The Battle for Truckers: Private Fleets Versus For-Hire Carriers
For decades, the trucker industry has been dominated by private fleets. Most drivers work for these companies long-term, but recently, the increased demands for shipped goods and the continued labor shortage have made it more difficult to staff these private fleets. This has lead to increased demand for “For-Hire” carriers.
Private fleet trucking is when a company provides its fleet of trucks to handle its own shipping needs. This is often a long-term arrangement where the driver signs on to work for that company, sometimes even before they get behind the wheel or take their commercial driver’s license test.
For-Hire carriers are independent companies that hire truckers and other transportation professionals to do short-term jobs with specific loads from one place to another. These companies often hire local drivers and independent contractors to complete these jobs, which can be lucrative for the driver when they are available.
Benefits of working for Private Fleets
It used to be that Private fleets could hire and train drivers and provide them the equipment needed. Many truckers preferred a more stable job and the ability to make a long-term career out of driving. Private fleets also offered the benefits of a safety net and an advancement track.
Here are some of the reasons that a trucker might choose to work for a private fleet:
- Drivers enjoy more stability and higher pay
- They can advance in their company or make a long-term career out of driving
- Private fleets offer safety net benefits, such as paid time off
- Workers get to drive the newest equipment
Benefits of Working For-Hire
For-Hire carriers provide more flexibility – they can hire drivers for short-term assignments, which allows them to adapt to market demands better than private fleets where driver turnover is costly. These companies can work with their clients directly instead of having to go through a broker.
Here are just some of the benefits that For-Hire truckers enjoy:
- Drivers enjoy more flexibility and higher pay.
- They can advance in their company or make a long-term career out of driving.
- Work with different people every day.
- Be your boss
COVID-19’s impact on the situation
The trucking industry’s problems, from labor shortages to an increase in shipped goods, have been a long time coming. Still, with the COVID-19 pandemic, the situation has gotten worse and even accelerated for private fleets. Because of parts shortages, private fleets cannot maintain their trucks the way they used to and have become less attractive to drivers.
The increased demand for shipped goods has increased the demands for drivers, even though new drivers were already being hired at a slower rate than old drivers were retiring. With the added labor shortage caused by the Covid-19 pandemic, the hiring rate has slowed even more while the demand has increased. This has made drivers more valuable and is reflected in the compensation and benefits that they receive.
Salary, Benefits, and Sign-on Bonuses
The big For-Hire carriers increased their compensation packages and created routes that allowed drivers to spend more time at home and not in a hotel to attract more drivers. This made the flexible offerings and higher pay more attractive to drivers.
This has made it harder for Private Fleets as a whole to attract new talent and compete. Companies like Walmart are offering $8,000 sign-on bonuses in some of their locations to attract drivers.
Private fleets offer higher salaries, with many companies coming in at over $85,000 annual starting salaries.
To put that in perspective, the 2020 median pay was only $47,130, according to the Bureau of Labor Statistics.
Companies like McLane are also ramping up recruitment by running programs like “Warrior to Wheels,” which trains military veterans. They also have programs to train warehouse workers to become drivers.
Similar to Other Markets
The housing market is the most straightforward comparison that could be made to what is going on with Truckers and the demand. You may have heard the terms, Buyer’s Market or Seller’s Market. That is basically what is going on here.
A Seller’s Market has more buyers than sellers, and a Buyer’s Market is the opposite, with fewer buyers and more sellers. When there is an imbalance between the two, it makes sense that prices would increase.
In this case, there are more drivers than trucking companies, which means salaries have increased to make driving a For-Hire Carriers Truck more attractive. Private Fleets don’t want to lose their best employees or even be unable to find them in the first place because they can’t afford them.
This means that Private Fleets will have to increase the compensation they offer to compete for drivers or risk not finding enough truckers and having their business suffer as a result of this labor shortage.
A Trucker’s Market
The simple market economics has driven all of these changes. A competitive market for goods will lead to increased demand, leading to an increased cost to get that good to the customer.
In this case, companies like Walmart have driven up demand for truck capacity, and drivers are seeing benefits from it through increased pay rates, better conditions, and more time at home.
This is an excellent opportunity for new drivers who can enter into an industry where they will be paid relatively while having a chance to advance and make a good living.
This is a great time for new drivers or current truckers looking to switch companies as the market has shifted in favor of carriers, so moving will put you in an advantageous position fast, and working with a For-Hire Carrier will put you in a better position to benefit from the increasing demand for truckers.
The bottom line is that this shift has made life easier on drivers and will continue to do so as long as more companies are offering higher pay, increased benefits, and improved working conditions.
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