What driver shortage?

What driver shortage?

Though the long-term outlook for finding and retaining enough drivers to meet the freight hauling needs of truckload carriers remains grim, the picture may be brightening significantly in the short term

Though the long-term outlook for finding and retaining enough drivers to meet the freight hauling needs of truckload carriers remains grim – due in part to a generational shift, with more Baby Boomers retiring than can be replaced by Generation X – the picture may be brightening significantly in the short term, according to some fleets.

“I say there really is no driver shortage,” Brett Terchilla, vp-fleet operations for Indianapolis-based truckload carrier Celadon Group. “We’ve got about 70% turnover but we’re keeping our 2,000-plus trucks on the road, running up to 1,000-mile length of hauls. And more drivers are calling us now than ever before.”

As a result, Celadon decided to beef up its hiring qualifications in October – and that effort hasn’t hurt its hiring ratios, either. “We interview 8,000 to 10,000 people a month and end up hiring about 200 of them – so about 2% to 3% of applicants get hired,” Terchilla said. “That ratio hasn’t changed, even though we tightened up our standards. There are just more qualified drivers out there.”

Several other carriers also report an easing of the driver shortage. Omaha, NE-based Werner Enterprises said in its year-end earnings report that while the driver market remained challenging, it was not as difficult in fourth quarter of 2007 as compared to the same period in 2006. “The weakness in the construction market and the medium-to-long-haul [dry] van fleet reduction contributed favorably to our driver recruiting and retention efforts in fourth quarter of 2007,” the carrier said.

“Our improved empty mile factor and significantly reduced driver turnover 24.6 percentage points resulted in fewer unmanned tractors and increased miles per tractor per week,” noted Cliff Beckham, president & CEO of USA Truck, Van Buren, AR. “Our driver turnover reduction coupled with nearly flat fleet growth led to reduced driver recruiting costs.”

Steve Russell, Celadon Group’s chairman & CEO, said his fleet’s long-term strategy is based on growth through success in attracting and retaining safe, experienced drivers, both internally and through acquiring the assets of under-performing companies – opportunities that are growing due to the current freight market slump.

In the company’s second fiscal quarter, Celadon said total revenue miles and total freight revenue increased compared with the prior year. In addition, miles per truck per week, and revenue per truck per week improved sequentially – the first time in the past six years that these metrics improved sequentially between September and December.

“From an industry-wide perspective, new truck order data indicate truck deliveries on a rolling basis declining below the long-term replacement rate for our industry,” said Russell in the carrier’s recent earnings report. “In addition, we believe the current freight environment will contribute to an increased number of fleet failures, and at some point we expect economic growth to produce an increase in freight tonnage. Over time, an improved supply-demand relationship should result.”

However, a 3% decline in freight revenue per loaded mile – reflecting the pressure on freight rates from shippers – knocked Celadon’s earnings down. The carrier posted a 72% drop in net income to $1.7 million in the second fiscal quarter of 2007, even though overall revenue include fuel surcharges increased 13% to $138.6 million compared in the same period in 2006. For the six months of its 2007 fiscal year, Celadon reported a 68% decrease in net income to $4.2 million, even though overall revenue increased 9% to $272.4 million as compared to the same six-month period in 2006.

“Freight is still out there, though,” Terchilla told FleetOwner. “All we need to do now is go and get it.”

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