Truckload fleets don't have to throw in the towel in the face of woeful driver turnover rates. Not if they're willing to get into their drivers' faces a bit — and really show them why they should stick around, instead of taking the next recruitment deal down the road.
That's a chunk of what consultant Duff Swain contends in a white paper he's authored titled “Utilization and Reinvestment Address Profitability Challenges.”
President of Trincon Group, Swain is something of a one-man trucking think tank, having penned several such white papers, all of which can be downloaded for free at www.trincon.com.
A fleet manager reading this latest piece will be guided step by step on Swain's approach to upping profits while building a stronger workforce.
“Many view the current state of the trucking industry as a Catch 22 or a vicious circle,” Swain contends. “The industry must have more drivers to increase productivity; but at the same time, it must make financial investments to recruit new drivers and reduce turnover. Low truck productivity suppresses company profits, which prevents carriers from making the necessary investment — yet productivity will not increase without additional drivers.”
“Is the situation hopeless?” he asks. “The underlying fact is that trucks are underutilized. If there were enough drivers to fill all of the industry's trucks, they would continue to be underutilized and shipping costs would remain high. There is a way out. The solution means taking immediate action to increase productivity to generate significantly higher profits and tax savings, then using the money to fund the additional measures needed to recruit and retain a stable, dependable workforce.”
Swain says halting the revolving-door effect of driver turnover is key to boosting productivity.
“While carriers enact across-the-board raises, sign-on bonuses and other measures to attract drivers, they are doing little to halt turnover,” he maintains. “It can be argued that incentives and bonuses create more problems than they solve. When a carrier lures a driver away from a competing firm with a signing bonus, what keeps that driver from moving on to take the next offer that comes along?”
By contrast, Swain says having a “personal stake” in a company is a prime reason for driver loyalty. “Unfortunately, most carriers are preventing their drivers from establishing a long-term commitment [with them].”
He says the question for a carrier still “supporting” 100% plus turnover is: “How can you expect your business to grow if your workforce doesn't?”
Rather, Swain argues, to increase profits truckload carriers must become better managers of their capital-intensive businesses. He says increased truck utilization means trucks operating more paid miles per year, not just more drivers operating more trucks.
To increase productivity, Swain urges fleets to:
Take full advantage of depreciable capital assets.
Reduce or eliminate trucks against the fence.
Fully utilize operating trucks through slipseating.
Begin marketing and negotiating from a more competitive position.
Reinvest profits and tax savings to recruit and retain drivers.
“Companies that increase profits become stronger,” he states. “They generate more sales, provide more competitive rates for shippers and, as a result, can afford to invest in recruitment and retention measures.”
And, Swain adds, those carriers that fail to act will become little more than “unwitting suppliers, allowing their drivers to migrate to stronger, more attractive employment options.