Driver Turnover at Truckload Carriers Drops to Lowest Levels

By Daniel P. Bearth, Staff Writer

This story appears in the Dec. 22 & 29 print edition of Transport Topics.

Truckload driver turnover rates fell to the lowest levels since American Trucking Associations began collecting the data in 1995, as trucking companies cut jobs and trimmed the size of their fleets in the face of sharply falling freight-hauling demand in the third quarter.

“The contractions highlight just how weak the economy was during the quarter,” said Bob Costello, chief economist for ATA. “Drivers are not jumping from company to company, as employment opportunities are drying up.”

Turnover at large truckload carriers — those with annual revenue of more than $30 million — plummeted 48 percentage points to 65% in the quarter ended Sept. 30 from 113% a year ago. The large-truckload rate was 85% in the second quarter.

The previous low point for large truckload driver turnover was 77% in the fourth quarter of 1997.

Turnover is calculated by dividing the total number of drivers who are terminated by the average number of drivers on the payroll. That number is then expressed as a percentage on an annualized basis.

Turnover for small truckload carriers was 58%, down sharply from 87% in the third quarter of 2007. The rate was 76% in the second quarter and the previous low was 61% in the third quarter of 1998.

Turnover for less-than-truckload carriers, which traditionally is much lower than truckload because drivers spend more time at home, slipped to 9% in the third quarter from 9.2% in the third quarter of 2007. It was 6% in the second quarter, the lowest level since ATA began keeping those figures in 2000.

“We are hearing that drivers are plentiful at the moment as many are coming from carriers that have closed,” Costello said. “This surplus of drivers, however, will only last as long as the economy is bad; once the recovery ensues later next year, the driver market will tighten again.”

The downturn is allowing trucking companies to be more selective in hiring new drivers, said K. Michael O’Connell, executive director of the Commercial Vehicle Training Association, a trade association that represents about 180 truck driver training facilities in the United States and Canada.

“Placement [of students in jobs] is a little more difficult,” O’Connell said. “Carriers are looking for better-qualified students and a person they are convinced will stay a while.”

While some trucking firms have laid off drivers, most have simply not replaced drivers who leave, said Brian Thomforde, owner of Truckdriver.com.

“Hiring has been drying up,” he said. “Good drivers are thinking ‘I better stay where I’m at.’ ”

Trucking companies reduced the number of tractors in their fleets by 2.6% in 2007 and have cut another 1% in the first 10 months of 2008, Costello said.

A sharp decline in demand for trucking services has left a surplus of equipment in the market and reduced the number of miles available to company drivers and owner-operators, he said.

For-hire trucking companies have shed 54,000 employees from payrolls in the first 11 months of 2008, the Labor Department reported.

Among the fleets that announced job cuts recently were FedEx Corp. and Con-way Inc.

Payrolls among LTL carriers surveyed by ATA fell 1.8% in the third quarter, with the largest reductions in mechanics, down 4%, and dispatchers, down 3.2%.

Large truckload carrier payrolls fell 0.5% and small truckload carrier payrolls were cut 2.4%.

Another consequence of the freight dry-up is that pressure to raise driver wages has diminished.

“Driver wages are literally frozen in place,” said Gordon Klemp, who conducts a national survey of driver wages for the National Transportation Institute in Kansas City, Mo.

Costello said he expects carriers to keep paring jobs next year.

“There is no reason, at this point, for the motor carrier industry to increase employment until the economy begins to recover,” he said.

Costello does not expect the U.S. economy to show positive growth in gross domestic product until the fourth quarter of 2009.