Truck Driver Turnover: An Internal Marketing Perspective

Abstract

INTRODUCTION Environmental pressures have created havoc for the trucking industry during the last several years. For example, downward rate pressures in the motor carrier industry in the post deregulation decade forced cost reduction measures that resulted in a serious decline in profitability, which in turn negatively affected truck drivers' wages. This decline contributed to a shortage of drivers for unionized less-than-truckload (LTL) carriers and extremely high turnover rates for nonunion for-hire truckload (TL) carriers. Industry-wide focus on price setting and market coverage as the primary tools of marketing strategy resulted in the continuation of rate pressures in an increasingly competitive environment. Consequently, raising truck driver wage levels was not seen as an option for some carriers. The current situation has somewhat improved. Myron P. Shevell, CEO of New England Motor Freight and Chairman of the New Jersey Motor Truck Association reports that the LTL business is healthier now than it has been for five or six years (Myron P. Shevell.... 1998). This comes as a result of the growing economy. Customers are requiring the shipment of more goods which translates into more business for the trucking industry. Early in 1997, many carriers announced they would be raising their general freight rates, some as much as 5.7 percent (Carriers Announce.... 1997). Nine months later some shippers imposed a second price increase of 4.9 to 5.9 percent (Mullins 1997). Bill Zollars, President of Yellow Freight System, believes these increases are necessary if carriers are to continue delivering the level of service and enabling technology that customers have come to expect (Carriers Announce.... 1997). Executives at Roadway Express communicate similar needs. They want to ensure their ability to invest in the equipment, information systems, personnel, and training needed to permit the carrier to provide the stable relationship and service level customers demand. Thus, it would appear that a healthy economy, strong consumer demand, and rock-bottom retail inventories are delivering carriers the heavy freight traffic they have long desired along with desired rate increases. Even with these positive developments, the trucking industry is still facing an uphill battle. A major shortage of drivers and therefore, a shortage of available equipment, has turned what could be a boon into a bust for some carriers in the industry as they find themselves unable to move the additional traffic. In other words, even with the implementation of a much needed freight rate increase, the trucking industry is still faced with a severe problem--driver turnover. For years, carriers have been attempting to buy their way out of shortage/turnover problems. One common approach has been to out recruit the problem. Recruitment and training has played a significant role in providing fleets with drivers. Careful scrutiny reveals the pitfalls of relying exclusively on this aspect of human resource management. Thus, managers have begun to seek other solutions to the problem. John Smith, President and CEO of CRST International reports that ten years ago, recruitment was a line item in our safety budget, now we spend more on recruiting than we do on marketing activities (Richardson 1994). It costs approximately $3,000 to $6,000 to recruit and train each new driver and to integrate him/her into the fleet (Leibowitz, Schlossberg, and Shore 1991; Stephenson 1996). These costs are sufficiently high to change a profitable operation into an unprofitable one suggesting that a purely recruiting based strategy--guarding the front door of the company, while leaving the back door unprotected--maybe effective, but is much too costly. Thus, this tactic has not been effective in the long run. Driver retention is possible provided the company treats each driver as a vital member of the company. This approach requires managers to think of drivers as a primary employee group. …