The committee includes well-known names in academia who have studied the issue of trucking 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 Freight Committee of the American Association of State Highway and Transportation Officials Standards is also on the committee.

The National Academy of Sciences is a private institution but was established by act of Congress during President Lincoln. A provision of the Biden administration’s bipartisan infrastructure law called for the Federal Motor Carrier Safety Administration to use the NAS to conduct a study on the intertwined issues of driver compensation, safety and retention.

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

Some of the findings in the driver retention section of the NAS study could be interpreted as more fundamental than an Economics 101 curriculum.

“Research indicates that truckload carriers’ driver retention and turnover rates can be explained in part by cyclical factors experienced by all carriers in the industry and by trucking in general,” the report states.

What happens when the market moves

For example, when the trucking market is strong, carriers step up recruiting through tactics such as offering signing bonuses that “attract new drivers to the industry who are inclined to quickly leave trucking jobs.” transport of complete loads over long distances.

“Conversely, when demand for trucking freight transportation declines, turnover will be lower in this sector, because there will be both fewer drivers new to the sector and fewer incentives and incentives. “opportunities for experienced drivers to change companies,” the report said. added.

The report was careful to note that turnover problems mainly concern the full load sector. Citing data from the American Trucking Associations, the NAS report said the average annualized revenue from the third quarter of 1996 to the first quarter of 2023 was 92.7% for large truckload carriers, defined as a figure of business over $30 million, and 77.6% for carriers under $30 million. that.

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

Contrasts with LTL, private

But the LTL turnover rate was 11.8% during this period. Among private carriers, the rate was 15% between 2005 and 2022, according to the National Private Truck Council.

Ultimately, the report concludes that truckload carriers could choose policies that reduce turnover, but that economic considerations lead them not to adopt these practices.

“High driver turnover rates create costs, as the carrier must incur expenses to recruit and train new drivers while facing lower productivity and higher accident risk from new drivers during that they gain experience behind the wheel,” the report said. “To reduce these turnover costs and retain drivers, the carrier may choose to pay a driver more than the next worker.

best earning opportunity. The report used construction labor costs as a benchmark for a driver’s alternative opportunities.

According to the report, higher wages intended to reduce some of the less desirable aspects of long-distance road transport, such as long absences from home, are known in economics as a “compensation differential.”

“When compensation differentials are high enough, the carrier can reduce departures, even if TL working conditions are difficult,” the report says. “This higher salary will, however, increase the carrier’s cost structure, perhaps more than the resulting savings in turnover costs.”

Inefficiency to reduce turnover?

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

This option – which is not really a recommendation – would aim to minimize the time the driver spends away from home.

“A dispatch system that focuses intensely on efficiently positioning drivers, for example by sending drivers to the load closest to their last drop-off location, regardless of proximity to the driver’s home base, can result in sending drivers everywhere. throughout the carrier’s operational area,” the report said. “This practice may increase the likelihood that a driver will abandon.”

But adjusting that split to spend more time at home generates more empty miles, which isn’t good for a carrier’s bottom line. “Again, the TL carrier must make a choice between overall cost savings and revenue maximization,” the report said.

It’s all about money, the report says. “A typical long-haul TL carrier will tend to favor cost-minimizing choices, namely an intense and efficient dispatch practice and control of driver salary expenses, while accepting the costs associated with the resulting high turnover “, the authors wrote.

The decision not to resort to this type of strategy, or similar measures that could reduce turnover in favor of reduced economic efficiency, promotes workforce volatility, leading 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 expansions and contractions of the long-haul trucking industry,” the report states. “However, as the research and data presented here demonstrate, this need can be explained by the overall effect of the competitive structure of the industry, which forces carriers to employ cost-oriented management strategies.”

To give a specific example of this 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 truckload carrier that year, adopted a radical change in its practices. He increased pay rates by 35% and only hired experienced drivers.

“The carrier expected its higher labor costs to be recovered by lower costs

through a reduction in the number of accidents and a reduction in the costs of recruiting and training drivers,” the report states. And although evidence was provided, the policy was abandoned after five years and the old pay scale was reinstated. The report does not explicitly state why, but this measure would obviously suggest that this policy was a failure.

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

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

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