Large Truckload Turnover Rate Rises
127% Level Is Highest Since Late ’05, ATA Says
By Tarun Reddy, Staff Reporter
This story appears in the June 25 print edition of Transport Topics.
Driver turnover at large truckload carriers climbed to its highest point in more than a year, rising six percentage points to an annualized rate of 127% in the first quarter, as drivers sought out carriers with more freight to deliver, according to American Trucking Associations.
Bob Costello, ATA’s chief economist, said the increase in turnover, or churn, at large carriers was a direct result of softer freight volumes.
“Drivers are not getting the miles they need, so they’re looking around for other carriers,” Costello told Transport Topics.
ATA, which measures driver turnover every quarter, also found that large fleets ended 2007’s first quarter with 1.8% fewer drivers than they had at the start of the year, and nearly 80% of the large carriers surveyed reduced their driver pool — the second straight quarterly reduction.
“This shows that when a large carrier loses a driver, they are not replacing him,” Costello said.
Many large truckload carriers have said freight volumes during the first quarter were lower than a year ago (5-14, p. 5). And ATA’s tonnage index for 2006 declined 1.7%, compared with 2005.
While driver churn at large carriers climbed, the turnover rate for small truckload carriers — fleets with less than $30 million in annual revenue — dropped 10 percentage points from the fourth quarter to 112%, ATA said.
Churn at less-than-truckload carriers increased four percentage points to 14%. LTL carriers tend to have lower turnover rates because their drivers are home more often. The LTL rate has ranged between 11.9% and 16.8% since the beginning of 2005.
The first-quarter turnover rate for large truckload carriers is at the highest level since the fourth quarter of 2005, when it was 136%, ATA said. The rate for the first three months of 2007 was 11 points higher than the same period in 2006.
Brett Terchila, vice president of recruiting for truckload carrier Celadon Group, said the company’s turnover rate was relatively un-changed from a year ago. Celadon’s turnover was 75% during the first three months of the calendar year, compared with 74% a year earlier.
Terchila agreed that turnover tends to be higher when freight volumes are weak. Celadon’s revenue per loaded mile, excluding fuel surcharges, during its most recent quarter grew only 2% — to $1.52. But, he said, “our turnover situation wasn’t that bad when you consider the freight environment.”
Celadon ranks No. 58 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers.
Tom Kretsinger Jr., president of large truckload carrier American Central Transport, said the company’s turnover rate was 75% during the first quarter, a four-point rise from the same period in 2006. The increase was “all about the slowdown in freight,” he added.
Kretsinger said ACT, which is based in Liberty, Mo., has about 400 drivers, two-thirds of whom are company drivers.
The turnover rate for the company’s owner-operators was around 85% during the first quarter, higher than a year ago, Kretsinger said, when the turnover rate for company drivers was nearly 65%.
Kretsinger explained that owner-operators who lease their trucks have to make weekly finance payments. “It only takes a couple of bad weeks before an owner-operator has to make some tough choices.”
Gene Funk, general counsel for Baltimore-based truckload carrier Cowan Systems, said the firm’s turnover rate is around 45% — about the same as a year ago. Much of Cowan’s business relies on dedicated contracts, rather than the spot market, for loads.
While business was down a little bit for Cowan, Funk said the company has managed to find enough miles for drivers.
Funk also said the company has changed the way it recruits drivers.
In the past, the company would take a general, nationwide approach to recruiting. “Now, we’re focusing more on specific regions of the country based on freight demand,” Funk said.
Although a weak freight environment was a large factor in rising turnover, any improvement may give churn another boost, at least initially, because carriers then will try to entice drivers from competitors and drivers will continue seeking positions with more freight. “As freight demand picks up, there will be increased competition among fleets to get more drivers,” Costello said.
Kevin Burch, president of truckload carrier Jet Express Inc., agreed that turnover may get worse in the coming months, but he said he expects the economy to improve later this year, which should increase freight demand.
As freight volumes pick up, drivers will be more selective about where they want to work, and that is likely to increase turnover, Burch said. “If a company thinks the turnover situation is going to improve later this year, they’re kidding themselves.”
While the turnover situation at large truckload carriers worsened during the first quarter, Costello said he was not sure why the rate fell at small carriers. Despite the decrease for small carriers, the turnover rate has been above 100% for six straight quarters, which is unprecedented, Costello said.
Small carriers added 3.5% more linehaul drivers than were let go during the quarter, Costello said.
This story appears in the June 25 print edition of Transport Topics.
Driver turnover at large truckload carriers climbed to its highest point in more than a year, rising six percentage points to an annualized rate of 127% in the first quarter, as drivers sought out carriers with more freight to deliver, according to American Trucking Associations.
Bob Costello, ATA’s chief economist, said the increase in turnover, or churn, at large carriers was a direct result of softer freight volumes.
“Drivers are not getting the miles they need, so they’re looking around for other carriers,” Costello told Transport Topics.
ATA, which measures driver turnover every quarter, also found that large fleets ended 2007’s first quarter with 1.8% fewer drivers than they had at the start of the year, and nearly 80% of the large carriers surveyed reduced their driver pool — the second straight quarterly reduction.
“This shows that when a large carrier loses a driver, they are not replacing him,” Costello said.
Many large truckload carriers have said freight volumes during the first quarter were lower than a year ago (5-14, p. 5). And ATA’s tonnage index for 2006 declined 1.7%, compared with 2005.
While driver churn at large carriers climbed, the turnover rate for small truckload carriers — fleets with less than $30 million in annual revenue — dropped 10 percentage points from the fourth quarter to 112%, ATA said.
Churn at less-than-truckload carriers increased four percentage points to 14%. LTL carriers tend to have lower turnover rates because their drivers are home more often. The LTL rate has ranged between 11.9% and 16.8% since the beginning of 2005.
The first-quarter turnover rate for large truckload carriers is at the highest level since the fourth quarter of 2005, when it was 136%, ATA said. The rate for the first three months of 2007 was 11 points higher than the same period in 2006.
Brett Terchila, vice president of recruiting for truckload carrier Celadon Group, said the company’s turnover rate was relatively un-changed from a year ago. Celadon’s turnover was 75% during the first three months of the calendar year, compared with 74% a year earlier.
Terchila agreed that turnover tends to be higher when freight volumes are weak. Celadon’s revenue per loaded mile, excluding fuel surcharges, during its most recent quarter grew only 2% — to $1.52. But, he said, “our turnover situation wasn’t that bad when you consider the freight environment.”
Celadon ranks No. 58 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers.
Tom Kretsinger Jr., president of large truckload carrier American Central Transport, said the company’s turnover rate was 75% during the first quarter, a four-point rise from the same period in 2006. The increase was “all about the slowdown in freight,” he added.
Kretsinger said ACT, which is based in Liberty, Mo., has about 400 drivers, two-thirds of whom are company drivers.
The turnover rate for the company’s owner-operators was around 85% during the first quarter, higher than a year ago, Kretsinger said, when the turnover rate for company drivers was nearly 65%.
Kretsinger explained that owner-operators who lease their trucks have to make weekly finance payments. “It only takes a couple of bad weeks before an owner-operator has to make some tough choices.”
Gene Funk, general counsel for Baltimore-based truckload carrier Cowan Systems, said the firm’s turnover rate is around 45% — about the same as a year ago. Much of Cowan’s business relies on dedicated contracts, rather than the spot market, for loads.
While business was down a little bit for Cowan, Funk said the company has managed to find enough miles for drivers.
Funk also said the company has changed the way it recruits drivers.
In the past, the company would take a general, nationwide approach to recruiting. “Now, we’re focusing more on specific regions of the country based on freight demand,” Funk said.
Although a weak freight environment was a large factor in rising turnover, any improvement may give churn another boost, at least initially, because carriers then will try to entice drivers from competitors and drivers will continue seeking positions with more freight. “As freight demand picks up, there will be increased competition among fleets to get more drivers,” Costello said.
Kevin Burch, president of truckload carrier Jet Express Inc., agreed that turnover may get worse in the coming months, but he said he expects the economy to improve later this year, which should increase freight demand.
As freight volumes pick up, drivers will be more selective about where they want to work, and that is likely to increase turnover, Burch said. “If a company thinks the turnover situation is going to improve later this year, they’re kidding themselves.”
While the turnover situation at large truckload carriers worsened during the first quarter, Costello said he was not sure why the rate fell at small carriers. Despite the decrease for small carriers, the turnover rate has been above 100% for six straight quarters, which is unprecedented, Costello said.
Small carriers added 3.5% more linehaul drivers than were let go during the quarter, Costello said.
