Driver turnover fell 19 percentage points year-over-year to 81% in the third quarter for larger truckload fleets, dropping to the lowest level in five years due to the soft freight environment, American Trucking Associations reported last week.
Turnover at the smaller truckload fleets, those with $30 million or less in revenue, rose 1 percentage point to 80% sequentially, but increased 12 points compared with the third quarter of 2015.
For larger fleets, with more than $30 million in revenue, the percentage dropped 2 points from the second quarter.
Less-than-truckload turnover remained low at 9%, 3 percentage points lower than the second quarter and down 1 point year-over-year.
“There wasn’t a significant change from the second quarter. There’s just not much going on right now,” ATA Chief Economist Bob Costello told Transport Topics. “Freight has been soft for a little while, so fleets aren’t making wholesale changes.”
Tim Hindes, CEO of Stay Metrics, said his company found similar results in third-quarter driver turnover, dropping from 67% to 61% sequentially. The company researches and consults with trucking companies on how to reduce turnover. The percentages are lower than the ATA figures because the clientele at Stay Metrics tend to be trucking companies already dedicated to retention, Hindes explained.
“It’s no secret that some carriers are right-sizing their fleets. You have mature drivers who know what it’s like in a soft market and it’s not the best time to move, so they sit tight,” he said.
Large truckload companies aren’t as aggressive at recruiting, and the competition to move laterally to another carrier is not as intense, according to Costello and Hindes.
But Angie Buchanan, vice president of safety and human resources at Melton Truck Lines Inc., said that her carrier hired more people last quarter, rather than tamp down on recruitment efforts.
Melton, which ranks No. 87 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada, grew its fleet by single digits as opposed to paring out trucks, according to chief financial officer Robert Ragan.
“From where I’m sitting, competition is still furious with sign-on bonuses and lots of recruiting activity, so we’re still working really hard to find good drivers,” Buchanan said.
Classic Carriers, a refrigerated carrier in Versailles, Ohio, also reported a jump in applicants and hiring in the third quarter. Company President Jim Subler said his turnover was at 30% last quarter among his 125 drivers.
“We’re working harder to sort through and pick out the well-qualified applicants from the larger pool,” he said. “When you come out of the summer and head into the fall, maybe a person did a small construction job, but realizes Christmas is coming and needs a job to buy gifts. I’ve seen it for a lot of years that hiring picks up in the third quarter. To me, it’s not an uncommon experience.”
Analysts pointed to trucking companies being more attentive to the needs of their drivers as another possible reason that turnover fell in the third quarter. Stay Metrics found that broken promises, such as the little time spent at home, were the biggest reason that drivers end up quitting, Hindes said.
“Companies are getting better culturally to get their drivers home more often and treat them better. So I think turnover is going down for many reasons,” said Kim Beck, vice president of benefits consulting at Cottingham & Butler, an insurance broker that publishes an annual report on benefits and compensation in the trucking industry.
Hindes agreed that most trucking companies remain dedicated to retention, but he said there could be a temptation to become less aggressive about it because there isn’t as much competition to lure drivers away. Some executives could take a short-term focus, rather than realize the industry is cyclical.
“It can be almost a resting period for carriers because of the current volume of freight,” Hindes said. “Right now, these executives aren’t having daily morning meetings about the loads they’ve turned down. But many carriers realize that it’s a lull, and six to 12 months from now they’ll need more drivers, so now is a good time to put in new policies and programs.”
His prediction could turn out to be accurate because several industry analysts and economists indicate that the trucking industry may already have hit the low point earlier this year and begun to rebound.
“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,” Costello said.