With fuel prices rising to record-high levels – in some areas reaching over $7 per gallon – many carriers will begin to see an impact on driver recruiting and retention. To help navigate the negative effects of the soaring prices, we’ve put together a road map of potential outcomes and our suggested, strategic responses:
While not directly affected by the price of diesel, company drivers (particularly those working locally) are impacted by record-breaking high gas prices. Many drivers have lengthy commutes that consume a significant portion of their monthly budget; hence, they may not be willing (or financially able) to make the drive to work.
- Potential Impact: Carriers providing compensation at or below market average will lose many current and prospective drivers to competitors that offer shorter commutes and/or higher compensation.
- Suggested Response: Carriers can use this opportunity to build unique campaigns targeting candidates within a short radius of their locations. With a clear message articulating the benefits of working close to home, candidates will be attracted to a shorter commute and, in turn, a better quality of life. For companies that depend on a significant portion of their drivers commuting long distances, an offer of prepaid gas gift cards or paid commute times can reduce the risk of having drivers ‘jump ship’ to a company with more enticing drive times and benefits.
Owner-Operators/Small Fleets/Lease Purchase Drivers
Fuel price increases often have a significant impact on the financial security of independent contractors. These small businesses will often contract with carriers for the added financial security and other associated benefits. When fuel and insurance rates are on the rise, these business owners are on the lookout for carrier opportunities that will help them reduce expenses.
- Potential Impact 1: The elevated fuel costs may slow the flow of opportunity-seeking contractors (owner-operators and lease purchase drivers). This is most often the result of the carrier failing to remain competitive.
- Suggested Response: Substantial fuel discounts and timely FSC (Fuel Surcharge) adjustments are of utmost importance at times of escalating fuel prices. Carriers that offer a competitive advantage and explicitly reflect it in their recruitment advertising gain the upper hand in this war on capacity. Deep fuel discounts, fuel rebates, frequent adjustments of FSC, and affordable insurance resonate deeply with most current and prospective contractors.
- Potential Impact 2: When carriers are slow to adjust their Fuel Surcharge and/or have delays or compromises in how payments are made to contractors, carriers typically see an increase in contractor complaints. When not responded to in an adequate and timely fashion, these complaints are usually followed by an increase in contractor turnover.
- Suggested Response: FSCs (Fuel Surcharges) should be adjusted on a regular cadence and communicated clearly to all affected contractors. While a 100% pass-through of Fuel Surcharges and discounts is highly recommended, a small administration fee for the transaction is widely viewed as acceptable by contractors.
- Potential Impact 3: Long-standing high rates in the spot market have kept most single truck and small fleet owners committed to operating independently. While that is not likely to change until rates drop, high fuel costs and rising insurance rates may push some truck owners back to operating under carrier contracts.
- Suggested Response: If contractor interest grows in the coming weeks, more focus and/or budget should be assigned to I/C recruiting efforts where it makes the most sense for company operations and revenue.
Fuel price increases are one of the many challenges the transportation industry continues to face in the recruitment of professional drivers. While adjusting and fine-tuning recruiting efforts based on current market conditions is imperative, developing a strong recruitment brand strategy is essential to overall success.
Interested in additional help navigating these record-breaking fuel prices and the myriad other challenges that come with recruiting and retaining drivers? Reach out to our experts at Bayard below.Reach out