Trucking: Driver Retention and Offsetting Expenses

The current driver shortage is feeling pressure on three fronts. First, the demand from shippers and the bottlenecks in supply chains means the trucking industry needs more drivers to manage the shipments sitting at the docks. Second, more drivers are reaching retirement age. Leaving many vacancies across the United States that need to be filled. The third front is driver retention. New and emerging CDL holders are attracted by the potential earnings of a career in trucking but seem to drop off or seek employment elsewhere, leading carriers to find new ways to improve driver retention. However, driver pay does not appear out of thin air, so trucking companies need to find ways to offset expenses when hiring new drivers and offering incentives to keep them.

Driver Retention Incentives

Supply chains and shippers need the trucking industry. The trucking industry needs more drivers. Unfortunately, new drivers do not want to settle for pay rates that have not increased from a few years ago. This leaves many trucking companies in a difficult position. Some can afford to increase pay rates. Other carriers cannot increase pay for new truckers without making cuts elsewhere. On the creative side, trucking companies are promising sign-on bonuses or bonuses that are available after six months or the first year, as a means of retaining drivers for at least a few months. A few trucking companies have turned to offer gift cards and the like in lieu of higher wages. These all work to varying degrees of success, but with the number of drivers needed to overcome the shortage, or at least mitigate it, trucking companies need to find a way to offset expenses.

Outsourcing and Insourcing

To offset expenses, trucking companies need to analyze which functions can be done in-house, which ones are less expensive to outsource, and what the overall cost-benefits are. Hiring an in-house CPA to do accounting, for example, can be quite expensive. Springing for good accounting software, on the other hand, can save a lot of money in the long run, and someone in the trucking company can take on those duties. The same goes for payroll. Human resources are typically something that can be insourced, especially with smaller carriers. Onboarding new employees, processing complaints, reviews, disciplinary actions, and more can be handled at a managerial or administrative level within a trucking company.

On the other end of the scale, toll management is something that should be outsourced. Toll management requires a lot of time, an eye for detail, and knowledge of managing toll programs, and the net result is typically frustration and headaches. Outsourcing toll management to another company can end up reducing the number of administrative hours, as well as toll fees, and reduce overall costs for trucking companies.

Fuel Efficiency and Expenses

Fuel efficiency is one of the top metrics for trucking companies throughout the United States. Given the wildly fluctuating prices at the pump, carriers are looking for fuel discount programs, and encourage drivers to take the most efficient routes. Some even use apps that provide gas prices so they can fill up at the least expensive stop on their trips. Trucking companies have turned fuel efficiency into friendly competition among drivers by giving out monthly and quarterly awards to the drivers with the highest fuel efficiency. The prizes can be monetary, gift cards, or even certain privileges. Not only does this encourage drivers to be as efficient as possible, but it also creates a stronger sense of team while giving drivers an incentive to stick around. In an indirect way, monitoring fuel efficiency can positively impact driver retention while directly offsetting costs.

Cash Flow and Driver Retention

One of the big reasons for not hiring a bunch of new drivers or raising pay for new truckers is that cash flow simply does not allow for it. Freight bills have payment windows of 30, 60, and even 90 days. The lag in payment may not allow trucking companies to cover payroll with higher wages. By using freight bill factoring from Single Point Capital, the payment windows are eliminated, and revenue is made available within a single day. The boost to cash flow allows trucking companies to build up capital reserves so they can hire more drivers and offer better pay to increase retention.

To learn more about utilizing freight bill factoring to grow your driver pool, contact the team at Single Point Capital today.