Driver compensation rises despite poor freight market

Driver compensation rises despite poor freight market

On Tuesday, American Trucking Associations released its latest driver compensation study, which showed continued increases in driver pay in the past two years despite a deterioration in freight market conditions. The survey collected the data of over 120 fleets, which comprised more than 150,000 employee drivers and 14,000 independent contractors.

Key findings in the the survey:

Truckload drivers earned median pay of $76,420 in 2023 – up 10% from the past two years.
Linehaul less-than-truckload drivers earned median pay of $94,525 in 2023; local LTL drivers earned a median of $80,680.
Median annual compensation for drivers at private carriers is up 12% since 2021, hitting $95,114 in 2023.
Leased-on independent contractors for truckload carriers earned median pay of $186,016 in 2023.
Carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to existing drivers and with a greater median value.

Transport Topics’ Connor Wolf writes, “The report also found that while over 90% of truckload carriers reported increasing driver pay during the 2021 study’s two-year span, only 42% boosted pay during the most recent study. Other incentives, such as sign-up and referral bonuses, were also used less in the years between the 2021 and 2023 survey periods.” Wolf noted a shift in the most recent survey as carriers offered higher tenure bonuses focusing on driver retention compared to new-hire bonuses focusing on attracting new drivers.

August preliminary Class 8 orders meet seasonal expectations

On Thursday, ACT Research released its preliminary Class 8 orders data, with August recording 16,400 units, an increase from July but down 16% year over year. The final order data is expected mid-September. Kenny Vieth, president and senior analyst at ACT Research, said in the report, “Class 8 orders remained at directionally and seasonally expected levels in August. Historically, August is the last month of weak orders before the OEMs open their books to next year’s orders. As such, the month enjoys a large seasonal factor that boosts Class 8 orders nearly 12% above nominal levels to 18,600 units.”

Vieth added that in aggregate, North American Class 8 orders are in line with moderating expectations, as overcapacity in the U.S. tractor market continues to weigh down for-hire carrier profits. The medium-duty truck market is also being negatively impacted, as high interest rates, overextended U.S. consumers and lower discretionary spending are creating weak recreational vehicle demand.

Rival firm FTR Transportation Intelligence reported a lower number in August compared with ACT. FTR reported Class 8 preliminary net orders in August totaled 13,400 units, up 2% m/m but down 16% y/y.

Dan Moyer, senior analyst, commercial vehicles at FTR, said: “OEMs this month faced a somewhat mixed market, though overall conditions were stable. The conventional market outperformed the vocational sector, driving most of the m/m improvement. Despite stagnant freight markets, fleets continue to invest in new equipment, albeit at a slower pace. We expect further reductions in backlogs once the final Class 8 market data is released later this month and continued growth in already record-high inventory levels. Pressure on OEMs to reduce production rates is mounting.”

Market update: LMI continues slow but steady August expansion

On Tuesday, the Logistics Managers’ Index released its August data, which saw major moves in inventory levels but a consistent but slow increase in the overall index. The LMI is a diffusion index, where a value above 50 indicates expansion while below 50 signals contraction. The overall LMI fell 0.1 points from July’s reading of 56.5 to 56.4, which suggests a slow yet steady expansion.

Inventory levels were a standout, up 6.1 points m/m to 55.7 and broke a three-month streak of expansion as firms built back inventory in anticipation of Q4. The report notes this rise in inventory patterns was a welcome return to seasonality that has not been observed since COVID. Despite higher inventory levels, both warehousing capacity (+5) and transportation capacity (+5.8) increased to meet demand.

On the capacity front, the persistence of excess truckload capacity may be related to smaller carriers compared to larger publicly traded fleets, which saw some cut their overall truck count. FreightWaves’ Todd Maiden writes, “The report said the heightened view on capacity could be tied to smaller carriers coming back to the market as rates improve and given the expectation for a seasonal lift in freight demand.”

The report added: “The signs of new life in the freight market, along with anticipation of the traditional jump in demand that follows the Labor Day holiday, are likely causing some of the capacity that had been sidelined over the past two years to re-enter the market, accounting for the mild increase in available capacity.”

FreightWaves SONAR spotlight: Spot rate softness persists through Labor Day

Summary: Nationwide dry van spot market rates failed to see a Labor Day bounce, breaking a five-year seasonal trend of increases leading up to and through the holiday weekend. NTI fell 3 cents per mile all-in during the past week, from $2.28 on Aug. 26 to $2.25 per mile. YTD saw the NTI down 2.2% versus 2023. Compared to the same period in 2023, spot rates rose 4 cents per mile from $2.25 to $2.29, while the largest gain in the past five years was in 2021, when rates rose 17 cents per mile from $3.18 to $3.35.

While dry van spot rates struggled, reefer spot rates also saw Labor Day declines. RTI fell 3 cents per mile all-in w/w from $2.70 on Aug. 25 to $2.67. The flatbed segment was the only area of improvement, up 6 cents per mile w/w from $2.61 to $2.67.