including unsettled insurance claims, liability issues that may arise, and unemployment and worker compensation.

Fred Clark, vice-president of ECS Risk Control Inc, Exton, Pennsylvania, points out that when a company scrambles to replace drivers, temporary employees may have to be added. Other employees may become alarmed with the driver exodus, which can interrupt their concentration and interfere with their work.

In addition, managers know the importance of maintaining a veteran pool of drivers who provide an experienced core that is a stabilizing force for any company, particularly where efficient customer service is involved. Almost without exception, drivers are the companies' face-to-face representatives with customers. They can make the difference for success in the carrier-customer relationship. But as experienced drivers continue to leave, or move constantly from one carrier to another, the veteran core has begun to disintegrate and the relationship with customers suffers.

As a result of the threat to companies' success, managers are searching for recruitment programs and following up with training sessions. These actions, too, prove to be expensive. "I've seen industry reports that peg this cost at approximately $10,000 per recruit, which includes the cost of recruiters, phone lines, advertising, back office personnel, training, background checks, drug testing, health-fitness exams, and more," says Sexton. "All of these costs are incurred before a recruit generates one cent of revenue."

"If a carrier has 100% turnover and has average ability to attract new drivers, I would estimate a total recruitment cost at 4% to 5% of total costs," says Martin Labbe of Martin Labbe Associates, Ormond, Beach, California.

Even when drivers can be found to fill truck seats, they require comprehensive training, a costly and time-consuming task. "Depending on the level of training required for the new employee, I would guess training a new hire could be in the 1% of total costs range - probably more for tank carriers due to their unique cargo handling requirements," says Labbe.

Just as recruitment and training require a generous budget, so does a successful retention program, if its goal is to retain drivers valued for their professionalism. The factors that cause a driver to move from company to company are as numerous as the drivers themselves, but one catalyst appears to be the numerous acquisitions, mergers, and company reorganizations that are occurring. Carriers not involved in transitions report they receive applications from drivers who are concerned about their future in the new arrangements. Other carriers say that it's not unusual for a driver to leave because an opportunity at another company appears to be better. Over-the-road drivers may opt for a regional company that keeps them close to home.

One way to keep drivers in the company is to give them opportunities to advance - either within their job as a driver or in lateral movements, says Bingham. By knowing there are promotion programs for which they can qualify, drivers are more likely to seek a future with the company.

"We also have bonuses for referrals and for mentors for the new people," Bingham says. "We welcome new hires to Bulkmatic by having them attend our company training school that we call Bulkmatic University. Everyone attends for a week, and they even get a diploma. We always try to mix some fun with the serious aspects of the training. While our retention is improving, we don't pretend to have all the answers, but we keep trying."

There are sociological changes that also affect driver satisfaction. With more women in the workforce, more men are accepting responsibilities that require them to be at home. As more and more men become increasingly active with their young children, they are preferring jobs that allow more time with the family.

Niswander says his company tries to accommodate drivers so that their time away from home is reduced as much as possible, although that cannot always be guaranteed. At Groendyke, a survey of all company employees has been completed and is being analyzed, says Niswander.

The survey covered subjects like job satisfaction and what areas of the company employees had concerns about. From the extensive data the company received, it plans to develop a stronger retention program by learning what can be done to improve driver satisfaction.

"The survey asked for ways the company could do better in keeping and attracting all employees," says Niswander.

Many carriers agree that increasing driver pay is high on the list for retention. A quick look at driver pay posted on some carriers' web sites shows that a beginning driver in some companies can earn about $42,000 in the first year. Top pay seems to be about $55,000, but these are only estimates. Other retention plans include increased benefits, upgrading equipment, and re-emphasizing the importance of safety.

Solving the driver crisis is crucial for the future of the tank truck industry. Carriers that succeed in maintaining a qualified driver pool benefit in many ways, according to information from Liberty Mutual Insurance Company, Greensboro, North Carolina.

One way trucking companies can benefit is by reducing risk exposure. That can be done by establishing corporate policies that require potential drivers to pass a thorough and rigorous screening process before being hired, as well as continuous training after being hired. This practice may sacrifice potential revenue in the short run because not all potential drivers will be hired, and some trucks will remain idle, the Liberty Mutual information states.

However, the hiring policy is likely to produce a worker compensation and commercial vehicle incident rate that is 50% less than the industry average. The company gains a significant expense advantage compared to its competition because of the lower cost of risk, which would ultimately reduce overall operating expenses.

Emphasizing safety has historically been an important operating function for bulk carriers, but that focus can be applied to recruiting drivers. A high safety standard reaches out to prospective drivers who know the importance of reducing risk - not only for the company, but for themselves.

Sexton points out the value of the Responsible Care initiative that is administered by the Chemical Manufacturers Association. The program commits companies to bettering safety programs and addressing public concerns about the handling of hazardous materials.

"There is great value in the initiative and it pays large dividends for the partner companies as well as for drivers," says Sexton. "There are financial dividends through reductions in risk management costs. Product stewardship efforts have advanced to the next level with improved customer relations, productivity, and labeling. The initiative simply works."

While retaining professional drivers is paramount for companies' survival, drivers often do not improve their situation when they leave a company. The Truckload Carriers Association, in a study partnered with Highway Bound and the Recruiting Resource Center, found that the average driver changes jobs eight times during a 30-year career.

Drivers not only lose wages as a result of movement but lose medical coverage, retirement benefits, paid vacation, and miles due to lack of seniority. That all adds up to more than five cents lost on every mile driven, or more than $100,000 over a 30-year span.

This same driver will be unemployed and uncompensated four months throughout the career because of job changes, will go 21 months without medical coverage, and will lose 84 months of eligibility for 401(k) participation, according to TCA.

"Usually our drivers find that the program is pretty much the same wherever they go," says Bingham. "But they have lost their profit sharing vesting and medical coverage for awhile, and their seniority that places them in a position for good starting times. In other words, if they leave a company they should either be getting a lot more money in the new job, and/or really feel that they are being treated unfairly in their old job."

Even if carriers eventually are able to offer an attractive incentive to prospective drivers, questions remain. Where will the professional driver of tomorrow come from? Some carriers have suggested more active recruitment of women and minorities. Others are interacting with driving schools to encourage training that will build skills for handling hazardous materials and other products unique to the tank truck industry.

So how can carriers improve the driver situation? The industry agrees that it has cut costs about as much as possible, so finding additional funding within a company to cover additional recruitment, training, and retention isn't likely. That means that the rates have to be adjusted. Demonstrating to shippers that costs for hiring and retaining drivers are increasing at a steady clip is not hard to do, but persuading them to respond appropriately can be difficult.

"It is a function of convincing them of the importance of having a well-trained, safe operator on their premises," says Bingham.

"It is becoming more difficult for carriers and shippers to discuss the real issues," says Lewis. "With the mergers and acquisitions that continue from both sides, there is a continual turnover of the decision makers, and the major topic is rates. Some of the shippers do have a sincere interest in the problem of the driver shortage and assist the carriers with this issue. However, the majority of shippers only take note when it has an effect on service or rates."

Sexton notes that some customers join companies in funding safety bonus programs for drivers. "Maybe more shippers will join with us to fund these programs," he says. "Treating the existing driver force as if it were their own will pay sizable dividends in the long run."

J Thomas King, Ashland Chemical Company vice-president, purchasing and logistics, has said that Ashland has had no shortage of carriers to move products. Most of the company's transporters are core carriers, dedicated to Ashland. On commenting about the spiraling cost of diesel in the last year, he said shippers must be willing to cooperate with carriers.

"If they don't, they are going to find themselves without anyone to handle their goods for them," he commented. That statement seems to speak to all the issues that are threatening the industry today, including the driver crisis.

About the Author

Mary Davis