This Editorial appears in the Feb. 2 print edition of Transport Topics. Click here to subscribe today.
Recently, we’ve fielded questions from acquaintances not in trucking who ask if fleet executives are deliriously happy because of the eye-catching plunge in diesel fuel prices.
No, we’ve replied, while the 22% decline in 11 weeks is most welcome, the nature of fuel surcharges is that they are now generating less revenue for carriers. In addition, the labor market for drivers has become so problematic, whatever good news there is on fuel has been offset by driver turnover, based on new report on the third quarter.
The churn rates for truckload carriers are as breathtaking in a bad way as the fuel numbers are in a good way.
There always seems to be some sort of major difficulty with trucking’s top two operating costs — fuel and labor. Management is always left to scramble on these issues, trying to figure out how to deliver freight promptly and efficiently while a major aspect of the business is invariably in crisis.
The two problems aren’t always opposites. During the recession, fuel was cheap and labor wasn’t a problem because there was far less freight to move. Other times, both cause trouble simultaneously.
American Trucking Associations’ survey said carriers with revenue topping $30 million a year saw annualized turnover rise to 97% in the third quarter of last year, from 96% in the second.
The churn rate at small carriers remained at 94%, but it has grown significantly since the 74% in the 2013 second quarter.
ATA Chief Economist Bob Costello predicted that, at best, the labor market will remain tight and that turnover could even accelerate.
The complete answer to this ongoing problem is not obvious. To the extent that the federal government and state governments are going to fund post-secondary education, driver training should be among the options. We’d also like to see insurance companies be more accommodating to the hiring of new drivers, provided they are rigorously trained.
Marketplace innovation is the best place to look. Another study on drivers found that 42% of truckload fleets announced pay increases during the third quarter. That’s a start.
Some fleets are using smart-phone apps to hunt for younger drivers. Other managers are recruiting on lifestyle, allowing more pets in cabs for solo drivers and seeking married couples as team drivers.
ATA is trying to groom trucking’s future leaders with its LEAD ATA program. There’s no problem more pressing than drivers to which these men and women in trucking could devote their attention.
