December 2017

Overdrive Magazine | Trucking Business News & Owner Operator Info

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BUSINESS 24 | Overdrive | December 2017 With freight demand climbing and rates on the move, driver pay also should rise in the coming months, said Gordon Klemp, a driver pay analyst and president of the National Transportation Institute. Klemp spoke with investors last month in a conference call hosted by investment firm Stifel. If carriers can secure rate increas- es in shipper contracts, they will pass some of those gains to drivers, Klemp said. Addressing fleet executives at the CCJ Solutions Summit in November in Palm Springs, California, Klemp said carriers started increasing per- mile pay in the third quarter by 1 to 2 cents nationally, with regional pay climbing as high as 4 to 7 cents. Carriers also are luring drivers with $10,000-plus sign-on bonuses, paid out in 30 days, 90 days and six months. "Carriers are much more aggressive about paying them out quickly" to make the bonuses more appealing, Klemp said. Though carriers have increased driver pay consistently in recent years, particularly when capacity ran tight in 2013 and 2014, driver wages have climbed only 6.3 percent on average over the last decade when adjusted for inflation, Klemp said to Stifel investors. "For-hire drivers have lost effective purchasing power over the past 10 years or so and have had to adjust lifestyles accordingly," says Stifel's report. Looking even further back and accounting for inflation, driver wages are, in effect, just half of what they were in 1979 before deregulation, Klemp said. "However, with freight demand strengthening and the driver shortage becoming acute, the stage is set for drivers to realize driver pay increases over the foreseeable future," accord- ing to Stifel's report. – James Jaillet and Linda Longton Driver pay expected to surge with rates Carriers are again dangling big sign-on bonuses in front of drivers and owner-operators. What's more, bonus payouts are shrinking to as short as two or three months. The ideal loan term for a three-year depreciable asset like a heavy-duty truck is three or four years, during which you can reap the tax benefits of depreciation to maximize the affordability of the monthly payments. The shorter the term, the less you'll pay overall due to interest. The Partners in Business program is pro- duced by Overdrive and the consultants at business services firm ATBS. It is spon- sored by Ryder and Truckstop.com. Free Partners in Business seminars will be held at the Great American Trucking Show in Dallas, Aug. 23-25, 2018. Want more Partners in Business tips and information on how to run your small truck- ing business more prof- itably? Visit OverdriveOnline. com/pib-podcasts to find 20-min- ute podcasts on topics such as managing time, budgeting money and controlling fuel costs. PARTNERS IN BUSINESS TIP: SHORTER LOAN, CHEAPER TRUCK Flatbedders prospering in '17 Flatbed operators are having a great year, based on year-to-date fi nancial reports from owner-operator fi nancial services provider ATBS. From January through September, ATBS fl atbedder clients had net income of $51,602. Net income per mile rose dramatically each quarter, indicating rapidly rising rates: 67.3 cents per mile in the fi rst quarter, 74.7 in the second and 81.7 in the third. Miles driven did not change much during the fi rst three quarters, "Flatbed usually leads us out of a recession," says Todd Amen, ATBS president and chief executive offi cer. "With a couple of slow freight years behind us, it seems like industrial goods, auto, homes, etc., are all booming, and that leads to fl atbed freight." At this year's pace, fl atbed owner-operators easily will surpass $60,000 in net income for the year. All leased and independent operators tracked by ATBS averaged close to $60,000 in 2015 and 2016.

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