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Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- March 25, 2014 -

 

Supply Chain News: US Truck Driver Turnover Rate Remains High, but for Now Seems to Remain Just Below Crisis Levels

Rate Fell in Q4, ATA Says, but has been Over 90% for Eight Quarters; At Least 30,000 Current Openings, Maybe Much More


SCDigest Editorial Staff

 

Worries about a US shortage of truck drivers continue on, with turnover of drivers in large truckload fleets near to 100% in Q4 and for the full year 2013, the American Trucking Associations reported last week.

Of course, those numbers do not mean large fleets are completely turning over their base of drivers each year. What happens is the carriers may go through 3-4 new drivers to obtain one that sticks, driving the total turnover number to high levels.

SCDigest Says:

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The average age of a commercial driver in the U.S. is 55, according to the Bureau of Labor Statistics, and tens of thousands will be retiring soon.
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But many still say the driver situation remains a significant problem, and is just a bit of economic growth away from being something of a crisis for carriers and shippers.

While turnover rate at large truckload carriers fell six percentage points to 91% in the fourth quarter of 2013, the measure was still above 90% for the eighth consecutive quarter.

That was the second consecutive quarter of a modest decline in the churn levels, but at over 90% the number remains in worrisome territory.

ATA Chief Economist Bob Costello said that "We saw turnover at fleets with at least $30 million in annual revenue bottom out near 50% at the depths of the Great Recession and it has increased steadily since."

He added that "The rate appears to have flattened out at an elevated level for the moment. However, it could easily increase as tightness in the labor pool should continue, and even worsen, as the economy improves."

For all of 2013, driver turnover averaged 96%, just below 2012's average of 98% and well off the all-time high of 130% set in 2005.

Turnover at small truckload fleets rose five points in the final quarter of the year to 79%, but was still below the 82% mark the figure hit in the first half of 2012. For the year, turnover at small fleets averaged 82%.

Why is the turnover at smaller trucking firms substantially lower for smaller carriers than for larger ones? Costello told SCDigest that are probably several factors.

"Historically it has been lower and some attribute that to a more "family" atmosphere at the smaller carriers," he said. "Perhaps it is related to more regional freight too, since that might improve a driver's lifestyle. Another big one is that many small fleets don't hire drivers right out of truck driver training school. Fleets that do, which are generally the big ones, have a higher turnover rate. Drivers get their feet wet in the industry and then some move on when they are highly recruited by others. "

As always, the churn at less-than-truckload carriers is just a fraction of that seen on the truckload side, because LTL drivers generally can get back home each night.

Turnover in the less-than-truckload sector fell two points to 11% in the fourth quarter, which was also the average for 2013.

The ATA estimates that there is currently an industry shortage of some 30,000 truck drivers across the US.
"As the industry starts to haul more because demand goes up, we'll need to add more drivers, nearly 100,000 annually over the next decade, in order to keep pace," Costello said.

Some experts have estimate the shortage as being as high as 150,000 drivers currently.

A number of carriers have cited driver shortages as a key issue in their quarterly earnings calls. In fact, the "asset discipline" the industry has seemed to maintain in terms of fleet sizing in recent years may have as much to do with difficulty finding drivers as it does with market restraint to keep a more favorable supply and demand balance.

In its Q4 2013 earnings release, for example, Werner noted that "The driver recruiting and retention market became even more challenging during fourth quarter 2013. Significant factors included a declining number of, and increased competition for, driver training school graduates, a gradually declining national unemployment rate, and increased job competition from the strengthening housing construction and hydraulic fracturing markets."

(Transportation Management Article Continued Below)

 
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If the US reaches sustained economic growth more in the 3% range, the driver situation could quickly move to something like the crisis levels seen in 2005 and 2006. That's the result of at least two factors. First, the growing economy leads to more freight to move, increasing the number of trucks and drivers needed.

Second, with a growing economy usually comes more jobs in fields such as construction and manufacturing that may be more attractive to workers than driving a long haul truck.

The new Hours of Service rules that went into effect last July have reduced driver productivity a bit, in the low single digits for most, but that has the effect of increasing the number of drivers needed for the same amount of freight movement by about the same percentage.

Also, the CSA 2010 rules relative to reporting of driver safety records has had the effect of pushing some drivers out of the industry.

 

 

Source: American Trucking Associations

 

Demographics is another big concern. The average age of a commercial driver in the U.S. is 55, according to the Bureau of Labor Statistics, and tens of thousands will be retiring soon. Other recent analysis by transportation software provider Sylectus puts the average age of a driver at 48,  but that is up from 46 eight years ago.

Meanwhile, some moves that could have raised driver productivity and reduced the need for drivers have not been pushed through, notably the failure in 2012 of a bill that would have increased the maximum weight for trucks from 80,000 to 97,000 pounds, with the addition of a sixth axle.

That measure was set aside for "additional study," and is likely to be back on the table at some point.

 

Are you concerned about truck driver churn and shortages here in the US? How close are we, if at all, to a real crisis? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

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