Of all the figures I saw during 2012, the rate of driver turnover in the truckload market really caught my eye. The American Trucking Associations reported that the annualized driver turnover for large TL fleets was 104% in the third quarter of 2012, which was actually an improvement from 106% in Q2. Turnover always increases when trucks are in high demand, but it has almost doubled during this weak recovery. What would happen if GDP were to pick up steam and grow at a 3% rate or better? Industry analyst Thom Albrecht of BB&T Capital Markets thinks driver turnover could hit 150%.
How do fleets get to triple-digit turnover? Consider this: Roughly 35% of truck drivers who quit their jobs do so within the first 90 days after being hired. Another 35% leave within the first two years. That means for every driver who quits with two or more years' seniority, the carrier is likely to churn through three drivers before finding a stable replacement.
In 2013, several issues may add to the driver shortage and color the capacity picture. Here are three things I’m looking at:
1. The lure of construction jobs
As construction and manufacturing pick up, it will be tougher for trucking companies to find and retain qualified over-the-road drivers. A lot of drivers would prefer to haul locally to building or highway construction sites, and sleep at home every night.
2. CSA compliance
Under the Federal Motor Carrier Safety Administration’s CSA (Compliance, Safety, Accountability) program, out-of-service violations, crashes, and moving violations follow drivers when they move to another motor carrier. The good news is that it’s easier for carriers to identify drivers with poor safety records. The bad news is that there will be a shrinking pool of qualified drivers who will be worth recruiting.
3. Hours of service (HOS)
The biggest regulatory change for trucking companies and drivers in 2013 will be the reduction of hours a driver will be allowed to log during a seven-day (168-hour) period. Currently, a driver can work right up to his 60- or 70-hour limit, rest for 34 hours, and “reset” his clock. This allows a driver to work up to 82 hours in a seven-day period. Starting on July 1, however, drivers will be allowed to work no more than 70 hours per week, and any 34-hour reset must include two rest periods from 1 a.m. to 5 a.m. This may require some drivers to be off duty for longer than 34 hours in order to get a valid restart. The new rule also requires drivers to stop driving once they reach eight consecutive hours past the end of their last 30-minute break. Of course, violations of hours-of-services rules count against a driver’s CSA profile — for more on that, see item #2, above.
Given an improving economy and new CSA and HOS rules, shippers and receivers — and their management practices at loading docks and terminal yards — will play a big role in driver retention. Add those to regulatory compliance and highway safety. Then consider additional employment conditions such as log-monitoring through EOBRs, and the fact that fleets are running older equipment than ever before.
All these factors will make it tough for carriers to satisfy both drivers and customers in 2013...without alienating one group, the other, or both.