Large Truckload Turnover Rises

This story appears in the Oct. 14 print edition of Transport Topics.

Driver turnover rates in the second quarter showed signs of stability, but at an elevated level, rising 2 percentage points from the first quarter to 99% at large truckload fleets and remaining unchanged at 82% among smaller carriers, American Trucking Associations reported last week.

On a year-over-year basis, turnover fell 7 percentage points at fleets with $30 million or more in revenue and dropped 4 percentage points among smaller carriers. Since the beginning of 2012, turnover has averaged 99% at larger fleets and 82% among smaller carriers.

“Continued high turnover shows that the market for qualified, experienced drivers remains extremely tight,” ATA Chief Economist Bob Costello said.

ATA also said less-than-truckload fleets had a 6% turnover rate, the lowest level in two years. In the first quarter, LTL turnover was 15%, and last year, it was 10% in the second quarter.

Though turnover numbers haven’t changed much, replacing drivers who leave and finding new ones continues to be difficult.

“We focused our marketing efforts this year on recruiting drivers,” Brent Nussbaum, CEO of Nussbaum Transportation, based in Normal, Ill., told Transport Topics, as turnover increased about 10 percentage points to the high 30% range.

“As jobs have come back in the manufacturing economy, drivers are leaving for those jobs and not going to other trucking companies,” said Nussbaum, whose company raised pay Sept. 1 to entice more drivers to over-the-road assignments.

Last week, Knight Transportation Inc. told investors that quarterly earnings would be lower than its earlier forecast, citing factors including “challenges related to recruiting qualified driving associates,” as well as higher recruiting and training costs.

“Turnover is always a challenging area,” said Chris Giltz, senior vice president of operations for the Evans Network of Cos., based in Schuylkill Haven, Pa. “What we try to do to prevent turnover is to do programs that connect drivers to the company.”

The nationwide drayage operator said it tries to build satisfaction by providing drivers the precise amounts of their weekly settlements two days in advance via the Internet so they know what they will receive.

“The advantage is that the information is not a surprise,” Giltz said. “They can manage their finances better.”

Another online feature allows drivers to search whether they have been paid for a specific trip.

Evans also is testing a lease-to-buy program. It’s meant to take a better approach to potential pitfalls such as overpriced equipment, high interest rates and short warranties, if any, on the leased truck.

“We have heard some horror stories out there,” Giltz said. “Drivers can very quickly get upside down if there are repairs and they don’t have money to pay for them.”

“Turnover has been pretty stable throughout the year,” Keith Klein, chief operating officer at truckload fleet Transport America, told TT. “As I look at the industry, I see indications that turnover has gone up for a lot of folks.”

Klein said his company takes a different approach to treatment of drivers, telling them that “the rest of us are here to support them.”

That is reflected in steps such as getting drivers home more often and quickly resolving issues that arise.

ATA’s Costello noted that turnover remains far below the 130% peak reached in 2005.

“Of course, the economy is not as good as 2005, which is probably a bigger factor” than other issues such as regulatory changes.

“I expect turnover to rise when the economy gets better,” Costello said. “The continued improvement in the freight economy, coupled with regulatory challenges from the changing hours-of-service rule and CSA will only serve to put a further squeeze on the market for drivers.”

Costello and Noël Perry, an FTR Associates consultant and former Schneider National executive, said driver pay and turnover are linked.

“Given that fleets are still very conservative vis-à-vis driver pay, I think we have a ways to go on turnover,” said Perry.

“A tight market for drivers will push costs higher for fleets as they work to recruit or retain quality drivers,” Costello said.

Duff Swain, a consultant at Trincon Group, said some fleets have shifted their attention from turnover to driver recruitment.

“Most of them have tried to do what they have done in the past with recruitment, and do that better,” Swain said. “That doesn’t solve the problem, as long as they do the same things, like a bad hiring decision.

“Pay is only part of the issue. Pay becomes an issue if it isn’t competitive. But turnover continues to be high, even if there are increases. [These increases] will just encourage drivers to switch fleets.”

“The real issue continues to be how drivers are treated, how connected they feel to their jobs, and the fact that they are valued,” Swain added. “That is what solves the turnover problem.”