Heavy Duty Trucking, August 2018

reward good drivers offering thousands of dollars over the base salary through mileage bonuses On top of earned monthly accessorials any mile that is over the top of a drivers minimum monthly requirement goes into an annual bonus bucket that will be paid out to them at the tenured rate per mile that they would have earned under the mileage program Theres all the incentive in the world for our drivers to overachieve their base salary now because they get paid for every mile above that minimum base just like they would on the mileage program says Wirkkala But the base salary ensures them that they will never make any less than that base salary amount regardless of their productivity in miles for the month Not every driver at Smokey Point is being paid on the salary program Many are still being paid by mileage They arent forced to switch and some may not be eligible for the program All new incoming drivers can opt into the program but for existing company drivers Smokey Point looks at historical data to determine if an employee will be able to meet the minimum required mileage Wirkkala says his company has always had relatively low turnover around 30 and it didnt introduce the salary program just to put more drivers into its trucks Instead the companys goal was to make what it sees as a necessary change in the way drivers are being compensated Our big motivation was to be more efficient as a company and just to give drivers honestly what theyve deserved since the beginning of trucking Wirkkala says Nevertheless since announcing the annual salary pay program Smokey Point has seen its driver applications increase by three to four times At the end of the day trucking like any job is about earning a living And again with business booming employment options more plentiful and fleets needing drivers more than ever its hard to beat an extra dollar So far this year weve finally seen driver wages increase So what can fleets expect with regards to driver pay for the rest of 2018 Batts says simply Its gonna go up Ill take a bet on that any bet you want and it will probably go up in 2019 short of there being a major recession see if a driver is contributing to a dip in performance or if its related to Smokey Points own operational efficiency Drivers still have to reach a monthly mileage minimum to participate in the salary program but the system allows for leeway If a driver falls short of his or her minimum mileage threshold accessorial fees that are being paid to drivers on top of the base salary will be used to buy enough miles to meet that minimum Even if a driver doesnt have enough accessorials to buy back the miles he or she can still stay in the program The negative balance will simply carry forward each month until the driver builds up enough to make up the deficit A driver does have to account for his or her minimum annual mileage by the end of the year Wirkkala says no matter what happens Smokey Point is taking on all of the risk in this program not its drivers and in every case the fleet is paying more than it would have with a strictly mileage based pay We understand that some drivers are going to be unproductive in a month with time off or breakdowns or whatever So we have to make sure that were tracking that performance on an annual basis Wirkkala says The company takes the risk of making sure that we overcome those mileage deficits by the end of the year Its still about the money Smokey Points system is also set up to Smoothing out lumpy pay As long as truck drivers are being paid by the mile they must always be looking to maximize their efforts Fleets can add on benefits bonuses and minimums but the job will always be unpredictable Thats why this year Smokey Point Distributing announced something of a novelty in the trucking industry a guaranteed annual salary But is it really bucking the industry trend All trucking companies pay by the mile and its just been an industry standard for so many years that we all follow each other says Dan Wirkkala CEO of Smokey Point Distributing When somebody raises pay by the mile the others follow But nobody has really stepped out and taken operational accountability for the efficiency of how many miles they give their drivers Rather than guaranteeing minimums or upping the maximum possible pay to entice talent the Washington based fleet is offering over the road drivers some stability Solo drivers can earn a minimum of 65000 per year through its salary program Nothing to sneeze at but the total year amount is not what stands out about the open deck carriers pay model Its the ability to tell drivers that they will be paid a consistent amount month to month in advance that could break the cycle of uneven pay It may sound simple maybe even a matter of semantics to say you are guaranteeing a drivers annual salary But to truly say a driver has an annual salary a fleet has to loosen the ties between week to week output and week to week pay There must be a difference between saying a driver can earn 65000 in a year and saying they will earn that amount But fleets are also paid based on productivity so there cant be any handouts In order to provide drivers with a truly consistent income Smokey Point had to take ownership of the productivity of a truck To do this Wirkkala says Smokey Point focused on developing tools that would give the fleet better visibility into driver performance and operations It also hired people with the skills to effectively use these tools It was critically important that the company be able to maintain profitability once the pay program was implemented The company uses these tools to track driver productivity in real time and see its highand low performing drivers This allows it to SPECIAL REPORT HDT AUGUST 2018 96 WWW TRUCKINGINFO COM 7 11 Cents per Mile 625 Company Driver Mileage Rate Increases January May 2018 1 2 Cents Per Mile 50 4 6 Cents Per Mile 4375 While most fleets are increasing pay by 1 to 6 cents per mile the desperation for more truck drivers is evident in the small group that has increased by pay by as much as 11 cents per mile SOURCE THE NATIONAL TRANSPORTATION INSTITUTE