Driver shortage issues continues to raise questions but not provide enough answers

No matter how many ways it is sliced and diced, one thing is certain when it comes to truck driver turnover: it is a difficult situation that has been going on for years and does not truly show any meaningful signs of abating, at least for now.

This line of thought was again apparent in the most recent edition of the American Trucking Associations’ (ATA) Trucking Activity Report, which showed that the annualized driver turnover rate for large truckload fleets on the third quarter fell two percentage points to 97 percent.

With close to 100 percent turnover rate for large truckload fleets, as per the usual, ATA Chief Economist Bob Costello says that even with this dip, the market for experienced, qualified drivers remains very tight, and should the economy continue to show growth, he believes the market will get even tighter, for various reasons. 

“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,” Costello said.

As previously noted, driver turnover and tight capacity are two things that clearly go hand in hand in the trucking industry, especially during the current tight market conditions, spurred on by a relatively slow economic recovery and the December 2010 implementation of CSA, as well as the July 1 changes to truck driver hours-of-service (HOS).

And regulations like CSA and HOS, as well as Electronic On Board Recorders (EOBR) continue to play a major role in carriers’ being hesitant to increase capacity and subsequently hire drivers, which continues to be challenging, as evidenced by ATA’s data.

Projections from freight transportation forecasting consultancy FTR Associates estimate that this problem is likely to get worse and by 2014 the driver shortage could be in the 250,000 range, which Stifel Nicolaus analyst John Larkin said is going to create a capacity shortage which will translate into “fairly sizable rate increases” that might be steeper than what has occurred during the slow growth period over the last couple of years.

While the driver turnover rate, especially for large carriers, remains high, it could reach even greater heights should the economy see material gains.

At the FTR Transportation Conference in late September, Larkin said that strong recruiting is the best way to keep driver capacity utilization at bay. The sophisticated and largest carriers are doing the best to recruit experienced drivers and many also have training programs,” he said.
“They are the ones treating drivers the best and getting them home regularly.”

While turnover figures to remain prevalent in the future as it is now, the onset of additional regulations to HOS and CSA, will lead to increased hiring. FTR Senior Consultant Noel Perry said that by the third quarter of 2016 there could be 1.4 million new drivers in the marketplace. a staggering statistic to say the least.

Larkin’s rate increase thesis was also supported by recent research from Transport Capital Partners (TCP), which noted that carriers are feeling good about volume gains and rate increases in 2014, coupled with the fact that positive volume expectations among the nearly 200 carriers it recently surveyed is up to 61 percent in the fourth quarter compared to the same period a year ago.

TCP also observed that volume and rates continue to mesh in conjunction with improving GDP figures, coupled with effective capacity being impacted by CSA and HOS. Taking that point further, TCP explained that if 5-to-10 percent of driver hours have been reduced, due to regulations, then 5-to-10 percent more drivers—with higher salaries—are subsequently needed. And on top of that in many cases TCP said carriers will also need to buy more trucks that add al already increasing fixed costs.

To be sure, the cons still outweigh the pros when it comes to reasons not to be a truck driver—including time spent behind the wheel away from home and salaries, with drivers jumping from one carrier to another for better pay—and these things don’t help the current situation because things don’t really appear to be changing much, if at all, despite the changes in economic patterns.

Something has got to give on the driver shortage and retention front. But, as usual, the question remains: how, if or when?