Small Truckload Fleet Turnover Rises

Driver turnover at small truckload fleets rose sharply in the first quarter to 71% from 55% in the fourth quarter of 2011, the largest quarter-to-quarter increase in seven years, propelled by financial pressures and other factors, American Trucking Associations reported.

On a year-to-year basis, turnover for small carriers that have less than $30 million in revenue climbed from 50% in last year’s first quarter, ATA said on June 13.

The increase in small fleet turnover for both periods outpaced the churn of drivers at larger carriers, where turnover inched up to 90% in the first three months of this year, from 88%. In last year’s first quarter, large fleet turnover was 75%, or 15 percentage points less than now.

“This report of a slight rise at large fleets and a significant increase at smaller fleets matches up with what we hear regarding the health of the industry, the tightening of the labor market for drivers and demand for good, quality, experienced drivers,” said Bob Costello, chief economist at ATA.

Financial pressures, including pay levels, are mounting on the smaller fleets and are driving the turnover increase, along with the effects of the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability program, Costello said.

“Some smaller fleets are having difficulty paying for new equipment,” Costello said, because of the price differential between new-tractor prices and trade-in values.

That difference today can be as much as $100,000, compared with half that amount five or six years ago, Costello said earlier this month.

As a result, he said, “they have to sell two [old tractors] to get into one new one.”

That move results in higher turn-over every time the driver of one of those traded tractors needs to find somewhere else to work.

Pay levels also are a factor, said both Costello and Steve Prelipp, a consultant on driver issues and former Schneider National executive, who called the small-fleet turnover increase “a striking number.”

“If you’re a good driver,” Costello said, “you are out there hopping around” in search of better pay.

“There is a definite trend toward people working harder to seat trucks,” Prelipp said. “The pressure is on. Recruiters are out there trying to fill trucks.”

One method for doing that, he suggested, was raising pay.

Smaller fleets are handicapped in finding drivers, Prelipp said, because they typically have smaller recruiting budgets or may not have a formal recruiting process — and usually don’t pay as well as other trucking jobs.

He described small fleets as being at the bottom of what he termed “an economic pecking order.”

In that situation, Prelipp said, larger truckload carriers with deeper pockets pursue drivers at smaller fleets that may not pay as well.

In turn, Prelipp said, larger truckload fleets can have drivers yanked out of their tractors by less-than-truckload or private fleets that pay better than larger truckload operations.

The FMCSA’s CSA program also is having an effect, Costello and others said.

“Some drivers are leaving some small carriers for CSA reasons,” Costello said. “Drivers are becoming more picky.”

He linked driver departures to the fact that those small fleets often have older equipment with more maintenance problems that can count against the driver during a roadside inspection.

Richard Mikes, a partner at consulting firm Transport Capital Partners, said the CSA program also could be accelerating turnover in another way.

Drivers with good individual scores who work for a carrier with a poor CSA safety assessment add to turnover by switching jobs, Mikes said. Their goal is to get more miles and loads because shippers and brokers are reluctant to use fleets that appear to be less safe.

Mikes said another factor in rising turnover could be drivers who switch back to the construction industry, which has been gaining momentum this year after several years in the doldrums (5-21, p. 1).

ATA’s report also assessed turnover at less-than-truckload carriers, which remains far below truckload operators.

In the first quarter of this year, LTL carrier turnover was 8%, one percentage point higher than the final 2011 quarter. On a year-to-year basis, the LTL turnover rate was unchanged.

Turnover usually isn’t a problem for the smallest tier of fleets, those with 20 drivers or less, said David Owen, executive director of the National Association of Small Trucking Companies, where the average number of tractors per member is 15.6.

That is because the owner typically dispatches the trucks and keeps a close personal relationship with the drivers.

“The relationship between the asset producer and the investor is one-on-one,” he told Transport Topics.

Often, Owen said, turnover at fleets with 20 or fewer drivers is one or possibly two workers per year.

Larger fleets, he said, may have a single dispatcher handling 40 to 60 drivers, which reduces personal contact, drives up turnover and makes the retention process more difficult.