Driver shortage issues remain firmly intact based on ATA driver turnover data

If the long-running dearth of truck drivers is considered the new normal in supply chain circles, then normalcy is firmly intact based on data released this week by the American Trucking Associations (ATA).

The ATA reported that the annualized turnover rate for large truckload carriers in the fourth quarter dropped 1 percent to 96 percent in the fourth quarter of 2014, with turnover for small truckloads carriers, which the ATA defines as those with less than $30 million in annual revenue, headed up 1 percent to 95 percent.

For all of 2014, the ATA stated that large truckload turnover came in at 95 percent, which was in line with 2013’s 96 percent. Small fleet turnover rose 11 percent to 90 percent. The ATA said that the difference in turnover between large and small fleets––at 5 percent––is at its smallest margin going back to 2000.

On the less-than-truckload (LTL) side, ATA said that the fourth quarter turnover rate dropped 3 percent to 10 percent, and for all of 2014 it was 11 percent, which was flat annually.

“We’re seeing the turnover gap between small and large carriers narrow to levels we haven’t experienced in some time,” ATA Chief Economist Bob Costello said in a statement. “This is likely the result of larger fleets raising pay, offering bonuses and attracting more and more drivers from smaller fleets to fill seats. These figures show us that the driver shortage – which we now estimate to be between 35,000 to 40,000 drivers – is getting more pervasive in the truckload sector. Due to growing freight volumes, regulatory pressures and normal attrition, we expect the problem to get worse in the near term as the industry works to find solutions to the shortage.”

Even with an increased onus on augmenting driver training, retention, and compensation packages, many carriers are still struggling with how to fill the empty seats. The ongoing driver shortage still serves as a major factor for tight over the road capacity, which has been burdensome for shippers in that they need to pay higher rates in order to get their freight moved in a timely and efficient manner.

Many industry stakeholders say that the lack of available––and willing––drivers will only get worse in the coming years, with the average age of drivers still firmly entrenched around 50.

“The driver shortage is as bad as ever,” Bill Graves, president and CEO of the American Trucking Associations, told the 28th annual meeting of the North American Transportation Employee Relations Association (NATERA) last November. “It’s as bad as it’s ever been, and I don’t expect it to get better any time soon.”

The $310 billion a year truckload sector moves the vast majority of freight in this country. And Graves said the shortage of drivers in that sector is impeding sufficient growth in the TL sector.
 
“The truckload sector is adding little if any capacity,” Graves said. “LTL is adding a small amount but remains well below all-time highs. LTL moves less than 10 percent of tonnage in this country, however.”
 
Some TL carriers have been reluctant to add capacity because their revenue per mile has increased up due to improved demand and limited capacity in that sector. That has led to increased merger and acquisition activity in the TL sector.

Echo Global Logistics CEO Doug Waggoner told LM that the driver shortage remains a huge problem.

“The average driver age is 51 and many are retiring and leaving the system and younger people are not coming into the system,” he said. “You have young people that are more focused on quality of life and being on the road three weeks out of the month is not something they want to do. They can work in construction or another sector instead. The industry has to be creative and look for solutions to the driver shortage problem. In that sense, we are probably fortunate we have not been in a 4 percent GDP environment, because of the capacity situation. There is also going to be an element of transportation inflation, because equipment costs have risen sharply in the last five years and driver pay is going up and so is fuel. The cost inputs for asset-based carriers are really going to go through the roof and you add to that a shortage of capacity that leads to pricing power, it is going to lead to a bit of a shock when it comes to transportation pricing.”