ATA driver turnover data sends mixed messages

Fourth quarter driver turnover rates were mixed according to data issued this week by the American Trucking Associations (ATA).

The fourth quarter turnover rate for large fleets-with more than $30 million in revenue-dropped 9% to 78%, and was down 10% compared to the fourth quarter of 2017. For all of 2018, the large fleet driver turnover rate was 89%, marking a 2% annual gain over 2017.

For small fleets, the ATA said the turnover rate was up 5% to 775, which was down 3% annually, with the full-year 2018 turnover rate at 73%, representing the lowest rate for small carrier driver churn going back to 2011. Less-than-truckload (LTL) driver turnover was flat at 10% in the fourth quarter and averaged 11% in 2018, ATA said.

“The driver market continues to be tight, but not quite as much as the middle of 2018. The overall trend late last year was that turnover is slowing,” said ATA Chief Economist Bob Costello in a statement. “There can be various reasons for this – either freight volumes are decelerating and as such fleets pulled back on recruiting efforts or fleets’ efforts to increase pay are paying dividends in the form or reduced turnover. The truth probably lies somewhere in between, but it is a trend that bears watching.”

At the recent RILA conference, Costello said that a key factor for driver turnover has been compensation, which has lagged for a long time.

“If you look at what driver pay was in 1980 compared to now in real currency terms, it was higher then…so we still have a lot of catching up to do,” he said.

But there are signs of improvement with large turnover rates falling 20% over the second half of 2018, as per ATA data, with Costello pointing to pay increases as the reason for that reduction. But that situation could change, even if the next recession is mild, he said, as it could lead to a fair amount of carriers exiting the business, as it will be difficult for them to keep those pay increases intact.

A recent conference call hosted by Stifel, featuring Gordon Klemp and Leah Shaver from NTI, presented a potentially positive outlook for the driver shortage showing signs of improvement, with the pair saying they expect driver wages to be higher in 2019, in the 6%-to-10% range annually, with the caveat, though, that driver wages will not rise unless they are commensurate with rate growth.

Stifel analyst Dave Ross explained in a research note highlighting this call that his firm believes that the driver shortage is a simple commodity shortage driving truckload rates higher.