Newer trucks can help lower on-boarding costs, increase retention
Heavy-duty fleet organizations continue to face major challenges in the retention and recruitment of drivers at a particularly perilous time, as drivers are needed more than ever to continue transferring the shipment of goods, food, medicine, and vaccines across the country.
Recent data from the American Trucking Association (ATA) states that driver turnover for carriers has rapidly increased by double-digit percentages during the third quarter of 2020. This occurred even as the industry began to return from the COVID-19 pandemic.
The tight market for drivers has made retention even more important in the current economy. ACT Research recently said its latest For-Hire Trucking Index showed a Driver Availability Index that dropped to a new low of 16.7 in March, down from its previous low of 23.6 in February.
Driver turnover rates remain inflated
The recent data showed that the annualized turnover rate at truckload carriers with more than $30 million in annual revenue increased to 92% during the third quarter. For smaller carriers, the turnover rate increased to 74%.
“After a calamitous second quarter, trucking – along with the rest of the economy – began recovering in the third quarter, leading to a tightening of the driver market,” ATA Chief Economist, Bob Costello shared his thoughts in a recent statement. “With a more robust freight market, we saw an increase in carriers seeking drivers, which led to increased turnover. Additionally, the driver pool has decreased this year for a host of reasons, including fewer new drivers coming into the industry as truck driver training schools train fewer drivers due to social distancing requirements.”
While it would be easy to point toward Covid-19 as the culprit, the fact remains that this has been a growing issue for several years now.
For the fourth consecutive year, driver shortage remains the trucking industry’s leading concern on the overall list of challenges and concerns according to the 2020 American Transportation Research Institute (ATRI) report, “Critical Issues in the Trucking Industry”.
Driver shortages are also a major concern specifically for private fleet organizations, even though the numbers are not as dire as for-hire carriers. The latest benchmarking report from the National Private Truck Council (NPTC) in 2020 shows that driver turnover has continued to increase, reaching close to an all-time high of 18.5% in 2020. For comparison purposes, in the previous year, private fleets reported a turnover of 16.9%, up a point and a half over the previous year’s 15.4% average turnover.
Compensation programs are regularly discussed to attract new drivers and retain existing ones. However, fleets are beginning to utilize other strategies for driver recruitment and retention.
On-boarding new drivers can be costly
Typically, the average cost of onboarding a new driver can exceed $10,000 for many companies. Organizations with private fleets and for-hire carriers, therefore, have a continuous motivation for retaining their existing drivers to avoid paying this hefty on-boarding expense. They’re now coming to realize that having drivers operate newer trucks can improve their chances of retention.
Newer trucks come with newer technology, advanced safety features, and fewer maintenance and repair (M&R) problems, which equates to less downtime and breakdowns on the side of the road. This means drivers can more frequently return home to their families at the end of the day and operate trucks on their routes with more confidence they will avoid breakdowns on the side of the road.
Advanced safety features benefit drivers and fleets
The advanced safety features found in today’s newer trucks are a significant motivating factor for drivers to remain with a particular fleet. Today’s drivers enjoy comfort and safety items such as the following:
- Air ride suspension
- Power steering
- Automated manual transmission
- Engine HP and speed settings
- Lane departure
- Collision mitigation
- Adaptive cruise control
- Blind-spot monitoring
- Roll stability
Fleets themselves are realizing a greater return on their investment (ROI) into newer trucks when more of these trucks are placed into service. In fact, the cost for all safety equipment (including Collision Avoidance, Disc Brakes, Lane Change, and Electronic Stability Control) reduces overall collision repairs and yields a return on the original safety technology investment in about 18 months (collision repairs cost avoided). These are substantial savings combined with the cost of onboarding new drivers.
As more fleets and transportation organizations replace aging trucks with newer, safer equipment on the roads, these companies will quickly realize they will keep their drivers and others on the road safer, retain their drivers at a higher rate, and also enjoy substantial savings in reduced accident and litigation costs as well as lower maintenance and repair expenditures.
Katerina Jones is VP of marketing and business development at Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and lifecycle cost management.
