The Truckers’ Paradox – Revenue Up, Driver Pay Down

As outlined in a recent New York Times Article by Neil Irwin, a major publicly-held trucking company, Swift Transportation (NYSE – SWFT), recently announced quarterly results and the stock promptly plummetted nearly 18%, because, the article claims, there was “too much” business and the company was constrained by “the challenging driver market.” Indeed, Swift proclaimed in it’s quarterly release, “[o]ur driver turnover and unseated truck count were higher than anticipated during the second quarter of 2014. Therefore, we sold more trucks in the second quarter to offset the impact of idle equipment, which drove additional gains on sale of equipment during the second quarter of 2014. After assessing the current and expected environment, we believe the best investment we can make at this time, for all stakeholders, is in our drivers. Our goal is to clear the path for our drivers by helping them overcome challenges, eliminate wait times and take home more money. We believe we can accomplish this through improved productivity and enhanced pay packages. Based on results we have seen thus far, we believe our drivers will stay with Swift, which will further improve our productivity and safety. These operational improvements, combined with rate increases from our customers, should help pay for the investments we are making in our drivers; however, we expect to have cost headwinds in the latter half of 2014 as the investment in our drivers will be more immediate and the benefits are expected to be derived over time. We believe by making these investments now, we can deliver on our goals for 2015 and beyond.”

In other words, many truck drivers left Swift last quarter and that caused a decrease in operating income. In order to offset the drop in income, Swift sold trucks and equipment. However, Swift has now made a public proclamation in a document regulated by the Securities and Exchange Commission (SEC) that its best investment it can make is in its drivers including “enhanced pay packages.” Interestingly, Swift used the term “stakeholder (those who may not own stock, but have a stake in the company)” instead of “shareholder (those who own stock in the company)” and claimed to care about those who do not own company stock. This definition would include drivers and members of the driving public who are indirect stakeholders because they are affected by safety decisions of the company.

Driver Log "Off Duty"
Driver Log “Off Duty”

It’s no secret that driver pay has proportionally decreased through the years and wrongly so. Make no mistake, truck drivers are and should be treated as professionals. They must:

  • be familiar not only with the operation with an expensive and potentially dangerous 80,000-pound machine
  •  but also, learn a set of complex regulations governing nearly every aspect of interstate trucking;
  • endure weeks and months away from family and long hours on the road.

The quarterly filing suggests many drivers are leaving big companies or the industry, as a whole. This fact raises the prospect that departing drivers will be replaced with less-qualified drivers.

Swift and other industry leaders have the opportunity to stop this exodus and increase trucking safety by increasing the pay and benefits to truck drivers. By doing so, they likely would cause other truck companies to follow its lead. An increase in pay packages likely would result in better-qualified drivers entering the profession, safer driving, fewer claims and decreased payouts for catastrphic injuries caused by driver error.

For the benefit of all Americans, let’s hope the truck companies do what they have promised to do and raise driver compensation to a level commensurate with truckers’ level of responsibility and the potential for harm when under-qualified drivers take the wheel.

Interstate Trucking Litigation Group Journal

At the 2014 AAJ Convention in Baltimore, I had the privilege of being appointed Co-Chair of the Peer Review Committee for the Interstate Trucking Litigation Group Journal. The Journal is a quarterly publication intended to address cutting-edge issues affecting trucking safety and the specialized area of legal practice. Articles are authored by the chosen contributors from among the hundreds of members of this group. 

Lack of Side Guards on American trailers poses safety risk to American drivers

People may be surprised to learn that many other country safety standards exceed U.S. standards regarding truck-trailers. One example is the area of side “underride” protection. Because a trailer lies much higher than a standard passenger vehicle, when an automobile runs into the rear of a trailer, the results were normally devestating and severe injuries or death would often occur when the car went under the trailer. Then, new industry standards were introduced that required the use of “guards” on the rear of trailers. These guards kept automobile passengers from passing under the rear of the trailer and would often save lives.

However, in the United States, the same standard was not required on the side of truck-trailers. When a truck pulls out in front of an oncoming car, the car will usually go under the higher trailer, causing greater damage than if the side had been guarded.

Many other countries have implemented mandatory safety guards on the sides of trailers. One example is shown below:

(Note that both the rear and sides are guarded by a protective railing not found on the sides of U.S. tractor-trailers)

New minimum insurance limits proposed for interstate trucking companies

Currently pending is proposed leglislation to increase the minimum mandatory insurance limits to be carried by interstate trucking companies. The minimum, set in 1980, for non-hazmat trucks that exceed 10,000 pounds gross weight is only $750,000.

Given the potential for catastrophic and life-altering injuries which can occur on truck vs. automobile collisions, this increase is vital. In many instances, the costs of medical care alone can exceed the current minimums and leaves nothing for non-economic human losses for elements including pain and suffering, permanent injury, mental anguish, and impairment of capacity to enjoy life.

In sum, the minimum insurance requirements have not kept pace with ever increasing costs of healthcare and inflation. These increases are needed to address this shortfall.

Trucking industry-oriented groups have claimed there is not enough data of catastrophic claims to support the mandatory increase and have voiced opposition to the increases. The Federal Motor Carrier Safety Administration has wisely chosen to study this issue and to consider changes for the protection of all motorists. Many trucking companies lack assets which leave many people and families vulnerable to having to rely solely on government assistance in the event they should suffer serious injuries. Stay tuned and let’s all hope these long-overdue and important changes are made. 

How do trucking companies hire drivers?

Trucking companies must investigate the background of every prospective driver.  The federal regulations require it.  Since turnover of truck drivers can be high and many drivers jump from job to job, the company safety director may need to contact many different past employers. The reason for this is simple: a truck company should not hire a driver who has a poor driving history or had problems in his or her past jobs.

When a truck company does not fully investigate both the driving history and the full employment history of the driver, dangerous drivers can cause catastrophic damage on our highways and interstates.  Here are some real life examples of cases I have handled where people were injured:

1. a truck company hired a driver with two felony drug convictions, multiple speeding violations, multiple over-hours violations and had driven for five different companies over the previous three years.  Not surprisingly, this driver had three “accidents” on his current job.  At the last accident, he fled the scene and the police discovered methampethamine in his truck cab with pipes and burners along with an unathorized female escort.

2. a large, mullti-national truck company hired a driver who could not read english and could not pass even the most basic written safety test. The company helped the driver cheat on the test and sent her out on long trips.  She and her husband were involved in a fatal “accident” on a U.S. interstate in inclement weather.  Both drivers had not been properly trained in inclement weather driving.

3. a large truck company hired a driver with a known medical condition that may have contributed to his failing to keep a proper lookout and colliding into the rear of a vehicle stopped on the interstate.

Truck companis must hire only qualified, professional drivers.  When these drivers are involved in accidents, the primary fault falls with the truck company that allowed the bad drivers on the road in the first place.