Truckload Rates Positive for First Time in more than a Year, while Competition for Drivers Remains Intense

The monthly Cass Information Systems report on several key measures of the US trucking industry was released last week, with the November numbers indicating more recovery in freight markets.

Supply Chain Digest Says...   In Q3, the driver turnover rate at truckload carriers with more than $30 million in annual revenue rose 10 percentage points to 92% on an annualized basis. What do you say? Click here to send us your comments Click here to see reader feedback

For example, the Cass Freight Index, which tracks levels of US freight shipments, rose 2.7% year-over-year, after turning positive in October for the first time in almost two years. However, the index actually dropped 2.2% versus October. Seasonally adjusted, the month-to-month decline decline was a narrower 1.0%. The small sequential pullback followed five consecutive months of strong recovery, averaging 5.0% sequentially, and is likely due to the worsening pandemic numbers impacting the trajectory of the recovery in November, Cass says.

Meanwhile, the Cass Linehaul Index, which measures contract US per mile truckload rates before any fuel surcharges or other accessorials went positive on a year-over-year basis in November for the first time in 15 months, rising a modest 0.6%. (See graphic below.)

On a month-to-month basis, the index rose 1.4% in November, resuming the uptrend which started in August but paused in October.

"Our sense is contract rates are accelerating," the Cass report says.

Meanwhile, the American Trucking Associations says drive turnover at US carriers jump by double digit percentages in the third-quarter.

"After a calamitous second quarter, trucking - along with the rest of the economy - began recovering in the third quarter, leading to a tightening of the driver market," said American Trucking Associations Chief Economist Bob Costello. "With a more robust freight market, we saw an increase in carriers seeking drivers, which led to increased turnover. Additionally, the driver pool has decreased this year for a host of reasons, including fewer new drivers coming into the industry as truck driver training schools train less drivers due to social distancing requirements."

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In Q3, the driver turnover rate at truckload carriers with more than $30 million in annual revenue rose 10 percentage points to 92% on an annualized basis. The rate at smaller truckload carriers rose 14 points to 74%.

However, despite those increases, the 2020 average turnover rate is still running behind 2019 levels.

"Ironically, turnover bouncing back is a good sign for the economy and for trucking," Costello said. "The second-quarter drop was almost entirely the result of COVID, and with scientific light at the end of the tunnel, it is possible we will see continued strong freight demand into 2021, and corresponding increases in demand for truck drivers. And, driver pay continues to rise as competition for drivers is intense."

The annualized turnover rate at less-than-truckload carriers was rose two points to 14% during the third quarter on an annualized basis.

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