Would new rules for hiring veterans reduce industry turnover?

Today's fleet managers face a variety of challenges on a daily basis. Whether it's the high cost of fuel, increasingly stringent regulations regarding greenhouse gas emissions or slow economic activity, businesses can benefit from any tool that makes it easier to limit overhead costs. For example, automated route planning software programs may help freight organizations make better use of available drivers no matter what employment rates look like.

The trucking industry has suffered from relatively high turnover rates in recent years. According to Overdrive Magazine, an industry publication, the latest data from the Bureau of Labor Statistics said transportation businesses added 400 new jobs to payrolls in October, bringing the industry total to 1.38 million. While there are now 22,000 more jobs than there were during this time last year, the magazine said the employment data could be inflated because of the large number of employees leaving jobs.

In fact, the American Trucking Associations (ATA) said turnover rates for large truckload fleets generating at least $30 million in annual revenue reached 97 percent in Q1 2013, according to the industry website Logistics Management. The numbers are high for smaller operations as well. For instance, the ATA report said turnover rates among small fleets increased to 82 percent during Q1 from 76 percent in the previous quarter.

What does this mean for the industry?
The difficulty of holding on to drivers has largely to do with fierce competition in the trucking industry. If these trends continue, fleet managers may experience an increase in overhead costs due to pay increases to stay competitive for retaining or recruiting drivers.

"Our data shows that competition for drivers across the industry remains high," Bob Costello, chief economist at the ATA, stated in a press release."It is our fear that this competition for drivers may be exacerbated by losses in productivity caused by recent regulatory changes such as the new hours-of-service rules. If the economy continues to improve as we expect it to, we'll see competition for drivers intensify, which will increase not just the turnover rate and exacerbate the driver shortage, but will push costs for fleets higher as well."

New opportunities to find drivers
Even as competition increases throughout the freight management industry, federal agencies are looking into altering existing employment regulations to make it easier for businesses to hire skilled workers. The Federal Motor Carrier Safety Administration (FMCSA) recently released a report outlining steps the organization plans to take to remove existing barriers for hiring veterans.

According to the study, as many as 60,000 service members have experience operating heavy-duty vehicles to transport military supplies to and from specific locations. When these people finish their service and enter the civilian workforce, however, they often have trouble obtaining the licensing necessary to drive trucks on U.S. highways.

"Federal regulations do not require military drivers to acquire a civilian commercial driver's license (CDL) during military service," the report stated. "This fact poses unique challenges for these drivers as they transition from active duty to the civilian workforce. Commercial carriers require new CDL hires to validate a safe driving history as well as show proof of civilian (commercial motor vehicle) driving experience."

The FMCSA concluded it plans to act swiftly to remove many of the obstacles to allowing certain veterans of U.S. military service to apply for jobs transporting various products around the country in heavy-duty vehicles. Doing so may have long-term positive impacts on the trucking industry.

Benefits for small fleet operations
Truckinginfo, the online publication of Heavy Duty Trucking Magazine, said the ability to hold on to experienced drivers will come as an advantage to many small enterprises. In an industry that already has high turnover rates, business owners may find it especially hard to compete with larger organizations when hiring workers. However, making it easier for veterans to find work in the transportation sector may ultimately level the playing field. As a result, small businesses will have a better chance of controlling their overhead costs while simultaneously expanding their fleets to handle more shipping activity.

No matter what the economic conditions, fleet managers can always benefit from investing in logistics software programs that make it easier to both schedule and assign dispatches for existing employees. Business expansion doesn't necessarily equate to spending more money on trucks and other operational expenditures, according to Truckinginfo. Instead, it's often more effective to utilize automated software programs that simply allow managers to run their operations more efficiently.