ATA reports linehaul driver turnover rate is still above 100 percent

A few years back, VW launched its well-known campaign for a new line of Jetta’s with the tagline “Drivers Wanted.” Based on data released this week by the American Trucking Associations (ATA), that sentiment can easily be applied to the need for large fleet truck drivers.

According to the most recent edition of its Trucking Activity Report, which was released this week, the ATA reported that the annualized linehaul truck driver rate at large truckload fleets is intact at more than 100 percent for the second straight quarter in the third quarter.

This comes on the heels of a September ATA release, which observed that the annualized turnover rate for linehaul truckload fleets of all sizes increased in the second quarter, as turnover at large fleets eclipsing the 100 percent mark for the first time in more than four years.

In this week’s report, the ATA said that for fleets reporting more than $30 million in annual revenue, driver turnover fell 2 percent to 104 percent, which is slightly below the five-year high of 106 percent from the second quarter of this year. What’s more, the ATA said that this marks the first time since the fourth quarter of 2007 and the first quarter of 2008 in which the driver turnover rate has topped 100 percent in consecutive months.

“Increasing competition for quality drivers, coupled with gradual, albeit choppy, growth in demand for trucking services continues to put pressure on the driver market,” said ATA Chief Economist Bob Costello in a statement. “These numbers continue to reflect a tight driver market, and an actual shortage for drivers,” Costello said. “We believe the industry is actually short between 20,000 and 25,000 drivers, but if freight volumes were to accelerate, I would expect that number to grow and grow rapidly.”

And for fleets under $30 million in annual revenue the ATA said that competition for drivers has resulted in an 8 percent increase in quarterly driver turnover for small fleets, putting the turnover rate at its highest level since the first quarter of 2007.

On the less-than-truckload (LTL) side, the turnover rate is not as severe, with the third quarter seeing a turnover rate of 8 percent, down from 8 percent in the second quarter.

As LM has reported, driver turnover and tight capacity are two things that clearly go hand in hand in the trucking industry, especially during the current tight market conditions, spurred on by a slow economic recovery and the December 2010 implementation of CSA, as well as planned changes to truck driver hours-of-service (HOS) regulations that are set to take effect in mid-2013.

What’s more, regulations like CSA and HOS, as well as Electronic On Board Recorders (EOBR) continue to play a major role in carriers’ being hesitant to increase capacity and subsequently hire drivers, which continues to be challenging, as evidenced by ATA’s data.

“Driver turnover for the truckload industry continues to be amazingly high compared to employee turnover in most industries,” wrote BB&T Capital Markets Analyst Thom Albrecht in a research note. “Next to the fast food industry, only carriers with turnover figures of 70 percent or 80 percent could be proud. With housing having decent momentum that looks almost irreversible, one of its biggest source of construction workers is truck drivers. So even though the nation’s unemployment rate remains high at 7.7 percent, the construction recovery, both residential and non-residential, should be a deterrent to fleets managing driver turnover in 2013-2015.”

And projections from freight transportation forecasting consultancy FTR Associates estimate that this problem is likely to get worse and by 2014 the driver shortage could be in the 250,000 range, which Stifel Nicolaus analyst John Larkin said is going to create a capacity shortage which will translate into “fairly sizable rate increases” that might be steeper than what has occurred during the slow growth period over the last couple of years.