Truckload Driver Turnover Dips

This story appears in the Dec. 16 print edition of Transport Topics.

Driver turnover ticked downward at truckload carriers during the third quarter but remained at relatively high levels, American Trucking Associations reported last week.

ATA said turnover at large truckload fleets slipped 2 percentage points to 97% and that at smaller fleets it dropped 8 percentage points to 74%.

The latest report, comparing turnover to the second quarter of 2013, represented the seventh consecutive quarter that churn remained above 90% at fleets with $30 million or more in annual revenue. On a year-over-year basis, turnover declined 7 percentage points at larger fleets, while smaller-fleet turnover fell 20 percentage points from a six-year high, ATA reported Dec. 11.

“I wouldn’t read too much into the drop,” ATA’s chief economist, Bob Costello, told Transport Topics. “The market for experienced, qualified drivers remains exceptionally tight.”

From a broader perspective, the latest report shows close correlation with a level of turnover in the six quarters since 2012 began. Larger fleet turnover in that period was 99% and smaller fleet churn was 82%.

Turnover at less-than-truckload fleets jumped 7 percentage points to 13% in the quarter. That was the highest level this year and was a sequential increase from a two-year low in the second quarter. Compared with 2012, LTL turnover rose from 8%.

Costello said he believes turnover will grow as the U.S. economy, measured by gross domestic product, grows at an expected 2.5% pace next year, compared with 1.7% for 2013 (see story, p. 13).

“I expect, as the economy continues to pick up, we’ll see that market get even tighter,” he said. “Between increasing demand for freight services and regulatory pressures, I expect fleets to remain challenged finding enough qualified drivers, and we’ll be contending with driver shortage-related issues for the foreseeable future.”

Robert Low, president of Prime Inc., told TT that restrictions on hours-of-service rules that began in the third quarter are forcing turnover higher.

“It adds to the turnover problem,” he said. “It has restricted productivity, which reduces drivers’ income. That creates additional pressure on the drivers and families.”

“We are working very hard to improve our systems and further reduce [turnover],” said Low, whose fleet has an overall 62% churn rate.

Prime ranks No. 21 on the Transport Topics Top 100 listing of largest for-hire carriers in the United States and Canada.

Other carrier officials said broader, long-term trends are affecting turnover.

“We are not seeing drivers leave as a result of the hours-of-service change,” said John Pope, chairman of Cargo Transporters, which is based in Claremont, N.C., where turnover rose slightly this year to 38% from 33%.

“Most of the increase in 2013 turnover can be attributed to an improved economy,” Pope said, as drivers find new opportunities to work regional or local runs closer to home.

Shephard Dunn, CEO of Bestway Express in Vincennes, Ind., said turnover typically slows at the end of the year. That’s because more drivers keep their trucking jobs, instead of leaving during warmer months to work outdoors in the construction industry.

Chip Smith, chief operating officer at Bay & Bay, based in Rosemont, Minn., told TT: “We haven’t done anything new just because of HOS changes. If drivers can’t get the miles they need per day, it’s hard to keep them. We just have to be careful planning our network and load selection.”

One possible explanation for the quarterly decline is more effective retention efforts, officials said.

“I do think fleets are putting more effort into retention, which might have paid some dividends during the quarter,” ATA’s Costello said.

“There has definitely been an influx of new programs aimed at driver retention,” said Jay Green, vice president of consulting firm Strategic Programs. “People who in the past didn’t care much are certainly putting more focus on that.”

The approaches being taken, Green said, include higher pay, dropping customers that treat drivers poorly and increased training for fleet managers and dispatchers so drivers are treated better.

Noel Perry, senior consultant at FTR Associates and a former truckload executive, identified an HOS-related effect on turnover.

He said he expects a rise if drivers go shopping for new carriers because their current employer doesn’t fully compensate them for lost productivity and fewer miles.

However, Perry added that may not happen because “the ATA report indicates that the fleets are managing the [retention] process fairly well.”

Rim Yurkus, CEO of Strategic Programs, said driver turnover at smaller fleets is declining faster because those fleets can successfully tailor job assignments to individual driver preferences, such as running more miles or being home more often.