Trucking hit a troubling milestone in the second quarter when the average annualized driver turnover rate at larger truckload carriers topped 100 percent for the first time in four years, according to the American Trucking Associations.
The average turnover rate reached 106 percent, a 16-point surge from the first quarter and 29 percentage points above the second quarter of 2011.
For truckload carriers with more than $30 million in annual revenue, driver turnover is at the highest point since the third quarter of 2007, an alarming statistic for those who remember the rapid increase in driver turnover following the 2001-02 recession. The turnover rate peaked at 136 percent in 2005, costing truckload carriers about $500 million a year at its worst, according to the ATA.
High turnover rates mean carriers must hire drivers repeatedly with no net gain in employment. That makes any existing driver shortage worse, magnifying its impact, and costs carriers a sizable bundle of money each year.
A 100 percent turnover rate means truckload carriers need to replace the equivalent of their entire driver pool each year just to maintain employment and capacity at the same level. Recruiting a new driver is estimated to cost between $3,000 and $8,000. If the cost averages $5,000, a company with 200 drivers and a 100 percent turnover rate would spend $1 million a year just to keep its driver numbers steady and ensure a stable supply of capacity for its customers.
A lower driver turnover rate would do much to alleviate, if not eliminate, a truckload driver shortage estimated to range from a low of 20,000 to 30,000 drivers (from the ATA) to 90,000 (according to FTR Associates). Simply put, truckload carriers wouldn’t have to expend so much time, energy and money constantly recruiting to replace truck drivers who quit.
Where do those drivers go? Mostly to other trucking companies. They go to carriers that offer signing bonuses, higher pay or more miles, or better benefits — companies, perhaps, that get them home more often.
“The drivers who have had five jobs in the last 20 years are few and far between,” said Ed Ferguson, field operations manager at Watsontown Trucking, a 240-driver company in Milton, Pa. “Most times, I’m looking at someone with anywhere from five to 10 jobs in the last 10 years. They get mad if they don’t get the miles, and they switch.”
Compensation — both low pay and inconsistent pay — is a major factor in driver turnover. So is the lifestyle, carrier executives are quick to note, with long working days and weeks on the road. Truckers are just as quick to point to poor dispatching and management. Better communications, both should agree, are essential. “We have a relatively good turnover rate compared to the industry, about 68 percent (annually), but it takes a lot of effort,” said Bert Johnson, vice president of human resources for Joplin, Mo.-based Con-way Truckload.
Con-way spends a lot of time communicating with its 3,000 drivers, Johnson said, meeting regularly with new hires. The carrier is considering ways to make driver miles and pay more consistent, and partnering with driver training schools. “We recognized quite some time ago we needed to supplement our experienced driver population with a robust student driver program,” Johnson said. “If we solely depended on experienced drivers, we would have trucks sitting against the fence.”
Technology may help. Qualcomm, a company that got its start tracking trucks, is now tracking driver behavior. That’s an unexpected benefit of the technology deployed by many truckload carriers to track vehicles and shipments, said Vikas Jain, a vice president at Qualcomm’s software as a service business segment.
“We are able to look at data surrounding a driver that’s collected on an almost instantaneous basis — not just miles, but how much money is he making, how many messages is he sending, how much stop time, when is he coming into work?” Jain said.
That data is fed into a model that helps predict the risk of a driver quitting. “We are able to look at your drivers and tell you which 10 percent of your driver pool is most likely to leave and why, whether the driver is stressed by a financial issue, a family issue or a professional issue. Then you have a conversation with the driver,” Jain said. “What is going to unfold is already written in your data.”