Truckload Turnover Remains Elevated as Fleets Try More Retention Methods

This story appears in the April 6 print edition of Transport Topics.

Truckload driver turnover remains stuck at historically high levels as fleets pursue every possible approach to retain them, American Trucking Associations reported last week.

The annualized rate in the fourth quarter was 96% for carriers with revenue of $30 million and above, and 95% for fleets below that level, ATA announced April 1.

It was the third consecutive quarter when turnover was within 1 or 2 percentage points of 95% for both fleet groups.

“Turnover rates are a good reflection of what is going on in the driver market,” said Bob Costello, the federation’s chief economist, who gauged the current shortage at 35,000 to 40,000 drivers.

“Due to growing freight volumes, regulatory pressures and normal attrition, we expect the problem to get worse in the near term as the industry works to find solutions to the shortage,” he added.

He also noted the turnover gap between small and large carriers narrowed to levels “we haven’t experienced in some time. This is likely the result of larger fleets raising pay, offering bonuses and attracting more and more drivers from smaller fleets to fill seats.”

Full-year turnover trends for 2014 illustrate his point. Last year, smaller fleets’ churn totaled 90%, just five points below the larger fleets’ amount. That is the smallest gap between the fleet sizes since 2000.

Smaller-fleet turnover now stands at the highest in nearly eight years, but larger fleets’ churn remains below levels that topped 130% a decade ago.

Costello said he believes the shortage will continue, even though pay levels rose 8% to 15% last year, and should continue this year.

At less-than-truckload carriers, turnover was 10%, down 3 percentage points from the third quarter. The full-year rate was 11% in 2014 and 2013.

Stifel, Nicolaus & Co. analyst John Larkin dramatized the difficulty in solving a “perplexing [driver] problem,” by citing 15 retention steps fleets have taken without much success, such as pay increases, seniority bonuses and wellness programs.

Steve Schelin, director of recruiting at Salt Lake City-based Pride Transport, related a frequent comment from CEO Jeff England that stresses a driver’s overriding importance. “Without any of them,” Schelin quoted England as saying, “I don’t need any of you.”

Pride, whose total turnover rate is 70%, relies on a scorecard including fuel economy, productivity and on-time service to help drivers “earn their own permanent pay increases,” through effective performance, Schelin said.

Pride also stresses technology such as free satellite television and radio for drivers in a 450-truck fleet that averages just 14 months old. And it emphasizes the importance of customer service skills for fleet managers, he added.

England is the grandson of the founder of C.R. England Inc., a venerable carrier based in Salt Lake City since 1920.

Rim Yurkus, CEO of consultant Strategic Programs Inc., told Transport Topics a key step for training schools and fleet managers is to “vaccinate” new drivers so that they ease into the new lifestyle effectively.

“Schools are doing a pretty good job with technical skills, but a lousy job preparing them for the lifestyle,” he said. Managers with excellent social skills who are assigned only to new drivers can be particularly helpful, he said, by coaching on pay and lifestyle issues.

Yurkus linked driver retention to the “Great American Dream.”

“[Drivers] need to feel they are better off than last year and will be even better off next year,” he said. “The trucking industry isn’t doing a good enough job at that. The temptation to try someplace else is higher than it has ever been” as pay increases and bonuses proliferate.”

Joe White, CEO at CostDown Consulting, said it is important to match new drivers’ expectations with the realization of wages and working conditions, particularly in the first 90 days.

“If drivers don’t receive the wages and working conditions they expect, they quit,” he told TT. Fleets need to do a meticulous job in communicating that information, and it’s particularly important for larger fleets with multiple terminals.

Carriers should have what White termed “longevity consultants” to show drivers how they can hurt themselves by job-hopping, such as loss of 401(k) benefits, medical, vacation and higher pay for seniority.

Another approach he suggested for new driver orientation is to list what carriers a fleet’s driver left for and which ones they left to return to their home carrier.

One approach that offers “at least a partial solution, Larkin said, is an apprenticeship program to bring high school graduates into trucking before they take up another career.