Higher Freight volumes and tighter regulations
Truck driver turnover is increasing steadily and exceeding pre-recession levels at both large and small truckload fleets, propelled by a combination of higher freight volumes and tighter regulations, industry experts have said.
Third-quarter turnover among fleets with revenue above $30 million rose to 89%, the fourth consecutive increase and 10 percentage points above the second quarter this year, American Trucking Associations reported last week. The increase, well above the 49% in the third quarter of last year, pushed large truckload fleet turnover to the highest level since the first quarter of 2008.
Turnover also jumped 10 percentage points, to 57%, from the second quarter to the third quarter at fleets with revenue of $30 million and less, the highest rate since the third quarter of 2008.
For trucking, the recession notably began to affect business toward the end of 2008.
Turnover bottomed out in the first quarter of last year at 39% for larger fleets and 35% for smaller ones.
ATA also said turnover remained low at less-than-truckload fleets, totaling just 10% in the third quarter.
“Clearly due to the economic recovery, as well as regulatory factors like CSA, we are seeing the market for good, quality drivers tighten,” said Bob Costello, chief economist for ATA. “As freight demand heats up, demand for drivers will also increase, thus pushing turnover up as drivers jump from fleet to fleet, especially if they can get sign-on bonuses.”
“I expect turnover to continue to rise as long as freight is doing OK,” Costello added. “The need for quality drivers [will] become more acute going forward, particularly if regulations either force current drivers out of the industry or force fleets to put more trucks on the road.”
Among those potential changes are hours-of-service tweaks that could curtail driving hours, effectively reducing mileage and take-home pay.
“Our turnover, much like the industry, has trended up,” said Tonn Ostergard, CEO of Crete Carrier, which ranks No. 25 on the Transport Topics 100 list of the largest U.S. and Canadian trucking fleets. “It is still far better than the industry average.”
Turnover is rising, Ostergard said, because of the improving economy, which has opened up new opportunities for drivers, as well as CSA scores, which have tightened industry standards.
“We are all vying for fewer drivers,” Ostergard told Transport Topics, adding that Crete is using the company’s CSA scores, which are among the best in the industry, as a competitive advantage in recruiting.
“We are seeing the same thing that everyone else is seeing,” said Scott Arves, CEO of Transport America, which ranks No. 88 on the for-hire TT 100. “Our turnover is less than the industry average. We have a strategy to pay in the upper 10% of the industry.”
Arves agreed that poor CSA scores were a factor in turnover, though he estimated that no more than 10% of drivers are forced to leave because of their poor CSA record.
“A very high percentage of turnover right now is the classic carrier-to-carrier jumping” for higher pay, said Gordon Klemp, whose National Transportation Institute compiles quarterly wage data from about 350 truckload fleets.
“There is quite a bit of opportunity for a quality driver with a good safety record and a good employment history to move from the bottom half to the top half” of the driver pay range, Klemp said. He noted that such a move on average would raise pay 5.5 cents per mile for dry van, 4.5 cents per mile for refrigerated and 7 cents a mile for flatbed haulers. For a dry van driver who runs 110,000 miles, that move would mean an additional $6,050 in pay annually.
Drivers also appear to be more ready to move because they believe the economy will remain steady, Klemp added. In the past, they stayed put because of fear their new carrier would be less financially stable.
While turnover is rising, Arves said, the industry is facing a larger, related issue: attracting new people to trucking.
“The pool of applicants is getting smaller,” he said. “There are fewer students being trained. Quite frankly, this industry is not very attractive to this [younger] generation. It’s very seldom I see a student under the age of 30.”
Steve Prelipp, a consultant on driver issues and a former Schneider National executive, agreed, saying younger driver candidates want more home time.
“Companies are trying to see how they can maximize home time, but you can’t generate miles with the truck in the yard,” Prelipp said. Carriers “are walking a tightrope — how do you get enough home time for the driver and still get enough miles and pay to retain them?”
Prelipp offered a turnover reduction solution.
“If people are going to get better at reducing turnover, they are going to have to get better at driver selection,” Prelipp said, noting that typically 30% of new hires leave within 90 days and 50% quit within 180 days.