Driver Turnover Rates Dip

Two closely watched reports on trucking jobs last week delivered a mixed picture of fleet staffing trends, with progress on turnover rates but a worsening driver shortage.

American Trucking Associations, author of the reports, said second-quarter turnover on a year-over-year basis fell to 87% from 96% among large truckload fleets, those with $30 million or more in annual revenue. Smaller fleets’ churn dropped more sharply to 76% from 94% over the same period.

However, those favorable signs were counterbalanced by a driver shortage report that identified a 25% increase this year to a shortfall of 47,500 drivers. Next year, the shortage could rise 55% to 73,500, driven by factors such as aging. The average linehaul driver age of 49 is seven years older than the U.S. working population.

“Our work shows the great and growing need for drivers,” said Bob Costello, ATA chief economist.

“Historically, larger fleets have had much higher turnover rates than smaller ones,” Costello said, noting that larger fleets closed the gap last year as their smaller competitors struggled to find funds for pay increases and updating their fleets.

Smaller fleets’ ability to reduce second-quarter churn could have resulted from pay increases and equipment purchases that they could afford this year, when diesel is low and rates are high, Costello said.

Costello cautioned that “it is difficult to ascertain much from a quarter-to-quarter change in turnover. In the next quarter, you could have the opposite.”

Sequentially, large TL fleets’ churn rose 3 percentage points to 87% over the first quarter. Over the longer term, large fleets’ churn has moderated this year, falling from the 95% average in 2014.

Small-fleet turnover dropped for the second straight quarter, reaching 76%, or 12 percentage points below last year’s average.

Less-than-truckload fleets remained relatively low at 13%, up from 11% in the year-earlier period.

Over the long term, the federation projects that the shortage could rise to almost 175,000 drivers because of industry growth and retirements. An average of 89,000 new drivers will be needed annually over the next decade.

“We are not saying that the shortage will reach that level,” Costello said, labeling the numbers as “a warning to the industry and the broader supply chain of what could happen if things don’t change.”

Some believe Costello underestimates the shortage.

Economist Noel Perry, a former industry executive who is now managing director at consultant FTR, believes trucking is 125,000 drivers short right now. That amount could double in the next 24 to 30 months, with the advent of logging devices and other government mandates that limit capacity, he said.

Costello’s report notes that regulatory change effects are not in his shortage projections. Driver shortages and turnover are separate and distinct, ATA noted.

Turnover reflects demand for drivers, most of whom are switching carriers. Shortages are forecast based on demographic and economic factors, and exclude turnover.

“The ability to find enough qualified drivers is one of our industry’s biggest challenges,” ATA President Bill Graves in an Oct. 6 statement. “This latest report plainly lays out the problem — as well as some possible solutions — to the driver shortage.”

In addition to a scarcity of female truck drivers and other demographic factors, well-known challenges also include the option to switch to construction or other jobs that give drivers more home time.

ATA identified steps that could help ease the shortage, including higher pay, better treatment of drivers, automation, hiring of veterans and increasing home time.

“Drivers are a front-burner issue for trucking companies,” said consultant Steve Prelipp, a former industry executive who guided fleets’ hiring practices. “If they don’t recognize they are the key to success, they don’t get it.”

Prelipp said that truckload fleets can help themselves by being realistic. That means, for example, attempting to create repetitive runs or soliciting private fleets with predictable trips to maximize home time.

However, fleets have to accept that those opportunities are limited by the nature of irregular route trucking.

“Carriers are trying hard to get drivers home more often, but there is only so much you can do,” Prelipp said.

Werner Enterprises last week delivered more evidence of drivers’ value by formally announcing it has acquired the American Institute of Trucking and Roadmaster Drivers School. Graduates of those schools can pick which fleet to work for, rather than be tied to Werner, which ranks No. 16. on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“This was a long-term strategic investment to ensure a stable flow of highly trained student truck drivers in a time when the entire industry is facing a significant driver shortage,” said Derek Leathers, president of Werner.

Also last week, a report from accounting firm Katz, Sapper & Miller, said that, based on 2014 activity, larger carriers’ turnover exceeds other fleets for the first year but then drops below smaller competitors.

A possible explanation, the firm’s report said, was that larger fleets operate newer tractors.