An improving outlook for freight and higher pay is reducing chronic driver turnover at trucking companies.
The turnover rate dropped 7 percent to 88 percent in the fourth quarter, down from the third quarter rate of 95 percent, according to the American Trucking Associations’ latest report.
“Despite this dip in turnover, the driver market remains tight and the driver shortage remains a real concern for fleets and the industry,” Bob Costello, chief economist of the ATA, said Monday.
The turnover rate at large truckload fleets with more than $30 million in revenue dipped below 90 percent since the first quarter of 2017.
“We’ve rebounded strongly from the freight recession of the last few years, and 2018 is shaping up to be a record year,” said Todd Amen, chief executive of ATBS, a trucking industry accounting firm.
Motor carriers are improving pay packages as the struggle to find drivers continues and the unemployment rate hovers at a low 4 percent.
“There’s not a lot of folks that are stepping up to be truck drivers so that kind of puts a lid on truck capacity,” Amen said.
K&B Transportation of South Sioux City, Neb., is launching a new mileage pay package in May, increasing its starting mileage pay from 45 cents to 50 cents, said Sean Barragan, director of recruiting of K&B.
Drivers are also guaranteed 2,500 miles per week if they work the entire pay period, even if they only run 2,000, giving them a $1,250 per week minimum, up from $1,225 the company currently offers, Barragan said.
“We want to offer a solid mileage pay package to make sure we get good drivers and retain them,” Barragan told Trucks.com.
The trucking company, which has about 730 trucks in its fleet, offered a $1,650 sign-on bonus in November when it added several trucks but is ending the practice now that the new pay package has been announced.
On Tuesday, ATBS said owner-operators who own their own big rigs averaged $60,182 in earnings in 2017, up $513 or 0.9 percent, from 2016.
Truckers who hauled flatbed freight netted around $70,400 last year, up $6,518 or 10.2 percent, from the previous year.
While rates remained “flat” for most of 2017, they picked up at the end of the year and continue to soar in the first quarter, which is typically a slow time for freight.
“This is the best time in trucking in 30 years,” Amen said.
Freight rates for loads paid per mile increased 5 percent on average from 2016, however, average miles driven went down by half a percent.
Freight rates are expected to remain strong for the next 18 months, Amen said.
Turnover at small trucking fleets — those with less than $30 million in annual revenue — dropped four points to 80 percent.
The turnover rate at both large and small fleets is still 14 points higher than the same period a year ago, the ATA said.
“While the driver market and capacity remain tight, freight volumes and driver pay factor into turnover,” Jeremy Kirkpatrick, ATA spokesman, told Trucks.com. “More freight means more miles, and an increased workload combined with several carriers announcing pay increases can serve to reduce turnover between fleets.”
Over the past year, the trucking sector has added almost 19,000 jobs.
According to seasonally adjusted Bureau of Labor Statistics data, the number of trucking jobs was 1.47 million in February 2018, up 1.4 percent from the same period a year earlier when the number of trucking jobs was around 1.45 million.
“Based on the level of economic activity we had, I would have expected trucking jobs to be more in the neighborhood of 50,000 new hires,” Kenny Vieth, president and senior analyst at ACT Research, told Trucks.com.
“If you have 88 percent turnover, you don’t have a driver shortage, you have a retention shortage,” Vieth said.
February marked the 10th consecutive month where demand for freight rose faster than any growth in the number of trucks on the road, according to ACT.
“This clearly indicates pricing power rests with truckers in 2018 contract negotiations, and the data provides further support for large increases in truckload contract rates,” Vieth said.