The committee includes some well-known names in academia who have studied the issue of trucks and drivers, such as Steve Viscelli from the University of Pennsylvania and Jason Miller from Michigan State University. Caroline Mays of the Texas Department of Transportation and also vice chairman of the Special Committee on Freight of the American Standards Association of State Highway and Transportation Officials is also on the committee.

The National Academy of Sciences is a private institution, but was established by an act of Congress during the Lincoln presidency. A provision of the Biden administration’s bipartisan Infrastructure Act called for the Federal Motor Carrier Safety Administration to hire the NAS to do a study on the interconnected issues of driver pay, safety and retention.

The panel’s work on driver retention draws heavily on previous studies, such as a 2019 study from the Bureau of Labor Statistics by Stephen V. Burks of the University of Minnesota Morris and Kristen Monaco from the US Bureau of Labor Statistics.

Some of the findings in the driver retention section of the NAS study could read as more basic than an Economics 101 curriculum.

“Research indicates that the retention and driver turnover rates experienced by trucking carriers can be partially explained by the cyclical factors experienced by all carriers in the sector and in trucking in general,” the report said.

What happens as the market changes

For example, when the trucking market is strong, carriers ramp up recruiting through tactics like offering sign-on bonuses that “bring new drivers into the industry who are prone to leaving long-haul jobs quickly.”

“On the contrary, when demand for freight transport falls, turnover will be lower in the sector, as there will be both fewer drivers new to the industry and fewer attractions and opportunities for experienced drivers to switch companies” , the report. added.

The report was careful to note that turnover issues are largely overwhelming in the trucking sector. Citing data from the American Trucking Associations, the NAS report said the average annual turnover from the third quarter of 1996 to the first quarter of 2023 was 92.7 percent for large truck carriers, defined as revenues over 30 million dollars and 77.6% for the carriers below. that.

Turnover is defined as “simply the percentage of drivers employed during the year who have left their job, including new recruits who have only spent a few days or weeks on the job.”

Contrast with LTL, private

But the less-than-truckload turnover rate was 11.8% during that period. For private carriers, the rate was 15 percent between 2005 and 2022, according to the National Private Truck Council.

Ultimately, the report concluded that truckers could choose policies that reduce turnover, but the economy is driving them not to adopt those practices.

“High driver turnover rates create costs as the carrier has to bear the expense of recruiting and training new drivers, while experiencing lower productivity and higher accident risk from new drivers as they gain driving experience,” the report said. “To reduce these running costs and retain drivers, the carrier may choose to pay the driver more than the next worker.

the best opportunity to win.” The report used construction labor costs as a benchmark for alternative driver opportunities.

Higher wages to reduce some of the less desirable aspects of long-haul transportation, such as extended absences from home, are known in economics as the “compensating gap,” according to the report.

“When compensation differentials are large enough, the carrier can reduce dropouts, even if TL working conditions are harsh,” the report said. “However, the higher wage will increase the carrier’s cost structure, possibly by more than any resulting savings in turnover costs.”

Inefficiency to reduce turnover?

Another option, which the report acknowledged was “counterintuitive at first,” was to reduce shipping efficiency.

This option – not so much a recommendation – would aim to reduce the driver’s time away from home.

“A dispatch system that focuses heavily on efficient driver positioning, such as sending drivers to the load that is closest to their last drop-off location, regardless of proximity to the driver’s home base, may result in drivers being sent far and wide. in the carrier’s operational area,” the report said. “This practice can increase the likelihood that a driver will give up.”

But adjusting that dispatch to create more time at home generates more empty miles, which isn’t good for a carrier’s bottom line. “In this case, the TL carrier must choose between overall cost savings and revenue maximization,” the report said.

It all comes down to money, the report says. “A typical long-haul TL carrier will tend to favor the cost-minimizing options of an intensive and efficient dispatching practice and controlling driver pay expenses while accepting the costs associated with the resulting high turnover,” the authors wrote .

The decision not to use such strategies, or similar steps that could reduce turnover in favor of reduced economic efficiency, stimulates volatility in the ranks of employees that leads to the conclusion that there is a shortage, the report says. “Carriers have come to believe that there is a chronic shortage of drivers due to the constant need to replace them during both expansions and contractions of the long-haul TL sector,” the report said. “However, this need, as evidenced by the research and data presented here, can be explained by the overall effect of the industry’s competitive structure, which forces carriers to use cost-focused management strategies.”

To give a specific example of that strategy in action, the committee went back to 1997 and a practice it said was undertaken by JB Hunt. (NASDAQ: JBHT).

The company, described by the committee as the second largest truck carrier that year, adopted a radical change in practice. He raised wages by 35% and hired only experienced drivers.

“The carrier expected its higher wage costs to be recovered through lower costs

from fewer accidents and lower costs of recruiting and training drivers,” the report said. And although there was evidence that had taken place, the policy was dropped within five years and the former payment schedule was reinstated. The report does not explicitly say why, but the action would clearly suggest that the policy was a failure.

Such evidence does not mean that companies will not seek to reduce turnover, the report said.

But “carriers focused solely on cost competition must be willing to accept turnover costs when they lead to savings in other costs that keep them competitive.”

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