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This story appears in the June 23 print edition of Transport Topics.

Driver turnover at truckload carriers with annual revenue of more than $30 million declined to 103% in the first quarter, the lowest annualized rate in five years, American Trucking Associations reported.

The large TL turnover rate was 112% in the fourth quarter of 2007, compared with 127% a year earlier. ATA also said turnover at small truckload firms declined two percentage points to 80% in the first quarter, the lowest rate since the third quarter of 2004.

Turnover at less-than-truckload fleets slipped to 14% from 15% in the 2007 fourth quarter, the report said. Churn at LTLs is generally lower because drivers’ routes are shorter, requiring less time away from home.

“It is important to note that, while the driver market has eased over the last year (or more), this is only a temporary phenomenon,” ATA Chief Economist Bob Costello wrote in the report. “In the longer-run, the driver shortage will be back with a vengeance, once freight volumes pick up, likely boosting turnover.”

Kevin Burch, president of Jet Express Inc., Dayton, Ohio, agreed that his company is having an easier time hiring and retaining drivers.

“We’re noticing people coming in the front door [and] putting in applications, which we haven’t seen,” Burch said. “So we’re asking why they’re coming in, and they’re saying, ‘My company lost this contract or lost volume or is downsizing.’ ”

Burch, first vice chairman of the Truckload Carriers Association, heads up the group’s driver recruitment and retention efforts.

Although he said he believes carriers are beginning to understand the importance of keeping drivers happy, he attributes the reduction in turnover more to the economy.

“I think when the economy turns around and we get a handle on fuel, that we are going to be in deep trouble because of the freight we need to cover,” Burch said. “When this thing comes back, it’s going to be rip-roaring and we’re going to be looking at everybody else’s drivers like we did a while back.”

ATA’s report found that motor carriers continued to shrink their driver pools and company payrolls during the first quarter. The number of LTL employees shrank by 2.4%, small truckload employees declined 2.3% and large truckload employees were down 0.9% during the January-to-March period.

The report attributed the declining driver turnover rate largely to the difficult freight environment.

“While the current environment, including freight volumes and surging diesel prices, is tough on nearly all fleets, one can see how the small carriers are getting hit particularly hard, since their volumes are off so much from last year,” the report said.

Duff Swain, president of trucking industry consultant Trincon Group, Columbus, Ohio, said the increasing carrier failure rates are dumping more drivers on the job market and making those with jobs think twice about leaving.

“The only thing that has changed is the economy,” Swain said. “In that circumstance, anyone is hesitant to change jobs as frequently.”

Swain noted that quarterly figures showed that 935 fleets closed their doors or failed in the quarter, which equated to 42,000 trucks.

“The last downturn in the economy, the same thing happened,” Swain said. “But it’s going to come back, and it’s going to bite everyone in the butt, big time.”

Don Osterberg, vice president of safety and driver training at Schneider National Inc., Green Bay, Wis., also said the slow economy is making it easier to find drivers, especially because the company is increasing capacity.

“Right now, we recognize there is a limited scope of opportunities, a symptom of greater problems in the economy, especially the downturn in construction job opportunities,” Osterberg said.

Jim Richards, chief executive officer of KLLM Transport, Richland, Miss., said his company’s advertising budget has been reduced drastically, and yet the number of drivers calling for work has increased.

“We’re not having to work near as hard, and we’re not spending near the dollars we have in the past,” Richards said. “As a matter of fact, for the first quarter, we didn’t even hold orientation. We were fully staffed and suspended orientation.”

In the longer term, however, Jet Express’ Burch said the significant problem of replacing aging drivers with younger ones will not go away.

“There is this difficulty getting people involved in our industry,” he said.

Similarly, Swain said there is another sign the driver shortage is not going away.

“Over the years, the industry has been constricting and consolidating, and there are fewer companies now,” Swain said. “But the fact is, there are about the same number of trucks in operation, and the productivity per truck has not improved during that time.”

Staff reporter Frederick Kiel contributed to this story.