Truckload Turnover Remains Elevated, Heightens Driver-Supply Fears

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

Truckload turnover hovered at elevated levels in the fourth quarter, American Trucking Associations reported, raising concerns about adequate driver supply in an improving freight market later this year.

The trade association said churn at large truckload fleets, whose annual revenue is at least $30 million, was 91% last quarter, compared with 90% in the final 2012 quarter and 97% in the third quarter of 2013.

Small fleets, with revenue below $30 million, saw an identical 1 percentage point increase to 79% from 78% on a year-over-year basis. On a sequential basis, small fleets’ turnover rose from 74% in the third quarter of last year.

Annual turnover is stuck at historically high levels, too. Large fleets’ turnover rate was 96% last year and 98% the year before. Small TL fleets dipped 3 percentage points last year to 79%, from 82%.

“The good news is that [turnover] didn’t spike last year; the bad news is that it remained very elevated,” ATA’s Chief Economist Bob Costello told Transport Topics. “Turnover certainly has the potential to get worse as capacity tightens, freight increases and good drivers feel more empowered to see if the grass is greener on the other side of the fence.”

Less-than-truckload turnover was 11% in the fourth quarter and for all of 2013, ATA said.

Pressure on all fleets to retain drivers soon could become more intense.

A March 11 survey from Bloomberg News and Internet Truck Stop found 78% of the fleets and brokers surveyed anticipate stronger freight volumes in the next six months. That was the highest percentage in 10 months.

“I think turnover is predominantly due to the fact that drivers have a lot more choices today,” said Scott Arves, CEO of Transport America Corp., where turnover has moved up into the 70% range.

“We are paying drivers in the upper quartile,” said Arves, whose company ranks No. 72 on the TT100 list of the largest for-hire carriers in the United States and Canada. “We think that helps with retention and safety.”

Drivers also are attracted to increased home time on regional and dedicated runs, an industry segment where Transport America is expanding, he said.

“During the depths of the recession, turnover plummeted because freight was so bad,” Costello said.

In 2009, large fleets stood at 50%, and small ones’ churn was 41%. A year later, those percentages were 52% and 44%, respectively.

“Many large fleets eliminated their recruiting efforts,” the ATA official added. “Obviously that has changed, but many fleets are working diligently on retention as well. “At-home time, pay, etc., all play into turnover. Also, shippers/receivers can impact a driver’s life and whether they stay with a carrier.”

Arves also said that driver-friendly freight, which doesn’t consume hours waiting at a shipper’s dock, will be an important factor in retaining drivers and preventing turnover.

Kent Ferguson, director of transportation solutions, at HireRight, based in Tulsa, Okla., told TT on March 12 that the company’s just-completed benchmark survey provides evidence that higher pay is the most cited reason for drivers to switch jobs.

Spending more time at home is the second-most frequent reason that drivers leave, followed in order by better benefits elsewhere, retirement and finding work outside transportation.

HireRight’s survey of more than 500 carriers also found that raising pay was the most effective retention step, followed closely by upgrading equipment and adding incentive programs.

Transport America is training fleet managers to function as “business leaders,” expanding their horizon beyond dispatching.

“There is also a focus on retention through training fleet managers on interaction with drivers,” Ferguson said, reinforcing Arves’ view.

“You have to be consistent in dealing with drivers,” Ferguson said, while also being flexible.

He said HireRight’s services include an alert to fleets if one of their drivers is looking for a job at another carrier, which gives the current employer an opportunity to decide whether to try to retain a restless employee.

Turnover and other issues, such as pay, continue to garner more attention as fleets’ business improves.

“2014 will be the year of the driver,” David Jackson, president of Knight Transportation (No. 31), said at an industry conference last month, stressing the need for long-term driver pay increases.

John Simone, CEO of USA Truck (No. 52), last month said turnover spiked in the fourth quarter to 106.5% from 97.9% in the same 2012 quarter after bad weather reduced miles for drivers and fleet efficiency alike.

Derek Leathers, president of Werner Enterprises (No. 13), identified a different challenge to keep turnover under control.

“We’ve got to find a way to make sure we build a job that [drivers] want to stay in,” he said.

At the same meeting, David Parker, CEO of Covenant Transportation Group (No. 41), stressed that Covenant’s rising turnover resulted from defections to the housing and construction industry and less-than-truckload carriers’ recruiting efforts.