By Finch Fulton
Vice President of Policy & Strategy
The $800 billion American trucking industry is facing major changes. Technology is advancing, we are seeing unprecedented strains on the nation’s supply chain, and the industry is in need of an additional 80,000 truckers (a number that jumped 30% during the pandemic). Moreover, there are rumblings of even bigger impacts that will shake American trucking to its core. Truckers’ pay structure may shift from a per-mile to a per-hour basis, with drivers being paid for time beyond the 14 hours a day they are legally allowed to work. Fortunately, Locomation’s unique approach is perfectly suited to prepare our partners for this future.
Meera Joshi, the nominee for Administrator (and current Deputy) of the Federal Motor Carrier Safety Administration (FMCSA), underscored the changes coming during her Sept. 22 confirmation hearing. Today, drivers are generally paid by the mile. When they are waiting for a load, what is known as unpaid detention time, they are not earning money. The open question is, how big of a problem is this?
Previously, the U.S. Department of Transportation’s (USDOT) Inspector General lamented that there is no good data set currently available to study this issue. The American Transportation Research Institute (ATRI) has noted the need to further “research and quantify the real-world safety, economic and operational impacts of detaining truck drivers at shipper and receiver facilities.” The Owner-Operator Independent Drivers Association (OOIDA) estimates that detention time could be up to 20 hours a week for a driver.
This down time significantly impacts driver pay, and it eats into the time they are supposed to be spending resting so they can safely operate. This burden falls most heavily on drivers, but also impacts the carriers. That same 2019 ATRI study noted that a big problem is that shippers / receivers aren’t necessarily concerned with Hours of Service (HOS) regulations because they may not understand, or have incentives to care, how detention time impacts drivers. Furthermore, the study noted there is a lack of accountability for excessive delays, which further compounds issues around detention time that ultimately impact driver safety and productivity.
Creating Incentives for Shippers
In her hearing, Deputy Administrator Joshi noted that the FMCSA needed to “create incentives” for shippers to decrease the hours drivers can spend waiting for their truck to be loaded by finding ways to make the shippers pay for this.
There has to be transparency on appointment systems, flexible hours and more certainty on when containers need to be dropped off and picked up. The financial incentives have to be aligned, so the trucking community is bearing the brunt of wait times and that time is not compensated because they have to hold containers, or because truck drivers have to wait for loading and unloading then the congestion and downtime is felt by them and there is no incentive to disburse that among the whole system which will have the overall effect of improving throughput.
She said she believes this is essential to easing some of the factors causing the current supply chain delays. Going further, she noted that the pending infrastructure bill will mandate … “a very important study on driver compensation more broadly including paid and unpaid detention time.” Specifically, Section 23022 (the Apprenticeship Pilot Program) of the Infrastructure Investment and Jobs Act, directs FMCSA to “conduct a study of the impacts of various methods of driver compensation on safety and driver retention, including hourly pay, payment for detention time, and other payment methods used in the industry as of the date on which the study is conducted.” In creating this study, FMCSA must consult with labor organizations and owner-operators, among others.
We can also look back at Deputy Administrator Joshi’s time as the Commissioner of the New York City Taxi and Limousine Commission (TLC) to understand her potential approach to the problem. Under her leadership, the TLC and New York City Council conducted an information gathering effort in order to establish a minimum pay requirement for drivers in New York City. As she described it, in 2018, 90% of the 80,000 full time drivers in the city were making less than minimum wage.
The New York City Council and the NYC TLC said they did not set an hourly wage because the drivers were independent contractors (much like the majority of truck drivers). However, they set a “minimum mile and a minimum minute pay standard which allowed those that were working to make the equivalent of a minimum wage.” This mile and minute rate was benchmarked against the city’s minimum wage requirement per hour. Thus, a new standard was set.
Why Stop There?
Changes to how truck drivers are paid could go further, and be a part of a greater push to change current hours of service rules. Long-haul truck drivers are typically paid on a per-mile basis, and the U.S. Department of Labor (USDOL) has occasionally flipped in their opinion that this per-mile model is allowable. Recently, under the Biden-Harris Administration, the DOL’s Wage and Hour Division withdrew a Trump-era opinion letter that stated truck drivers didn’t have to be paid for time in the sleeper berth. As University of Pennsylvania labor professor Steve Viscelli wrote:
For nearly six decades, the Department of Labor has consistently stated that drivers are working if they are ‘engaged to wait,’ meaning that if the waiting time they endure is an integral part of the labour process, they are working and the time is compensable. Since deregulation many long-haul carriers have ignored this, as did drivers, until wages dropped so low that they violated minimum wage laws.
There are also challenges to the USDOT interpretation that the “time drivers are relieved of all duties and permitted to sleep in a sleeper berth is presumptively non-working time that is not compensable.” The U.S. District Court in Arkansas ruled in 2018 that long-haul drivers were entitled to at least 16 hours a day of minimum wage, and according to this ruling, sleeper berth time is compensable under the Fair Labor Standards Act (FSLA).
Viscelli also discussed relevant pay structures for the automated trucking industry, saying “this matter is far from settled, but if drivers are eventually found by the courts to be either working or entitled to minimum wage, this will also provide a strong disincentive for the autopilot scenario.” This means any model that would require a human to be present in a cab, but unpaid for that time until engaged in first or last mile operations, would not be viable and the cost savings on labor would not be realized.
What It Means For Locomation Customers
In Locomation’s Autonomous Relay Convoy™ model, drivers are able to utilize each of the human driver’s hours-of-service to go twice as far, twice as fast, and generate twice as much revenue. Because drivers generate mileage even when in the sleeper berth, pay would easily exceed minimum wage requirements. Higher pay will also help with driver retention.
In addition, Locomation’s approach to the back-end organization of the routes may be intended to match loads, reduce dead-head miles, and get the drivers home every night, but it also has additional benefits. The 2019 ATRI report also included a driver survey and noted that “customers who were well organized, utilized technology, maintained tightly managed schedules and appointments, and/or utilized as-needed extended business hours (“after-hours delivery”) greatly reduced delays.”
Carriers and shippers that work with Locomation will be positioned as the market leaders in managing these driver pay and Hours of Service rules changes.