THE Kenan Advantage Group Inc garnered headlines last year when management announced a significant driver pay increase. However, that was just part of a wide-ranging strategy developed by North America’s largest bulk transportation and logistics provider to proactively address the growing truck driver shortage.
KAG announced in mid-January that a majority of its customers had agreed to pay higher rates to support the driver pay increase, which took effect at the beginning of the year. The program calls for guaranteed pay increases for the next three years to help significantly elevate driver pay to levels that successfully attract new drivers required to meet the capacity and growth needs of the organization’s blue customer base.
“As the flagship carrier in the tank truck segment, it is important that we boldly assume the responsibility of protecting our customers from the painful impacts of the driver shortages,” says Dennis Nash, Kenan Advantage Group executive chairman chief executive officer. “A potential tsunami is building now that presents serious consequences for the entire trucking industry if not addressed.
“There are many elements to creating a highly attractive work experience such as new equipment, advanced technology, safety support, respect and appreciation from management, and many more. We’ve spent an enormous amount of time, energy and money enhancing all of these as part of our ‘Employer of Choice’ promise.
“Ultimately, however, we have to provide a compensation package that can compete effectively with other industries for what is a shrinking pool of available candidates. This move on wages provides our drivers with the certainty that they will experience an improving personal financial situation well into the future.”
Bruce Blaise, president and recently appointed chief executive officer of Kenan Advantage Group, adds: “The perfect storm is upon us. Developing factors include the coming industry-wide driver capacity impacts of the ELD (electronic logging device) mandate, an economy at near full employment, and an aging workforce. Estimates indicate that as many as 20%-25% of current drivers will be retiring over the next five years. We simply have to make the adjustments needed to attract new drivers to our company and industry. It’s also critical that we retain the drivers who are already part of our team.
“We are thankful, but not surprised, that our valued customers understood the consequences of an impending driver shortage and took action with us to support this critical role within our country’s economy. Our customers recognize that the safe and secure delivery of their products is imperative to their business success. Similarly, we understand the importance of retaining and recruiting the best drivers in the business.
“We’re doing graduated pay increases over the next three years to move the needle in a positive direction for our drivers. We are driver centric, and we want to be the employer of choice and help deliver a better life for our drivers and support employees. We are confident that we are on the right track.”
Drivers account for 7,185 of the nearly 10,000 KAG system employees. Fleet operations across four asset-based groups run 6,687 tractors and 10,747 trailers.
The KAG system includes five groups consisting of Fuels Delivery, Specialty Products (chemicals and liquid food), Merchant Gas (industrial gases), KAG Canada, and KAG Logistics. The company has terminal and satellite locations in 40 states and five Canadian provinces and territories, with the ability to deliver within all 48 contiguous states, Canada, and Mexico. KAG also provides specialized supply chain logistics services through KAG Logistics.
Refined fuels transportation makes up between 50% and 60% of KAG’s business. However, chemicals and other specialized commodities continue to gain ground.
“KAG is a very diversified operation serving many industries,” Blaise says. “Diversification has been one of our most important strategies for growth. It smoothes out the peaks and valleys of an ever-changing economy.”
KAG serves more than 2,000 customers and makes almost 3.4 million deliveries annually. With its broad geographic reach and deep infrastructure, KAG is a market leader in the sectors it serves.
To deliver the service its customers expect KAG provides best-in-class drivers and equipment. “We still believe tank truck drivers are the cream of the crop,” Blaise says. “Our drivers are highly skilled professionals operating quarter million dollar machines and doing critical work. They are also the face of our company.”
Finding and keeping the best drivers takes more than pay raises, though. “Higher pay certainly plays a role and has created plenty of buzz in the overall driver community, which has benefitted our recruiting efforts,” says Becky Perlaky, KAG executive vice-president, safety & compliance. “We invest a lot of time and money to attract the right drivers who fit our system. We also engage our driver force in the recruiting process. We encourage their participation by paying referral bonuses, and we have even developed a referral app for cell phones.”
When considering applicants, KAG management looks for a solid 10-year work history with no indication of job hopping. Drivers must be at least 23 years old and should have at least one to two years of tractor-trailer experience.
“We don’t hire anyone fresh out of a truck driving school,” Perlaky says. “We provide some flexibility for military veterans who drove trucks during their time in the service. Veterans who apply with us may already have the required one to two years tractor-trailer experience and may need only minimum training on the commodities and type of vehicle operating.
“Our continued effort and commitment to hiring veterans has included increasing the number of vehicles with automatic transmissions throughout our fleet and a military program that provides a guaranteed pay package during training and extensive mentoring of in-cab training. This program is focused on ensuring candidates remain safe as they continue or begin their driving career now that they are home with us.
“This focus on hiring veterans has drawn 860 individuals with military backgrounds to our driving fleet since 2015. In our industry, reliability matters. We have the ability to place candidates nationwide local, regional, or over-the-road positions and further have the ability to begin the qualification process as they are completing the Transition Assistance Program (TAP) and other friendly military functions.”
Regardless of experience, all newly hired drivers go through a training program before being sent out on the road. KAG has driver training centers with on-site equipment and pump exercises in Joliet, Illinois, and Baytown, Texas. Training also is done locally at KAG terminals.
New hire training typically runs about three weeks and includes an orientation on KAG and its policies. New hires also go through Smith System Defensive Driving training for safe driving. Plenty of time is spent with KAG’s driver trainers who reinforce safe driving skills, regulatory requirements, and safe product handling.
Training updates are scheduled as needed, and drivers attend quarterly safety meetings at their home terminals. Each driver room has a computer terminal that can be used for training programs and corporate communications.
In addition to the latest update on the electronic driver log mandate, recent safety meetings offered reminders on slips, trips, and falls and roadside inspections by commercial vehicle enforcement personnel. Defensive driving got attention along with safe work procedures and proper use of personal protective equipment.
Training sessions typically include a reminder of just how important each driver is to the company. One recent program stated that KAG drivers are the best of the best in the transportation industry and invited drivers to carry KAG business cards.
KAG management is working continually to refine the driver selection, screening, training, and on-boarding process. Terminal managers and trainers are required to conduct reviews with new hires at 30-, 90-, and 180-day intervals.
Throughout the selection, training, and review process, drivers receive a consistent message that they are part of a work family with a career path and a wide range of options.
“We offer job flexibility,” says Ralph O Lee Jr, KAG chief human resources officer. Drivers can choose local or over-the-road work. We are the only tank truck company with deliveries to all 48 states in the continental United States, along with Canada and Mexico. We offer our employees the opportunity for transfers across the system. These transfers can be permanent or temporary.
“Drivers also can pursue opportunities as driver trainers and in safety and dispatch. We try to build our management team from within, because we want people who have bought into the KAG system and know that the driver is our biggest customer.”
Perlaky says approximately 150 transfers have been approved for drivers over the past year. “We make it easy for them to move,” she says. “They just have to reach out and we will coordinate.”
Career-path programs certainly play a role in driver retention. KAG boasts a relatively modest driver turnover rate that remains at 23% year after year.
However, dispatchers may be the biggest single factor in driver retention and satisfaction. KAG has moved aggressively to make sure it has the best dispatchers in the industry.
A 16-segment video training program is now in place for dispatchers, terminal managers, and field support staff to show them how to deal effectively with drivers and other employees. KAG initially targeted 850 people in driver management roles, and the program eventually will be expanded across the entire management team.
“The program is paying off with better communication between dispatchers and drivers,” Lee says. “All too often dispatchers lack skill in building relationships with drivers. Drivers don’t know you care until you show them that you do. We have to follow through on anything we tell a driver, and we have to be consistent day after day after day. We can never take a day off from that. It’s all about building and maintaining trust.”
A better driver work environment also is coming from the equipment side. “We’ve recently invested a lot in fleet equipment updates and upgrades,” says Kirk Altrichter, KAG vice-president of fleet services. “We’ve shifted to a seven-year replacement cycle for our tractors.”
A shorter replacement cycle means about 600 new tractors annually for the tank truck carrier. Daycabs account for 75% of the tractors. Tare weight ranges from 14,000 to the mid-15,000 pounds.
The latest purchases have been for Peterbilt Model 579s with PACCAR MX-13 engines and automated transmissions and Meritor axles. Tractors are specified with Omnitracs IVG electronic driver logs and the Bendix Wingman Fusion system that includes roll stability, collision avoidance, and lane departure warning.
The lane departure system includes a front-facing video camera. KAG also is testing some tractors with inward facing cameras as well.
For product handling, tractors have Blackmer or Roper pumps. The fleet also uses 32-cfm tractor air compressors for product handling.
Other tractor specs include SAF Holland fifthwheels, Michelin tires, and Accuride aluminum disc wheels. The KAG fleet runs a mix of dual and widebase single tire configurations.
On the trailer side, fuel tankers make up 65% of the fleet. LBT Inc builds the four-compartment, 9,500-gallon DOT406 trailers. All of the trailers have double-bulkheads. Tank hardware includes Betts domelids and internal valves, Dixon Bayco API adapters, and Flo-Tech overfill protection.
For chemical hauling, Brenner is the primary tank trailer supplier. The newest DOT407 stainless steel tanks have a 7,000-gallon capacity.
Trailer air disc brakes are a mix of Bendix and WABCO, Hendrickson Intraax axle/air suspension systems, and a mix of Hendrickson Tiremaax and PSI tire inflation systems.