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September 5, 2016 3:45 AM, EDT

Large TL Churn at 5-Year Low in Sluggish Market, ATA Says

This story appears in the Sept. 5 print edition of Transport Topics.

Driver turnover fell 4 percentage points year-over-year for larger truckload fleets to 83% in the second quarter, dropping to the lowest level since 2011 amid a sluggish freight market, American Trucking Associations reported last week.

Turnover at the smaller truckload fleets, those with $30 million or less in revenue, fell nine points to 79%, the lowest level in three quarters sequentially, but ticked up 3 percentage points year-over-year.

For larger fleets, with more than $30 million in revenue, the rate dropped six points from the first quarter to 83%.

“The continued decline in the turnover rate reflects the continued choppiness in the freight economy,” ATA Chief Economist Bob Costello said. “Though the turnover rate continues to fall at truckload carriers, finding enough qualified drivers remains a concern for many carriers.”

Less-than-truckload turnover remained low at 12%, one point below last year’s second quarter but higher than 8% in the first quarter of 2016.

While turnover has eased a bit, two carrier executives told Transport Topics last week that controlling turnover is a never-ending struggle.

“It has been more of a challenge this year,” said Jim Subler, president of Classic Carriers, a Versailles, Ohio, refrigerated fleet that is in the smaller-fleet category.

“We’ve had all kinds of medical issues with our drivers in the over-50 group,” he said, including one who never smoked but is suffering from cancer.

Finding replacements has been difficult, Subler said, but he believes the number of driver candidates is improving. However, he said the quality of those candidates overall is “pretty poor,” resulting in the hiring of about one driver for every 20 applicants.

The older drivers’ health problems have emerged, even though Subler said his company provides wellness programs for its drivers and emphasizes healthy lifestyles.

Robert Ragan, chief financial officer at Melton Truck Lines Inc., said that “it’s certainly not easier to get drivers. Our turnover is about the same as last year.”

Tulsa, Oklahoma-based Melton, whose turnover has hovered around the industry average, has had some recent success with larger classes of recruits and a six-month low in the number of empty trucks.

Melton, which ranks No. 87 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada, is recruiting more drivers from schools, Ragan said.

“It’s important to note we haven’t lowered our standards,” Ragan said. “That is something we will not do. We’ll keep a truck empty and not run it before we would hire an unsafe driver.”

Melton tries to fight turnover with pay levels that are near the top of the industry and running a young fleet with an average age of 1.8 years. Those trucks are equipped with camera and collision mitigation technology that has been widely accepted by drivers. Drivers like the cameras, he said, because they provide evidence when a driver is wrongly accused of responsibility for an incident, Ragan said.

“Any improvement in turnover, whether it is industrywide or fleet-specific, are probably tied to the fact that fleets everywhere are under pressure to get their drivers more miles,” said Thom Albrecht, an independent trucking analyst. “Drivers stay put a little more because they know the grass isn’t always greener on the side.”

Another factor, he said, is that driver pay increases that can trigger turnover have dried up. A recent survey by the National Transportation Institute, which tracks truckload driver pay, found that less than 1% of fleets raised pay this year, compared to 40% or more less than two years ago.

Albrecht said a small drop in percentage terms can have limited significance because it can fall within the margin of error for any survey, whether it involves trucking or presidential politics.

Priscilla Peters, a vice president at recruiting and retention consultant Conversion Interactive Agency, told TT last week there were two reasons why turnover is declining.

“If I’m a driver when freight is soft and I am making the money I need every week where I am, I will think twice about leaving because I don’t know what I am going to get into at another carrier.”

In addition, she said, there is much more attention being paid to keeping drivers.

“Carriers are more focused on retention than they ever have been during the 20 years we have been in business”, said Peters. She said that her firm has done more retention plans for drivers so far this year than in any prior year.

“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,” Costello said. Once freight improves, Albrecht said, turnover doesn’t worsen right away.

As freight improves, drivers are content to run more miles at their current carrier, and driver pay increases that could prompt them to switch don’t occur until later, when fleets can afford to improve drivers’ compensation, Albrecht said.