Driver Turnover Plummets

By Rip Watson, Senior Reporter

This story appears in the Sept. 22 print edition of Transport Topics.

Driver turnover rates in the second quarter reached the lowest level in at least eight years as opportunities to switch employers were reduced by carriers’ decisions to trim their fleets in a sluggish freight market.

American Trucking Associations said the turnover at large truckload carriers — those with more than $30 million in revenue — fell from 103% in the first quarter to 85%, the lowest rate since the first quarter of 1998. Turnover at truckload fleets below that revenue level dropped from 80% to 76%, the lowest level since the first quarter of 1999.

Less-than-truckload driver turn-over, which traditionally is much lower than truckload because drivers spend more time at home, fell to 6% from 14%. That mark was the lowest since ATA began keeping those figures in 2000.

“The primary reason for the low turnover is that fleets are shrinking,” said Bob Costello, chief economist at ATA. “Drivers know that and are staying put . . . at least more than before and the most in a long time.”

Trucking capacity has been reduced by approximately 5% as a result of bankruptcies that have reached the highest level since 2001. A total of 1,905 carriers filed for bankruptcy in the first half of the year after being pounded by the twin forces of record diesel prices and excess capacity that kept a lid on freight rates that otherwise might have cushioned the blow from higher fuel prices.

Driver turnover at large truckload fleets peaked at 136% in the last quarter of both 2004 and 2005, when freight was at near-record levels and the U.S. economy was strong. Turnover has been dropping at truckload fleets for the past five quarters as freight volumes have moderated. As recently as the first quarter of 2007, the large fleet truckload turnover rate was 127%.

“Between what drivers are seeing in terms of freight availability and companies going out of business, most people are moving to a safe way of doing things,” said Steve Prelipp, a consultant and former executive at Schneider National, Heartland Express and Cardinal Freight Carriers. “Part of it is a hunker-down mentality, based on what drivers are seeing in trucking and when they turn on the news.”

Other factors, including reduced hiring by companies, are at work to lower turnover levels, Prelipp said.

“Freight is down,” he said. “You don’t have the vice president of sales and marketing standing on the CEO’s desk and saying ‘I need drivers.’ ”

The current drop in turnover isn’t a sign that the industry’s long-standing struggles with driver recruitment has gone away, Prelipp cautioned.

“The driver shortage is still here,” he said. “The need for drivers is still going to exceed the supply in the future, but it is not true today.”

A study commissioned by ATA found that the industry will need approximately 110,000 more drivers in 2014 in order to meet expected freight demand. At present, there are approximately 3.2 million commercial drivers in the United States.

Companies also are not hiring as many drivers because they are being more careful in committing additional equipment to move freight and “right-sizing” their fleets.

Part of the reason for that, Prelipp said, is the eagerness to save costs by reducing empty miles.

The ATA driver turnover re-sults mirrored comments by individual publicly traded carriers when their second-quarter earnings were released.

For example, Werner Enterprises Inc. said in its earnings announcement that “the driver recruiting and retention market remained less difficult,” citing the weakness in the automotive and construction industries as a reason why more drivers could be recruited.

ATA also reported that the recent trend of reduced industry payrolls continued for the fifth consecutive quarter among LTL as well as truckload fleets, both large and small.

The total drop among small truckload fleets was 0.8% and 0.3% at large truckload fleets. LTL carriers’ payrolls fell 0.4%.