The “Amazon Effect” could explain the recent spike in driver turnover. Traditionally, driver turnover rates go down when freight demand is relatively soft, as it was in 2019, but turnover has counterintuitively been rising.
The term “Amazon Effect” is generally used to describe the metamorphosis of supply chains in response to rising consumer expectations for delivery of goods purchased online or in stores. Shippers are changing their freight distribution models to shorten the distances between warehouses and customers to achieve same and next-day deliveries.
The American Trucking Associations (ATA) reported turnover increased 9 points during the third quarter of 2019 for large carriers, hitting an annualized rate of 96%. The ATA defines large truckload fleets as those with more than $30 million in annual revenue.
The third-quarter increase was the largest quarterly uptick recorded by ATA since the second quarter of 2016, and the 96% churn is the highest on record since the second quarter of 2018. Smaller carriers saw turnover increase six points to hit a 73% annualized rate.
Driver pay was supposed to be less of an issue when the trucking industry made significant increases to mileage-based pay rates in 2018. Carriers maintained their rates in 2019, but drivers are getting fewer miles. According to a recent survey of 62 truckload carriers, average annual miles for drivers fell 11% in 2019 from 124,244 in 2018 to 108,777 in 2019.
The survey was conducted by CarriersEdge, a provider of online driver training courses, in partnership with the Truckload Carriers Association (TCA) for its Best Fleets to Drive For program. Carriers surveyed for the TCA program ranged from small operators of 14 trucks to mega fleets with more than 8,000 power units.
Average length-of-haul (LOH) for truckload shipments has been sliding for at least a decade, but the trend has accelerated in the last 24 months.
