Large fleet driver turnover rate heads up in first quarter, says ATA

Turnover rates for truckload drivers part of large fleets resumed its pattern of heading up in the first quarter of this year, according to the American Trucking Associations (ATA).

This decline marked the fifth time in the last six quarters driver turnover has risen, with the rate declining during the fourth quarter of this year, which was preceded by four consecutive quarterly declines. ATA officials said that the turnover rate for large truckload fleets moved up 2 percentage points to 90 percent for its highest level since the first quarter of 2008. And the turnover rate for smaller fleets-with less than $30 million in revenue-moved up much higher during the quarter with a 16 percent gain to 71 percent, which was its highest level since the second quarter of 2008.

On the less-than-truckload side, where driver turnover is traditionally less prevalent due to shorter transit times and less time spent away from home, the first quarter turnover rate was just 8 percent, marking a gain of 1 percent from the fourth quarter of 2012.

“We were surprised that the turnover rate dipped in the fourth quarter,” ATA Chief Economist Bob Costello said in a statement. “This report of a slight rise at large fleets and a significant increase at smaller fleets matches up with what we hear regarding the health of the industry, the tightening of the labor market for drivers and demand for good, quality, experienced drivers.”

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.

Werner Enterprises President and COO Derek Leathers said in an interview that the ongoing driver shortage situation has paved the way for a major covergence of costs of sorts.

“The number one cost is salaries,” he said. “For the 11 publicly-traded truckload drivers from the third quarter of last year to the fourth quarter, carriers reduced the size of their fleets even though it was one of the best freight quarters in recent history. The driver shortage situation is real, and wage inflation is going to happen. Our job is to create a better environment for drivers and get them home as frequently as we can. It is hard to do in an irregular route environment, but we do the best we can.”

Avondale Partners analyst Donald Broughton wrote in a research note that the ATA’s data shows that driver turnover remained elevated but stable at large fleets, while jumping noticeably at small fleets.

“Meanwhile, recent employment data has shown that driver pay increases accelerated in the first few months of 2012,” he wrote. “The result is that while the driver shortage continues to constrain capacity, we expect the larger, better-capitalized fleets to be able to more effectively seat their fleets and exploit the pricing power that comes with a tight capacity marketplace.”