US trucking industry can’t stop driver exodus, transport institute says

Dustin Braden, Assistant Web Editor, JOC.com | Feb 29, 2016 3:57PM EST

Try as they might, trucking companies have been unable to stop the exodus of drivers from the industry just as new regulations threaten to cut capacity by 15 percent, according to the National Transportation Institute.

The impact of driver turnover is felt most acutely depending upon the segment of the trucking market, hitting truckload firms the hardest and presenting opportunities for less-than-truckload carriers and third-party logistics providers, Gordon Klemp and Leah Shaver of NTI said during a Friday conference call hosted by investment research firm Stifel. The shortage of qualified drivers and related cost increases cited by trucking operators will only grow worse as new regulations like electronic logging devices, speed limiters, and mandatory drug testing further restrict capacity.

Sluggish pay rises have contributed to the exit of drivers. Although driver pay rose 14 percent from July 2014 through January, that 19-month period of pay increases is actually the shortest recorded in the 22 years the NTI has been keeping track of driver pay. Previous pay increase cycles have lasted roughly 33 months, while the Great Recession took a 25 percent bite out of driver pay on average, according to NTI.

Private fleets pay drivers between 20 and 50 percent more than over-the-road for-hire drivers are paid and that premium, coupled with steady and reliable hours, has held down private fleet turnover at 14 percent while for-hire truckload turnover is basically 100 percent, NTI said.

Turnover at large for-hire truckload firms hit its highest level since 2012 in the third quarter, according to the American Trucking Associations. Smaller truckload firms had a turnover rate of 68 percent. The need for drivers is so acute that trucking firms added 1,500 jobs in January, a month when other transportation companies shed more than 20,000 jobs.

Less-than-truckload shippers and third-party logistics companies can take advantage of this as excess truckload freight often finds its way into LTL trailers while tight truckload supply creates a need for 3PLs to find capacity, NTI said.

Making truck driving more unattractive to potential recruits is the fact that while driver pay averages $54,000 a year, purchasing power is half what it was at the time of trucking industry deregulation in 1980. Many truckload drivers must pay for their own expenses when on the road and spend an average of around $1,000 per month on food, showers, laundry, etc.

One bright spot for an industry that faces stiff demographic headwinds is that only 6 percent of drivers are female. NTI believes changes to recruiting practices and operational tweaks could boost that percentage.

Women truckers could also help companies meet safety goals and cope with a changing insurance market, NTI said. Companies have begun to hand out safety-based bonuses as AIG exits the trucking insurance market, reducing supply and likely driving up costs, and other insurers are tightening their safety standards ahead of new Federal Motor Carrier Safety Administration standards.

Carriers should also make sure that dispatcher and fleet management personnel are used to maximum effectiveness. Typically, a company’s best dispatchers are teamed with its best drivers, which means that inexperienced dispatchers are working with inexperienced drivers, allowing for miscommunication and flaring tempers, creating a challenging work environment that can contribute to turnover, NTI said. Carriers could use personality tests to match drivers and dispatchers, the company suggested.

The report also said that driver needs don’t really change all that much and firms that can guarantee a consistent paycheck, sufficient miles to reach pay targets, desired quantity and frequency of time at home, and “emphatic” respect will find themselves with significantly lower turnover.