TL Turnover Sinks to 71%

This story appears in the April 3 print edition of Transport Topics.

Driver turnover for large truckload carriers dropped 31 percentage points to 71% in the fourth quarter of 2016 versus the same period in 2015, the lowest level in six years according to American Trucking Associations.

Turnover at the smaller truckload fleets, those with $30 million or less in annual revenue, fell 16 percentage points from the third quarter to 64%. Year-over-year, the rate fell from 89% in the final quarter of 2015.

For fleets with more than $30 million in annual revenue, turnover dropped from 102% in the fourth quarter of 2015 and 81% in the third quarter of 2016.

Less-than-truckload turnover remained low at 8%, 1 percentage point lower than the second quarter and down from 11% during the final quarter of 2015.

“Continued declines in turnover rate reflect the overall choppiness of the freight market,” ATA Chief Economist Bob Costello said. “As inventory levels throughout the supply chain are drawn down to more normal levels and freight volumes recover, we should see turnover rise along with concerns about the driver shortage.”

Knight Transportation CEO Dave Jackson said that the results were consistent with his experience but that driver turnover could be even lower if fewer freight brokers not owning assets were involved in the bidding process for irregular route, daily freight movements.

Knight, a Phoenix-based truckload carrier, ranks No. 29 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

“Over the last two years, the non-asset-based brokerage community has been very aggressive in the bids. They don’t have any drivers of their own; they don’t own any trucks,” Jackson said. “They get in there very transactionally and take, move and give lanes left and right without realizing that to develop quality service programs customized to individual shippers requires a tremendous amount of work and setup and requires drivers with a high level of execution.”

Turnover will continue to be a problem, Jackson added, as long as there is stiff competition on pricing that allows shippers to prioritize cost over quality of service. If there were more of an emphasis on reliability, consistency and predictability of the carrier, he estimated, then truckload turnover could drop below 50%.

“When we go out and bid business and agree to make commitments, we look at and understand the impact on drivers,” Jackson said. “Will drivers view it as favorable? It’s hard for [non-asset-based] brokers to appreciate the value in a irregular truckload route in providing consistency, safety and a quality of life and productivity of the driver.”

Turnover at Nussbaum Transportation, a Hudson, Illinois-based dry van carrier, dropped to 29% from about 40% over the past year. Nussbaum operates 300 trucks and 750 trailers.

“When we approached 40%, we just concluded that we couldn’t allow that to continue, and we needed to take a closer look at it,” said CEO Brent Nussbaum.

“We’ve really focused on turnover and our culture over the last nine months. We’ve brought in FranklinCovey’s four disciplines of execution,” said Bill Wettstein, Nussbaum Transportation chief financial officer, adding that it was a suggestion from Rob Penner, CEO at Bison Transport, which ranks No. 65 on the for-hire TT100.

“We’ve investigated what we can do in our 13 teams within the company to improve the driver experience. It’s been our big emphasis since October,” Wettstein said.

Brent Nussbaum also credited the lower turnover to his executive team speaking to a portion of the 300 truck drivers each week to gauge their overall satisfaction level. Each driver talks to senior management two to three times per year.

“We have about eight of our executives do what’s called a weekly pulse-taking call,” Nussbaum said. “We want to find out what kind of experience they are having operationally. We want to know what their home time is like, what their maintenance experience is like. We just allow them to vent.”

Despite the decline, some fleets have experienced higher turnover during the past six months.

Ed Nagle, CEO of the Nagle Cos., told TT that four drivers have abandoned their equipment and quit during the past six months. Prior to that, he said it happened only once in his 30-plus years in business. He called the act “utterly disrespectful” and couldn’t explain why it has happened with such frequency lately.

The Walbridge, Ohio-based refrigerated van carrier operates about 50 trucks and 85 trailers.

“We’ve seen more turnover in the last year than we have in our entire history. Our greatest challenge is to get the drivers to communicate to us what they’re really looking for,” Nagle said. “The food industry is tough. It’s probably one of the hardest industries and most disrespectful to drivers. Some customers are very good, but by and large, there are more delays and detention in the food industry than any other.”