Given all the news about what ails the freight transportation market these days, and there is no shortage of things to select, it stands to reason that second quarter driver turnover data issued by the American Trucking Associations (ATA) today serves as somewhat good news.
The ATA said that the second quarter turnover rate at truckload fleets with more than $30 million in annual revenue dropped six points to 83 percent, which ATA said is its lowest level in five years going back to the second quarter of 2011.
And for smaller truckload fleets, with less than $30 million in annual revenue, the second quarter turnover rate dropped 9 points to 79 percent for its lowest point since the third quarter of 2015, while less-than-truckload (LTL) driver turnover was the lone group to see its turnover rate head up with a 4 point gain to 12 percent.
“The continued decline in the turnover rate reflects the continued choppiness in the freight economy,” said ATA Chief Economist Bob Costello in a statement. “As we hopefully approach the end of this period of elevated inventories later this year, freight demand will pick back up leading to increased demand for drivers and higher turnover rates in the future. Though the turnover rate continues to fall at truckload carriers, finding enough qualified drivers remains a concern for many carriers.”
Costello makes some great points there, laying out both sides of what is happening in terms of the truck driver turnover situation mirroring key themes within the freight economy, specifically the ongoing theme of high inventories, which has been a true drag on freight volumes for more than a while and something that has been echoed on company earnings calls and by industry stakeholders of all kinds.
And his comment about freight demand picking up and subsequently coming with increased demand for drivers and higher turnover rates, which will likely be back to the more familiar range of the mid-to-high 90 percent range will also ring true.
So, where does that bring us? Back to where things have been for a long time in regards to the state of driver turnover and availability: a state of equal parts flux and confusion.
It is not surprising, of course, and most, if not all, view this situation as just “how things are” to a large degree. There are many reasons, too, as we all know, whether it be: time spent away from home; not enough money; regulatory crunch; and an aging workforce with many younger people simply not interested in pursuing driving a truck as a career path.
These things and more were well-documented in an October 2015 report issued by the ATA, entitled “Truck Driver Analysis 2015,” whose chief findings cited how the current shortage of truck drivers now stands at almost 48,000 and has the potential to go higher, due in large part to industry growth and drivers parking their trucks on the way to retirement and also noting that if current trends remain intact, the driver shortage could rise to around 175,000 by 2024.
Many industry stakeholders say that the lack of available––and willing––drivers will only get worse in the coming years, with the average age of drivers still firmly entrenched around 50.
Even with an increased onus on augmenting driver training, retention, and compensation packages, many carriers are still struggling with how to fill the empty seats. The ongoing driver shortage still serves as a major factor for tight over the road capacity, which has been burdensome for shippers in that they need to pay higher rates in order to get their freight moved in a timely and efficient manner.
Stifel analyst John Larkin said in an interview with The Wall Street Transcript last month that the labor shortage in trucking continues to be fairly severe and will just get more severe with the implementation of new regulations.
“And I think that one of the misconceptions out there is that people think that simply raising pay for drivers is the solution to the problem,” he said. “And we would argue that if pay was the answer, then the highest paying carriers should have a line out the door of drivers waiting to sign up. There is quite a differential between the highest-paying carriers and the lowest-paying carriers, let’s say maybe $100,000 a year on the high end and $40,000 on the low end. Today, carriers are struggling to seat their trucks with compliant drivers across that entire pay spectrum.”
In terms of making life behind the wheel more attractive for prospective drivers, Larkin explained that all the carriers are sharing best practices and are trying to get the drivers home more frequently and are offering performance bonuses for improved fuel efficiency, reduced accidents, on-time delivery and improved productivity
“The carriers are offering signing bonuses, referral bonuses, recruiting bonuses, etc.” he said. “The carriers have built driver training schools to train new drivers. They have set up driver lounges with access to free health and wellness programs. They have really gone over the top here to try and make truck driving a more attractive job, and yet just about all carriers are still struggling to seat their equipment with qualified compliant drivers.”