Logistics Blog | Total Distribution, Inc. in Jacksonville, FL

The Truck Driver Shortage is making it hard for trucking companies to find qualified truck drivers. Forward thinking trucking companies are looking for ways to increase truck driver retention and lower driver turnover rates.

Truck Driver Shortage: Retention & Lowering Driver Turnover Rates

Truck driver turnover is a hot topic in the trucking industry right now. Because of a drop in shipping demand, the turnover rate for large truckload fleets dropped from 102% to 89% this year. For those with long experience in the industry, such fluctuations are routine, and when we read the Truck Driver Shortage Analysis 2015 report by the American Trucking Associations, we believe it will have little impact on the struggle to find qualified drivers. According to the ATA report, the driver shortage was 38,000 in 2014 and is expected to grow to 175,000 by 2024. The reasons are varied, but common threads emerge.

Churn in the Trucking Industry

Most of the driver turnover in the trucking industry is churn, as drivers leave one trucking company to go to another. When demand is high, churn increases, and during a period of weak demand, they stay where they are.

The Truck Driver Shortage vs. Driver Turnover: Not the Same Thing

The truck driver shortage is not the same as driver turnover. They are different measures, with different causes. The shortage is caused by factors beyond an individual carrier’s control. Average driver age is 49, and the 45-54 age group is the largest. Trucking’s biggest need is to replace retiring drivers. The second most important factor is industry growth.

Two other important factors are pay and working conditions. Construction and other industries pay more and don’t require time away from home. Competition keeps freight rates low, and carriers have little wiggle room on pay. Newcomers to the job have to pay their dues with longer trips, and that lifestyle does not appeal to younger workers.

Calculating the True Cost of the Truck Driver Turnover

Estimating per-driver turnover costs can be difficult. Most companies focus on hard costs and do not capture what is not easy to measure. Hard costs include lost capacity, idle equipment, separation processing, advertising and recruiting cost, pre-employment testing, and orientation and training cost. There are others we call soft costs you may not be considering:

  • Declining productivity. As a driver becomes dissatisfied, their productivity declines. It should be easy for you to spot in your reports if you are looking for it.
  • Team productivity. Include the time a supervisor must spend trying to correct performance issues and the time dispatchers must spend compensating for reduced productivity.
  • Lost productivity during training. Training has an impact beyond the actual cost of delivering it. Consider the impact on other people and the time in training that does not include time hauling freight.
  • Impact on company brand. The actions of a dissatisfied driver may not be in the best interests of your business reputation.
  • Impact on morale. If a problem persists, it may affect other drivers and warehouse or terminal staff. We see estimates of the per-driver cost as low as $2,000 and as high as $22,000. However, to get an idea of what the costs could be, we can use a conservative estimate for a company with 100 drivers, a turnover ratio of 75%, and an average turnover cost of $5,000.

The Benefits of Reducing Truck Driver Turnover Rates

There are many other benefits of reducing turnover. We can estimate some, but others we can only measure over time. One of the advantages is the boost to your company reputation, and one of the results might be that you find it easier to recruit high performers.

The Grimes Approach to Improving Truck Driver Retention

It is easy to see why companies like Grimes pay attention to driver retention. We talked with several team members in the trucking department to understand the efforts they make to keep turnover as low as possible. Combined, the team members have over 35 years of experience in the transportation industry, and they know the impact happy drivers have.

First in the arsenal of interventions is their Driver Retention Department. They are constantly on alert for signs a driver is unhappy. When a dispatcher alerts them to an issue, they swing into action to correct it.

The team pays attention to how much drivers are earning. If they have a bad day or a bad week, they are vulnerable, and a fast-talking driver telling tall tales about earnings at another company can sway their thinking. They also understand that drivers spend a lot of time alone, which can foster negative thinking.

Staying in touch with them and understanding their concerns helps retention. The Grimes marketing team keeps drivers informed, using text messages and videos. Drivers always know how much they are earning and what to expect.

Improving the Truck Driver-Dispatcher Relationship

In the trucking industry, the most important relationship is between the trucker and the dispatcher. Grimes dispatchers receive bonus compensation when they keep drivers on the job and have retention targets they must meet.

Another important factor is the team’s understanding of the tension and balance between time at home and earnings. Drivers are not earning unless they are driving, and balancing earnings and time at home can be difficult. The team at trucking is always mindful that the balance is always changing, and when drivers earn more, they tend to start driving less. They reach a comfort level where time at home becomes more important than more earnings.

Grimes Trucking operates on the philosophy that everyone who comes in touch with a driver has an effect on their relationship with the company and the people in it. Every team member strives to make the interactions as supportive as possible.

Reducing Driver Turnover: Hiring the Right People

Measuring and controlling the costs of replacing a driver is important, but just as important is hiring the right people. Most companies have high standards for work history, experience, and insurability. Even during periods of critical shortage, they do not lower standards because the cost of increased insurance costs and accidents is very high. Minimum qualifications, however, is only the first step. The team, with their long experience in the industry, can spot warning signs in an applicant’s work history and background.

With every driver application, Grimes looks for a steady, stable history with reputable companies. An applicant who has 6-8 jobs in a year is a red flag to them, and may show someone who is never satisfied. On a background check, they don’t want a “whole lot of ink.” Lengthy records are another red flag. The team says these methods serve them well when evaluating a new driver. We hope that by sharing our methods we have given you information to help you reduce your turnover. We know from our experience that the cost of retaining good employees pays for itself.

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