Insurance and Economy and Education & Workforce Development and Economic Development

Bumpy road ahead for truck-driving schools?: Slowing freight and federal standards could hurt prospects and raise costs

October 13, 2008

With a driver shortage as bad as the freight industry says, one might think operating a truck-driving school would be a license to print money.

But proposed federal rules to toughen training standards and, lately, a fishtailing economy could bring a shakeout among schools.

There are even rumblings that a few big carriers that contract with driving schools are poised to eliminate tuition reimbursement as they sweat out the economic downturn.

"We're going to start losing schools," predicted John Priest, owner of Indianapolis-based Commercial Driving Training Consultants, who's been training drivers for 20 years.

Spiking diesel fuel prices and slowing demand for goods have driven many small trucking companies out of business or into the hands of larger rivals.

In theory, at least, that slowdown should ease a driver shortage that's fueled the growth of driving schools. It's been three years since the prophecy of doom was sounded: A study for the American Trucking Associations estimated the industry could come up short about 111,000 drivers by 2014.

The projected shortfall might explain why major trucking firms continue to provide tuition reimbursement. Mike Benkert, of Indianapolis-based Driver Solutions, which operates the C-1 Professional Training Center, said he's heard of only one carrier eliminating tuition reimbursement so far.

"If this [downturn] goes on long enough, it would be a situation where carriers will need fewer and fewer drivers, and that would cause some smaller schools to go out of the business," Benkert said.

Driver Solutions, which has five schools, has seen revenue fall about 15 percent since the trucking industry started to downshift. It closed an underperforming school in St. Louis.

But a longer-term threat to driving schools may be a rule the Federal Motor Carrier Safety Administration has been mulling for nearly a year.

FMCSA, saying the rule would give truckers additional skills "needed to keep roads safe," wants all applicants for a commercial driver's license or upgraded CDL to earn a certificate from a truck-driving program or institution accredited by the U.S Department of Education or Council on Higher Education Accreditation.

Except for driving programs offered through community colleges, accreditation is uncommon in the driver-training field. Federally guaranteed student loans are the province of long-term education rather than these short-term training programs that often get students out the door in under six weeks and for under $6,000.

Tampa-based Career Path Training, which operates Roadmaster Driving School in Indianapolis and eight other cities, estimates that accreditation will cost it more than $100,000, plus the cost of additional employees in Indianapolis and elsewhere to prepare and maintain accreditation status.

The American Trucking Associations points to one study suggesting accreditation could cost the driver training industry $10 million to $22 million annually.

"Industry representatives have estimated the costs for initial accreditation at between $10,000 to $40,000 per site and an additional $30,000 to $60,000 yearly to maintain accreditation requirements," ATA said.

Whatever the actual cost, "it's going to make it very difficult for our industry," said Roadmaster Vice President Ken Whittington. "Before you know it, we'll even have a worse shortage of drivers than we have now."

Accreditation would not be a significant issue for Ivy Tech Community College, which offers driver training in Indianapolis and three other cities. Ivy Tech, which touts itself as the nation's largest statewide community college system with a single accreditation, contracts with Camp Hill, Pa.-based Sage Corp. to provide the training.

The FMCSA would also require that students receive at least 44 hours of behind-the-wheel training.

Currently, some schools count instruction on simulators and "observation" time in the cab as behind-the-wheel training.

Ivy Tech wouldn't have a problem complying with FMCSA's proposed 44 hours of behind-the-wheel time. It's already the standard of the Virginia-based Professional Truck Driver Institute, whose instruction guidelines Ivy Tech adopted.

Unlike proprietary driving schools, state-funded Ivy Tech earlier this year rallied in support of the FMCSA proposal.

"Some ... operator training schools speak out against hours-based training in protection of their own interests as opposed to the interests of the industry and the general public," Sherm Johnson, executive director of work-force and economic development at Ivy Tech, wrote to FMCSA.

"These schools, some call them CDL mills, know that the longer they have a student in a class or actually behind the wheel, the more it will cost that school and reduce their profits," Johnson added.

Ivy Tech charges $3,995 for its 150-hour Class A license training program. Some private schools locally charge up to $5,995. But private schools point out that they do not enjoy taxpayer subsidies as do community colleges. Private driver schools also tout that they work closely with trucking carriers to help graduates speed the leap to employment, including preparing them for "finishing" training that carriers conduct for new drivers.

Whittington and others said federal regulation should be focused more on driving proficiency than on setting particular behind-the-wheel hours.

While battles rage in Washington over regulation, insurance companies have exerted pressure on companies to find safe drivers, said Kenny Cragen, president of the Indiana Motor Truck Association.

Some carriers require their green drivers to drive in a team with an experienced driver for a while.

"It's really difficult to get insurance for a new driver who has not been properly trained," Cragen said.

Some giant trucking companies won't even hire newly trained drivers. For example, Indianapolis-based Celadon Trucking Services requires at least three months' experience.

Part of the reason is to ensure the applicant has the stomach for long-haul driving and the other is that it gives Celadon a chance to see whether the applicant has been a safe driver.
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