Turnover Analysis-2014 TMW Study

The 2014 TMW Transportation & Logistics Study analyzed results from three online surveys conducted between July and August last year, polling 131 companies in the irregular route and dedicated truckload sectors as well as brokerage/non-asset firms.
Some of the highlights:

• More than 60% of the trucking respondents reported an operating ratio (OR) of 94% or lower, compared to 48% in 2013, with 16.7% reporting sub-90% ratios, as compared 3.2% in 2013.
• Net rate per mile improved by 7%, or 10 cents per mile, while utilization increased 2%, or 54 miles, per seated truck per week.
• Utilization remains a critical factor in fleet profitability, TMW discerned, as those reporting an OR of 96% or lower averaging 2,387 revenue miles per seated tractor per week while fleets reporting ORs higher than 96% averaged just 1,864 miles.
• TMW’s poll also reinforced the obvious connection between wages and driver turnover. For example, no respondent in the TL irregular sector with annual driver earnings below $50,000 reported turnover of less than 50%. (Note though that average driver turnover in 2013 hovered at 51%).
• Only irregular-route TL fleets reporting average driver pay above $55,000 achieved turnover rates of 25% or less.
• Yet only one responding TL fleet in the dedicated sector with driver wages averaging below $50,000 reported less than 50% turnover.
• But TMW also discovered “no consistent relationship” between wages and turnover in the dedicated sector. In fact, some of the highest paying fleets experienced particularly severe retention challenges in 2014 versus 2013.

So what’s going on here? Well, according to TMW’s findings, three other factors are influencing turnover rates: the tractor-to-driver manager ratio, utilization rates, and length of haul (LOH).
TMW’s poll found that 68% of fleets with fewer than 30 tractors or drivers per fleet manager reported less than 75% turnover, while 83% of fleets with less than 21 tractors per fleet manager reported a sub-75% turnover rate – with many achieving 50% or lower.

“This pattern is significant in an industry where 41% of participants reported driver turnover of 75% or higher,” the company noted in its report.

There’s also a very strong correlation between utilization and driver retention, according to TMW’s survey data. In a measure of seated truck utilization, respondents with driver turnover below 75% also averaged 100 more revenue miles per tractor per week than those with higher turnover, the company pointed out.
“The connection is clear: if OTR [over-the-road] drivers aren’t getting enough miles, they’ll seek work elsewhere,” TMW emphasized. “Until a fleet can raise the bar on utilization, it could risk a downward cycle of increased turnover, more unseated trucks, and lower revenues.”

TMW also noted that in its 2013 survey, per-mile pay rates seemed to matter less than higher average driver miles – and its 2014 survey confirmed that trend.

“It also appears that while driver miles are a factor in higher retention, this gains more significance when paired with other variables,” the company added.

“One of those additional variables appears to be fleet size, as just one fleet with more than 500 tractors reported driver turnover of less than 75%,” TMW noted. “While there are several strong relational factors that appear to impact driver turnover, there are nearly as many exceptions. For example, many respondents with higher tractor to fleet manager ratios reported lower driver turnover but also coupled with either longer LOHs or top-end driver wages.”

One reason longer LOH seems to help with retention is that it means fewer dispatches and stops to coordinate, which theoretically gives fleet managers more time to focus on driver needs, the company surmised.

That also means “drivers also have fewer docks to bump and perhaps reduced stress around finding a load or managing detailed pickup/delivery requirements,” TMW added.

“Perhaps the key takeaway is that irregular-route TL carriers with lower tractor to fleet manager ratios are more likely to achieve better than average driver retention,” the firm noted. “The life of a driver in an irregular route environment is marked by long periods of isolation and more attentive fleet managers may offer valuable relief from that burden.”

Those three factors -- tractor-to-driver-manager ratios, utilization and LOH – also affect turnover and retention in the dedicated segment, but not always as strongly, TMW found:

• Respondents in the range of 19 tractors per fleet manager averaged less than 50% turnover, while those averaging 25 tractors or more per fleet manager reported turnover higher than 50%.
• Yet the LOH connection in the dedicated segment is less clear-cut as a two-day LOH will typically put a driver at least four days out, whereas a shorter-haul dedicated route often allows for increased home time per week.
• About eight out of 10 fleets that averaged less than 500-mile LOH reported lower than 50% driver turnover.
• As the reported LOH average rose to 663 miles, TL dedicated segment turnover spiked to as much as 75%. Higher LOH averages pushed driver turnover rates to between 75% and 100%.
• As in the TL Irregular segment, TMW found a strong correlation between utilization and operating ratios, yet also noted hours-of-service (HOS) rule changes creating a “daunting challenge” with 65.6% of respondents reporting a negative impact on utilization of as high as 10% from the new HOS requirements.
• Yet TMW’s poll also found dedicated fleets are combatting the impact of HOS with new technologies. For example, fleets using planning optimization software averaged 142 more revenue miles per seated truck per week over the preceding 12 months – a 6.3% upswing in utilization.

Now, certainly, with TMW’s survey pool only comprised of 131 companies, it might be hard to apply all of the findings above to the U.S. trucking industry as a whole. But it certainly provides some meaty food for thought.