Fleet Management News & Business Info | Commercial Carrier Journal
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32 commercial carrier journal | january 2018 our customers," said Bruce Blaise, KAG president and chief executive o cer. Many carriers again are implementing sign-on bonuses and upfront incentives to entice drivers to work for their eets. Too o en, however, these measures only increase turnover rates as drivers look to cash in on new opportunities by jumping from carrier to carrier. " e perfect storm is upon us," said Blaise. "Developing factors include the coming industry-wide driver capac- ity impacts of the ELD mandate, an economy near full employment and an aging workforce. Estimates indicate that as many as 20 percent to 25 percent of current drivers will be retiring over the next ve years. We simply have to make the adjustments needed to attract new drivers to our company and industry. "It's time to make some gains on the pay side for our drivers," he added. "If you look at driver pay levels and fac- tor out in ation, they haven't moved much in 10 years." Rather than contributing to the in- evitable "churn" associated with sign-on bonuses, KAG is taking a di erent ap- proach to attract new drivers and ensure it will continue to meet the demands of its "blue-chip" customers. In September 2017, the company announced a new pay increase strategy that will provide drivers with guaranteed pay increases each year for the next three years. "As the agship carrier in the tank truck segment, it is important that we boldly assume the responsibility of protecting our customers from the pain- ful impacts of the driver shortages," said Nash, KAG executive chairman. e annual pay increases took e ect Jan. 1, with subsequent pay increases planned in January 2019 and January 2020. Each of KAG's ve business units are responsible for re ning and imple- menting the driver pay initiative to best suit its needs. "We want to be strategic in the way we do it with each group," said Blaise, noting the market dynamics for mer- chant gas may be di erent than those for food, chemical and petroleum hauling. "Ultimately, everyone will see an increase in compensation moving forward, with the end goal to provide a better life for our people." Shortly a er the pay increase an- nouncement, KAG approached its customers to secure funding for the program. Blaise said those conversations are not always easy, but the company was successful in getting customer buy-in. "It hasn't been a budget-breaker for our customers," said Blaise. "We are try- ing to educate them about how we solve these problems, or they are going to have a hard time getting products delivered. You can announce a bold move that is signi cant and disrupts budgets for customers, or you can start the process of creating clarity for what drivers can expect the next few years." Although KAG did not announce an annual xed rate increase, it does guar- antee a rate increase based on market conditions as the ELD mandate takes e ect, the economy continues to gain momentum and drivers retire from the trucking industry. " e beauty of the three-year commit- ment is we'll see how acute are the e ects of all those headwinds we are facing," said Blaise. "[ e pay increase] could be a step up even larger next year." Blaise said he's already seen a positive impact from the three-year pay increase initiative before the program even took e ect. "Just since the announcement, our net driver count has moved more posi- tively than it has in two years," he said. " at tells me they want some clarity and understanding that life is going to get better." CC J I N N O VATO R S pro les carriers and eets that have found innovative ways to overcome trucking's challenges. If you know a carrier that has displayed innovation, contact Je Crissey at jcrissey@ccjmagazine.com or 800-633-5953. "You can announce a bold move that is signifi cant and disrupts budgets for customers, or you can start the process of creating clarity for what drivers can expect the next few years." – Bruce Blaise, Kenan Advantage Group president and CEO Each of Kenan Advantage Group's five business units will be responsible for refining and implementing the three-year driver pay increase initiative to best suit its needs.