Truckload Driver Turnover Surges

This story appears in the Sept. 17 print edition of Transport Topics.

Driver turnover at large truckload carriers reached 106% in the second quarter — the highest level since the final quarter of 2007 — as fleets looked for staff to move modestly higher freight volumes this year, American Trucking Associations reported.

Turnover at these fleets — those with at least $30 million in annual revenue — grew 16 percentage points from the first three months of 2012, ATA said on Sept. 15.

A 106% turnover rate means that drivers on average spend less than one year at a particular company, forcing fleets to find replacements.

At smaller truckload fleets, turnover in the April-to-June period rose 15 percentage points to 86%, the highest reading since the third quarter of 2007.

“We continue to see steady, albeit sluggish, growth in freight volumes, which increases demand for drivers,” said ATA’s chief economist, Bob Costello. ATA’s tonnage index has risen 3.7% through July, on top of 5.9% increases in each of the past two years.

“That, coupled with continued pressure on fleets to improve their safety records as a result of regulatory oversight changes, is increasing competition among carriers for drivers with clean histories,” Costello said.

Driver turnover for large truckload fleets has more than doubled in two years from 49% in 2010’s second quarter. At the smaller fleets with revenue below that amount, turnover nearly doubled from 46% over the same two-year period.

“We have been contending that the driver shortage is by and large qualitative, rather than quantitative,” Costello said. “Despite some estimates, I believe that in terms of raw numbers, the trucking industry is currently short somewhere in the range of 20,000 to 30,000 drivers.”

“However, if we continue to see growth in freight volumes, we can expect that number to rise in the near future, exacerbating the qualitative shortage and creating a quantitative one,” Costello said.

Others have estimated that far more drivers are needed now, including a current estimate of 200,000 — with a sharp increase next year as the driver population ages and freight volumes continue to increase.

Based on ATA’s calculation that there are about 3 million U.S. commercial truck drivers, the shortage is about 1%, using Costello’s gauge.

“How can there be a driver shortage when unemployment is so high?” Russell Stubbs, CEO of Frozen Food Express, asked the attendees at a New York investor conference on Sept. 5 — before answering his own question.

“The hard part is that medical and physical qualifications are taking a lot of drivers out of the marketplace,” he said. “The other part is baby boomers getting to retirement age. They didn’t raise their kids to drive trucks — it’s not a glamorous job.”

Stubbs maintained that pay increases aren’t the most important reason drivers leave, citing a pay increase of 50% by an unnamed competitor that “lost drivers almost as fast as they hired them.”

FFE cut its 108% turnover rate by opening a school for training new drivers earlier this year, Chief Operating Officer John Hickerson said. The move has reduced the company’s turnover rate to 70%.

The pressure caused by turn-over is forcing other fleets to take all kinds of steps to find and keep drivers, including using smart-phone technology, an approach now in vogue at Landstar System Inc.

Candidates can use their smart phones to apply through the Internet, or they can use a target built into a magazine advertisement to apply, CEO Henry Gerkens said.

Joseph Cowan, CEO of Co-wan Systems, offered another approach.

“Our over-the-road operators are home every weekend,” he said. “It costs us a fortune. The quid pro quo is 25% turnover.”

Dave Jackson, president of Knight Transportation, stressed the personal approach.

“We are not the highest payer,” he said. “We’re more toward the middle of the pack. Our ability to build a relationship with drivers can make all the difference whether they stay with you or go somewhere else.”

As in past quarters, the turnover rate for less-than-truckload fleets on average was far below truckload levels, standing at 9% in the second quarter, compared with 8% in the first quarter and last year’s second quarter.