The committee includes some well-known names from the academy who have studied the issue of truck transport and drivers, such as e.g. Steve Viscelli from the University of Pennsylvania and Jason Miller from Michigan State University. Caroline Mays from the Texas Department of Transportation and also vice chairman of the Special Committee on Freight at 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 an act of Congress during Lincoln’s presidency. A provision of the Biden administration’s bipartisan infrastructure law called for the Federal Motor Carrier Safety Administration to hire the NAS to conduct a study on the intertwined issues of driver pay, safety and retention.

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

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

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

What happens when the market changes

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

“Conversely, when demand for freight transport declines, turnover will be lower in this sector, as there will be both fewer new drivers in the industry and fewer incentives and opportunities for experienced drivers to switch companies,” the report added.

The report was careful to note that turnover problems are 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 through the first quarter of 2023 was 92.7% for large trucking, defined as $30 million plus in revenue, and 77.6% for carriers under that.

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

Contrasts with LTL, private

But the less than truck turnover rate was 11.8% during that period. For private carriers, the share was 15% 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 leads them to not use these practices.

“High driver turnover creates costs, as the carrier must incur expenses to recruit and train new drivers while experiencing lower productivity and higher crash risk from the new drivers as they gain experience behind the wheel,” the report said. “To reduce these turnover costs and retain drivers, the carrier may choose to pay one driver more than the worker’s next

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

Higher pay to reduce some of the less desirable aspects of long-haul trucking, such as prolonged absences from home, is known in economics as a “compensating differential,” according to the report.

“When compensation differentials are high enough, the carrier can reduce dropouts, even if TL working conditions are tough,” the report said. “However, the higher wage will raise the carrier’s cost structure, possibly with more than a few resulting savings in turnover costs.”

Inefficiency to reduce turnover?

Another option, which the report admitted was “counterintuitive at first”, was to reduce the effectiveness of the broadcast.

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

“A dispatch system that is intensely focused on efficient driver positioning, for example by sending drivers to the cargo closest to their last drop-off point, regardless of proximity to the driver’s home base, can result in drivers being dispatched far and wide across the carrier’s operating area,” it says in the report. “This practice can increase the likelihood that a driver will quit.”

But adjusting that dispatch to create more time at home generates more empty miles, which isn’t good for a carrier’s bottom line. “Once again, the TL operator must make a choice between total cost savings and revenue maximization,” the report said.

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

The decision not to use that type of strategy, or similar steps that could reduce turnover in favor of reduced financial efficiency, stimulates volatility in the ranks of employees that leads to the conclusion that there is a shortage, the report said. “Carriers have come to believe that there are chronic driver shortages due to the constant need to replace them during both expansions and contractions of the long-haul TL sector,” the report said. “However, that need, as demonstrated 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 carried out by JB Hunt (NASDAQ: JBHT).

The company, described by the committee as the second largest trucking company that year, adopted a radical change in practice. It raised pay levels by 35% and hired only experienced drivers.

“The company expected its higher wage costs to be covered by lower costs

from fewer crashes and lower recruitment and training costs for drivers,” the report states. And although there was evidence that occurred, the policy was abolished within five years and the previous wage schedule was restored. The report does not specifically say why, but the action would clearly indicate that the policy was a failure.

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

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

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