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.

Trucking companies (surprise!) oppose limits on driving time

According to, the trucking industry opposes new limits on driving hours and is worried these limits will derease revenue by as much as $470 million dollars a year industry wide.  In support of their opposition, the industry blames the Obama administration for “exagerating” data related to fatigue-caused crashes.

The target of the opposition is a rule proposed to go in effect that would require truckers to take at least 34 hours or two consecutive nights of rest each week to combat fatigue-related driver errors.  The American Trucking Association filed and argued their opposition to safety rules to the U.S. Court of Appeals for the District of Columbia.  Proponents of the mandatory rest believe the data supports a corresponding increase in safety and reduction in fatigue-related collisions.  In support of this conclusion, the Obama administration cites data that indicates 13 percent of truck-related crashes are caused by fatigue.  The trucking industry, on the other hand, argued that the data cited by the administration only establishes that fatigue was “present” at the time of these crashes and did not establish fatigue caused the collisions.  Therefore, they argue, trucking companies should be able to allow drivers to continue to operate large trucks without a mandatory 34 hour rest every week.

The case is styled, American Trucking Associations, Inc. v. FMSCA, 12-01092, (D.C. App.).