Driver turnover rate declines, but challenges remain firmly intact

The topic of driver turnover is always prevalent in trucking, and all of freight transportation and logistics to a larger extent, and it is typically viewed with a bit of apprehension, as the supporting data is almost always dire in highlighting the severity of the driver shortage.

That is not to say that the driver shortage does not remain a significant issue, it does to be sure. But based on data issued by the American Trucking Associations (ATA), things don’t appear to be as bad as usual at least.

According to the ATA, the turnover rate at large truckload fleets with more than $30 million in annual revenue saw a 2 percent decline to 81 percent in the third quarter for its lowest level going back to the second quarter of 2011.

This marks the third decline in 2016, with the large truckload fleet turnover rate in the first quarter seeing a 13 percent decrease to 89 percent and the second quarter off 6 percent at 83 percent.

And for small truckload fleets, which the ATA defines as fleets with under $30 million in annual revenue, the turnover rate saw a 1 percent increase to 80 percent, with less-than-truckload fleet carriers seeing a 3 percent decline to 9 percent (the turnover rate for less-than-truckload (LTL) carriers, which is typically much lower than the rate for truckload drivers)This follows turnover rates of 88 percent and 79 percent, respectively, for the first two quarters.

ATA Chief Economist Bob Costello cited various reasons for the lower turnover percentage on the truckload side, with a forward-looking approach to what may be in store for the coming months.

“Ongoing softness in the freight economy has contributed to an easing of the market for drivers and a reduced turnover rate,” Costello in a statement. “Since the end of the third quarter, we have seen signs that we may be reaching the end of the poor inventory cycle that has driven a lot of the weakness in the freight economy, so we may see turnover rates rebound in the months to come. Despite the falling turnover rate, carriers continue to report difficulty finding well-qualified drivers, a problem that will not only persist, but which will get worse as the freight economy improves.”

That last part regarding inventories is where things really start to get fuzzy in regards to the driver shortage in that as the economy shows improvement, finding drivers will only continue to become more difficult.

Earlier this year, Costello observed that  if freight demand truly picks up and subsequently comes 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…an unwelcome statistic to be sure, as it represents a “here we go (or are) again” type of scenario, with no clear end in sight for addressing the shortage and high turnover rates.

That brought to mind this comment below that I wrote earlier this year: 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.

I cite this comment as it continues to drive home the point that this is a tough situation for the industry, and really the entire supply chain and freight transportation and logistics sectors to continue to be in, especially when you consider the fact that trucking moves around 70 percent or so of all freight volumes. As Charlie Brown might say, “Good grief!”

It is also worth mentioning the ATA’s landmark October 2015 report, 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.

As previously noted in this space, 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.

Now, maybe 2017 paints a different picture and we end up seeing the turnover rates continue to decline, which would be welcomed with open arms. But it goes without saying at the same time, that much remains to be seen, with everything contingent on economic activity in one way or another, not to mention the impact of certain regulations, too.

In other words, when it comes to assessing the future truck driver turnover situation, stay tuned.