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3Q large carrier driver turnover rates remain high, says ATA report

Driver turnover rates in the third quarter followed the second quarter’s lead, with things heading up again, according to data issued this week by the American Trucking Associations (ATA).

By ·
{scmr_abstract}
By ·

Driver turnover rates in the third quarter followed the second quarter’s lead, with things heading up again, according to data issued this week by the American Trucking Associations (ATA).

With rates heading up for the second straight quarter, it appears that the traditional trajectory is back in place after a bit of an anomaly occurred during the fourth quarter of 2016 and the first quarter of 2017 ostensibly showed some progress in the other direction, with indications that efforts made by motor carriers to fill driver seats, an issue, which has plagued the sector for several years, appeared to be paying off.

But the traditional trend of high turnover returned in the second quarter of this year and, based on the data issued by the ATA today, the third quarter as well.

For the third quarter, ATA reported that the annualized turnover rate for large truckload carriers with more than $30 million in revenue increased 5% to an annualized turnover rate of 95%. This follows the second quarter’s 90% and the first quarter’s 74%, which ATA said in July was at a “near historic” low point. The first quarter was up 3% over the 71% recorded during the fourth quarter of 2016.

And for smaller carriers, which ATA defines as fleets with less than $30 million in annual revenue, ATA said the turnover rate dipped 1% to an annualized rate of 84%, which marked a 2% gain over the third quarter of 2016. The second quarter’s 85% was its highest level since the first quarter of 2016. This dwarfs the second quarter’s 66%, which was down 22% annually, and was in line with the 64% recorded during the fourth quarter of 2016.

The less-than-truckload turnover rate for the second quarter was down 2% to 7%, marking the lowest rate for LTL drivers going back to the second quarter of 2016. The turnover rate for LTL carriers is typically much lower than the rate for truckload carriers.

“Since bottoming out at the end of 2016, the turnover rate at larger fleets has steadily risen – a function of an improving economy, rising demand for freight transportation and fierce competition for drivers,” Costello said in a statement. “The tightening of the driver market has raised fears about the driver shortage, which will hit an all-time high this year. Fleets continue to tell us that competition for good, safe and experienced drivers is fierce, pushing wages higher in hopes of attracting the best talent. However, unless steps are taken to make it easier for individuals to pursue careers in trucking, demand for drivers will continue to outstrip supply – eventually even leading to supply chain disruptions.”

In October, the ATA issued a report, entitled “Truck Driver Shortage Analysis 2017, which took a deep dive deep dive into the current driver shortage situation, with analysis on where things may be headed and what needs to happen to prevent a bad situation from becoming even worse down the road.

ATA’s Costello authored the report, which noted that from 2015 to 2016 the driver shortage actually declined from 45,000 to 36,500.  While that is encouraging, future numbers may not be as much, though, due to multiple factors outlined in-depth in the report, including: an aging driver workforce; lifestyle issues; and regulatory challenges, among others. 

The report added that the driver shortage is projected to hit 50,000 by the end of 2017, with the possibility, if things remain the same, that the number could exceed 174,000 by 2026.

Perhaps one of the most telling stats included in the report is that 70.6% of freight tonnage moves on U.S. highways, as per the ATA’s Freight Transportation Forecast 2017 to 2028, which was released earlier this year. Another stat noted that 43% of trucking’s operational costs are allocated towards driver compensation and stands as the largest operational cost for a motor carrier.

Costello wrote in the report that “as volumes increase, the existing driver pool is only more strained.”    Not to be overlooked is the quality of candidate either, with the report explaining that the current shortage seems even worse to carriers than the current figures suggest because of a quality versus quantity issue.

It said that this is because many carriers have strict hiring criteria based on driving history, experience, and other factors. This becomes further magnified through the ATA’s Benchmarking Guide for Driver Recruitment & Retention, which cites how in 2015 88% of fleets indicated they were getting enough candidates but the majority were not qualified, something which ATA says has not likely changed since then either.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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