Truckers are shifting into low gear as high turnover rates continue to plague the industry. According to the latest data from the American Trucking Association (ATA), the annualized turnover rate increased by 4 percentage points to over 90% in the second quarter.
“So far this year, the turnover rate at large truckload fleets is up ten percentage points (to 96%),” the highest it’s been since 2013 said ATA’s Chief Economist, Bob Costello. Smaller truckload fleets saw a slight decline, down to 72%, while less-than-truckload carriers saw an increase of 4 percentage points, up to 14%. Costello noted that over-the- road fleets continue to have the most problems with turnover. “While private fleets are having problems with drivers, and they are, and while LTL is having problems with drivers, and they are, they pale [in comparison] to the problem of over-the-road fleets,” he said.
Costello estimates that the trucking industry is currently short 51,000 drivers, while the ATA predicts the industry will be short 160,000 drivers by 2026 if nothing changes. “If we [reach 160,000], we’ll be in a world of hurt” Costello remarked, “because at some point, you’re not going to see six kinds of apples on store shelves, but you’re going to see three kinds of apples.”
While the general economy has recovered since the 2008 recession, Costello pointed out that trucking has not kept pace with the hiring trend. He said that since 2017 manufacturing has added 400,000 jobs, construction has added 420,000, while trucking has only grown by 30,000.
Coming Around the Bend
While the high turnover rate is a disappointing glitch on the GPS, there is a bright spot as we come around the bend.
According to data collected by the FMCSA, there has been a surge of new truck orders, which suggests that the industry is growing. While some analysts feel this data might be subjective, there are a few other indicators, such as ELD, gas consumption, and electronic dispatch system data, that the industry is turning a corner.
Since the ELD mandate went into effect on April 1, overall trucking capacity has increased by 4%. That means that somehow the industry has managed to add new drivers, even with the difficulties it has experienced in attracting and retaining quality drivers. Many fleets are crediting creative recruiting campaigns and higher pay as the key to attracting the new drivers. For more information on what led to the driver shortage and the difficulties the industry has experience in attracting drivers, click here.
While this is good news on the surface roads, the limited sets of keys behind the wheel will keep the market tight.
According to Bloomberg Intelligence Transportation Analyst, Lee Klaskow, the growth in freight rates is expected to decelerate, but will remain in high gear as we head into 2019. Klaskow said that “truckload rates have entered a prolonged upcycle, fueled by tight capacity amid GDP growth, new regulation, and limited driver availability.”
Klaskow announced that year-to-date spot rates were up by 20%, and contracted rates are expected to increase between 8% and 12%. He went on to say that rate increases “should moderate from low double-digit growth this year to mid single-digit growth in 2019,” and added that “we do expect pricing power to continue into 2020”.
- Supply & Demand Chain Executive