SPECIAL REPORT: HOS - the good news?

| 12/2/2003

It may seem improbable to truck drivers trying to cope with the peculiarities of the Federal Motor Carrier Safety Administration's new hours-of-service rules, but the regulations may arrive with a silver lining.

Specifically, the rules, even though not effective until Jan. 4, 2004, have already pressured carriers to increase driver pay. That's because carriers are concerned that professional drivers, fearing a loss of income, may quit at a time when the pros are in short supply.

Meanwhile, regulators and the trucking industry are beginning to look to shippers to decrease loading and unloading delays.

Under the old rules, these delays should have been legally logged as on-duty, not driving; however, they were often logged as off-duty time. So trucking companies and shippers had little incentive to "get off the dime" and improve efficiency. But beginning in January, that time counts against the 14-hour clock - drivers are allowed 14 consecutive hours on-duty with 11 hours maximum driving time.

Moreover, most long-haul truck drivers get paid by the mile and are not compensated when they are not driving.

Both the old and the new HOS rules say loading and unloading time, in addition to time spent fueling and inspecting a truck along with other non-driving duties, must be counted as on-duty - which cuts into driving time. But neither the new nor the old rules say anything about what a driver should be paid for non-driving, on-duty time - that's a matter of negotiation between the driver and carrier.

In view of these economic realities, shippers may yield to pressure and add forklift drivers and other workers to clear docks more efficiently - and they also may improve load scheduling to get trucks moving to their destinations more quickly.

Dale Belman, an associate professor of labor and industrial relations at Michigan State University, told The Detroit News that under the old rules, shippers and trucking companies treated time loading and unloading as though it were free.

But after January, there will be a price, according to several press accounts.

Because trucks hauled more than 81 percent of the nation's $571 billion freight-transportation bill last year, the effects could be far-reaching. Some users of truck transportation say higher trucking rates could lead to increases in all kinds of goods.

Thom Albrecht, an analyst at BB&T Capital Markets in Richmond, VA, expects trucking rates to climb between 4 percent and 7 percent in 2004, nearly half of which he attributes to the new federal rules, according to The Wall Street Journal. That would represent a sharper increase than in any year since the deregulation of interstate trucking in 1980 started putting downward pressure on rates.

In comments to the FMCSA, Wal-Mart Stores Inc. said it thought the 14-hour rule would reduce its drivers' daily work time by 6 percent on average and cause it to add 275 new drivers and 300 new trucks to handle the same amount of cargo. The retailer expects the changes to cost it $24 million just for the additional trucks.

Charlie Parfrey - who together with his wife, Donna, owns Spokane, WA-based Parfrey Enterprises Inc., which does business as Parfrey Trucking - is projecting a 10 percent jump in costs.

Trucker pay increases announced

Parfrey says some trucking companies have increased their rates in anticipation of the rules.

But those increases have drawn skepticism from trucking industry leaders.

"While it's always nice to see drivers getting paid more for what they do, there is a lot of catching up that needs to be done," Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, said. "The rate hikes being mentioned right now will simply put drivers back to levels they were getting about four years ago.

"If carriers are truly interested in attracting and retaining the best drivers, they should start looking at pay packages similar to those in the LTL sector of trucking," he added. "There is hardly any turnover among those drivers, and pay and benefits are the reason."

Some per-mile fees recently rose by 5 cents to 15 cents, or 4 percent to 12 percent, Parfrey told the Spokane Journal of Business.

Meanwhile, Heartland Express Inc. of Coralville, IA, said it was implementing a 3-cent per mile pay raise for all mileage-based drivers in its fleet. The increase includes all company drivers, owner-operators, solos and teams. This will move top solo company driver pay from 40 cents to 43 cents, company teams from 40 cents to 43 cents and owner-operator solo and team pay from 85 cents to 88 cents (before their additional fuel stabilization program).

The raise goes into effect in the first quarter of 2004.

"This is an industrywide challenge, and Heartland is in a position to meet this challenge in a number of ways," Russell Gerdin, Heartland's founder, president and CEO, said in a press release. "The driver cannot bear the brunt of this from a financial and a production standpoint. Heartland drivers will move forward instead of backward so that as a company, we can face this change."

In addition, Green Bay, WI-based Schneider National plans to boost driver pay and other compensation starting Feb. 1 next year, partly in response to hours-of-service changes that take effect in January 2004.

Owner-operators contracted to Schneider should gain a $2,500 to $3,500 yearly pay boost, with team owner-operators getting $3,500 to $4,500 more per driver per year, according to press accounts.

Mileage pay for both company drivers and independent contractors is being increased, accompanied by boosts for tasks such as loading and unloading. Company drivers should see their annual pay increase between $1,500 to $2,500 next year, with team company drivers getting between $3,500 to $4,500 more per year per driver.

Compensation for non-driving work is going up too. For hand-unloading or -loading trailers, drivers will get $100, up from the current $65. Partial loading or unloading will net them $30 vs. the $15 they get today.

If a driver is required by a shipper to look for a trailer, they will get $30, compared with $15 today.

Schneider said it wanted to keep the ability to retain current drivers and recruit new ones in the face of the new rules.

According to press reports, Lincoln, NE-based Crete Carrier Corp., boosted its base driver pay 3 cents per mile in November and plans to revisit pay issues after the new HOS rules go into effect next year.

Crete is adding company drivers as well as owner-operators - just to handle current business, company officials said.

Meanwhile, Tulsa, OK-based Melton Truck Lines increased its starting pay from 30 cents to 32 cents per mile this month. It also added 33-cent and 34-cent-per-mile categories for those with three to five years experience and five years or more driving experience, respectively, for new hires as a way to attract and keep good drivers as the economy improves.

--by Dick Larsen, senior editor