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Driver Turnover & the Advent of Autonomous Vehicles in Trucking

A Look at What’s Coming & What to Do about It

By: Christopher Ferrell

January 30th, 2016

“IHS Automotive1 states that ‘autonomous truck sales could reach 60,000 annually by

2035 [or] 15 percent of sales for trucks in the big Class 8 weight segment.’ There are

currently 3.46 million Class 8 trucks in the U.S.; if hypothetically 60,000 autonomous

trucks were added annually starting today (instead of 20 years from now), it would be

more than five years before autonomous trucks made up 10 percent of the total fleet.

Thus, the IHS prediction does not see rapid adoption in the shorter term.”2

The above quote was taken from a November 2016 report issued by the American

Transportation Research Institute (ATRI) entitled Identifying Autonomous Vehicle Technology

Impacts on the Trucking Industry. I mention it here to address immediate concerns for motor

carriers eager to adopt the new technology in the face of the current driver shortage and

ongoing high driver turnover. The trucking industry demands continuously engaged attention

across an array of economic, technological, and political domains. Significant attention is also

warranted for human factors related to the organization and conduct of labor, especially the

labor of long-haul truck drivers. Oceans of ink are spilled daily in the process of disseminating

economic, technological and political developments as they apply to the logistics industry.

However, significantly less attention is given to better understanding ongoing labor issues, save

for the continuous reaffirmation that high driver turnover among long-haul motor carriers

1 IHS Automotive is part of the London based Information Handling Services firm and offers research and analysis to support decision making tools for businesses and governments in various industries to include defense, technology, and trade. 2 http://atri-online.org/2016/11/15/identifying-autonomous-vehicle-technology-impacts-on-the-trucking-industry/

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remains an intractable issue. The national rate of driver turnover in this segment has remained

near or exceeded 100% annually for several decades now. The ATRI and IHS both agree that

significant impact on the trucking industry arising from autonomous trucks within the U.S. is

likely decades away. Motor carriers stand to benefit in a number of ways by acknowledging that

there are accessible measures that should be taken in the interim in order to improve

operations. They can take advantage of the appeal surrounding the development of

autonomous truck technology, improve the work-life experience at their firm, and become

more profitable, as I will explain.

The buzz generated from the proliferation of research in autonomous vehicle

technology (AVT) over the past few years has been exciting. Several automotive manufacturers

and technology firms have created partnerships to allow for enhanced integration during AVT

development. Large truck manufacturers have been no exception to this practice. The Otto and

Uber partnership referred to in this article3 from Wired is the latest example of an AVT

development effort paired with a delivery service, Uber Freight, and any automotive original

equipment manufacturer (OEM) for further developing the application of AVT. Otto’s AVT is

intended to retrofit existing vehicles with fully autonomous capability, which could both

broaden and accelerate AVT adoption. I was personally involved with a project created

between an auto manufacturer and academia when Nissan Labs North America partnered with

my alma mater at the University of North Texas (UNT). The joint project entitled The Social Life

3 https://www.wired.com/2016/10/ubers -self-driving-truck-makes-first-delivery-50000-beers/

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of the Car was an effort geared toward better understanding the human factors associated with

AVT development.

As exhilarating as these concepts are for the motoring public, even more excitement is

generated among logistics industry professionals eager to do more than seize upon the safety

and convenience promised by such automation. In the most mature scenario, provided AVT is

able to deliver on all of its promises, the removal of humans from commercial motor vehicles

would likely lift a number of federal restrictions as described in the ATRI report. Doing so would

permit near perpetual commerce and asset utilization for trucking companies enabling them to

maximize their earnings potential. I am excited about the potential AVT has to offer. The grim

task of arranging spreadsheets to track trends related truck crashes and resultant fatalities on

an annual basis really drives home a desire to see AVT succeed. However, it’s simply too early

for motor carriers to pin their hopes of overcoming the issues related to the driver shortage

and high driver turnover on the admittedly promising future of AVT.

The Numbers

The current cost estimate of a fully autonomous, or ‘Level 5’ Class 8 truck is around

$200,000 assuming a $30,000 to $50,000 markup for the autonomous tech.4 Compared to a

conventional Class 8 truck of around $140,0005 paired with an average annual driver wage of

$45,000, it appears that no real cost-barrier is presented by adopting the technology as soon it

becomes commercially available. Add in other factors like the cost of driver benefits, bonuses,

4 https://www.wired.com/2016/10/ubers -self-driving-truck-makes-first-delivery-50000-beers/ 5 http://www.topspeed.com/trucks/truck-reviews/daimler/2015-freightliner-inspiration-truck-

ar169226.html#main

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turnover expenses including recruitment, training and lost opportunity costs, and the prospect

of AVT becomes even more striking. Additionally, a solo truck driver is typically required by

federal law to stop for 10 hours each workday. This can be overcome with team drivers on a

single truck, but team drivers generally command higher wages than do solo drivers. In either

case, a fully autonomous truck would have no driver wage, nor any need for extended breaks.

However, it should be noted that the vast majority of AVT development is currently centered

on the Level-1 through Level-46 autonomy as discussed in the ATRI report. These levels of AVT

still require human operators as the features at these levels are considered “conditional.” Only

Level-5 AVT is considered fully autonomous, and does not require a human operator.

Widespread adoption of this level of autonomous technology will likely not occur until much

further into the future.

There are some important details about the costs, and by extension, savings potential

related to old-fashioned human truck drivers and non-AVT Class 8 trucks. In 1998 a study7 was

conducted by the Upper Great Plains Transportation Institute in order to create a

comprehensive cost-analysis on driver turnover. Given the relative lack of substantial change in

the industry regarding the categories discussed within the report, it continues to offer valuable

insight. The data collected from 15 participating motor carriers of various sizes and modalities

was distilled into categories that assess costs associated with driver exit, recruitment, training,

6 An example of Level 1 autonomous vehicle technology would be adaptive cruise control (ACC). Level 2 AVT occurs

when two or more Level 1 functions are working simultaneously; such as ACC and any form of collision avoidance systems. Level 3 and 4 AVT get to where the vehicle can actually drive itself provided certain conditions are met with respect to specific driving parameters, but require a human operator be present during a “handoff” where the AVT may need to return control of the vehicle to a human operator. 7 http://www.ugpti.org/pubs/pdf/SP146.pdf

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hiring and orientation. Items such as the cost of idle equipment, lost business opportunities,

and driver applicant drug screening among several other cost-item categories are estimated.

While the report makes clear the shortcomings of incompletely submitted data and explains

why the cost estimates provided by the study are considered conservative, it has been referred

to so consistently over time within the industry and throughout related studies, that it could be

regarded as the de facto authoritative model detailing many of the costs associated with

replacing a truck driver. The average, conservative estimate provided in the report for the cost

per driver replaced was about $8,000. Adjusted for inflation, at the rate given by the Bureau of

Labor and Statistics with a targeted average of 2% annually, the $8,000 figure becomes $11,000

per driver replaced today, again, conservatively.

Further, it is within large truckload motor carriers that driver turnover is the highest. For

instance, a single, large motor carrier with 2,300 drivers, such as the client carrier for my own

study, USA Truck, Inc., can potentially face a 100% driver turnover rate or higher within a single

year. That carrier would spend an estimated $25 million on driver turnover alone. To put that

figure into context, the Transport Topics Top 1008 list for 2015, showed USA Truck, Inc.’s

reported net revenue for the same year was $11 million; over two times less than what was

possibly spent on reseating trucks. Such figures, regarded as conservative estimates, illustrate

the ceaseless concern and necessity for ongoing research among large, long-haul motor carriers

to identify the causes of and provide effective solutions for the problem of high truck driver

turnover.

8 http://www.ttnews.com/top100/companies/profile.aspx?co=usatruck

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Warning!

Given the tremendous potential benefit of AVT for long-haul trucking, why should there

be any warning at all? The answer lies between the apparent industry-wide fatigue regarding

the perennially high driver turnover rates, and the refreshing excitement surrounding

autonomous vehicles. Driver turnover, especially churn9, is a known value. Even as turnover

appears to be an intractable problem, its size and impact are well understood. Autonomous

vehicles, as exciting as they are, still have many unknown variables , including:

total cost of operation

modifications to, and funding for the autonomous vehicle operating environments

legal concerns

security concerns

the coming period of more heavily mixed human and autonomous vehicles operating

simultaneously and in the same areas

To be clear, AVT appears to be very promising for cars and large trucks alike. That said,

maintaining a continued focus on the need to attract and retain quality truck drivers should

remain an industry imperative.

Addressing a real solution to high driver turnover must begin with a more

comprehensive understanding of turnover and why it has perpetuated nearly unabated for so

long. The good news is that my recently concluded research10 addresses this question directly,

and offers valuable insight for the entire logistics industry.

9 While turnover refers to the total ratio of driver replacements to account for retirees and drivers that altogether

exit the industry, churn refers to the drivers that move from one carrier to another; often more frequently than an annual rate, and accounting for nearly two-thirds of total turnover. 10 High Driver Turnover Among Large Long-Haul Motor Carriers: Causes and Consequences - publication pending via the University of North Texas . Currently available here: https://www.slideshare.net/ChrisFerrell7/high-driver-

turnover-among-large-longhaul-motor-carriers-causes-consequences

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A New Understanding of Driver Turnover

In order to better contextualize my own study, I thoroughly researched 21 prior studies

focused on driver turnover published between 1988 and 2015. I then created a synthesis matrix

to facilitate a comparative analysis and condensed the 450 pages of relevant material into a 19-

page table.11 One of the most striking conclusions following my own study based on long-

format interviews with drivers from USA Truck, Inc. was the emergence of language as a key,

relevant feature. The way in which language underlies better explanations about driver

reasoning and their turnover decisions is culturally situated, and rarely obvious. The language

used in the short answer surveys employed by nearly all of the prior driver turnover studies was

particularly useful. Perhaps unsurprisingly, when people are given a list of choices as they are in

surveys, they tend to choose from the lists they are given. Typically this approach is taken to

expedite analysis for the researcher, generally for the purpose of determining a numerical value

that can affect a statistical instrument. It is by definition, a confirmation of a preconceived

hypothesis; only a specific value or ratio is being learned. By contrast, the ethnographic

approach which employs long-format interviews and analysis can be a great deal more time-

consuming. However, the responses are not restricted to survey choices or pre-existing

hypotheses which can make the discovery of new categories of data possible and related

findings more productive. This approach allowed me to employ a more interpretive analysis,

11 https://www.slideshare.net/ChrisFerrell7/table-of-truck-driver-turnover-studies

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which was informed by my own 4 years as a long-haul commercial truck driver, 15 months as a

logistics industry researcher, and my formal training as an ethnographer and an anthropologist.

The central finding from my study is this: When drivers feel unable to effectively

communicate with their employing motor carrier or build a relationship based upon mutual

trust and respect with their assigned driver manager, they quit. As barriers to finding their next

job are low, drivers are able to accomplish a renegotiation of their working conditions through

the quit event. When drivers are ready to exercise their freedom, or their independence, and

defend their sense of dignity related to their work-life identity, they accomplish these things

through a quit event. A quit event for a truck driver is essentially the external manifestation of

internalized conflicts reaching a breaking point. The masculine characteristics that fall under the

umbrella of independence inform drivers (irrespective of gender) that if voicing their objections

is not sufficient to effect desired results, then complaining will be even less effective. What’s

more, complaining is not considered masculine, nor indicative of self-reliance, personal

responsibility, or professionalism. Quitting then, is an avenue for drivers to regain a sense of

control over their working conditions and reaffirm their work-life identity. These findings were

far from obvious, and required extensive study in order to tease out the paradox that often

exist between what people say, and what they actually do.

Once a driver is navigating the hiring process with a new carrier, they are effectively

renegotiating their working conditions, likely receiving one-on-one time from support

personnel, and probably not being made to feel like an interruption while doing it. Sign-on

bonuses such as those on offer for the past few years ranging from $500 to $5,000+ can make

this method of renegotiating working conditions especially attractive. Although the overall

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working schedule with respect to home time or even pay (aside from the sign-on bonus) will

likely differ very little, the reaffirmation of independence and personal pride from working out

their own employment or labor issues will improve a driver’s disposition about their work

dramatically. At least for a while. The reasoning behind quit events as described here, simply

could not have been revealed through short answer surveys.

What Can Be Done?

At least as import as a well-defined, and well understood problem is the execution of

specific and measurable actions geared toward effective change. One of the most frequent

complaints from drivers is an inability to maintain expedient or consistent contact with their

assigned driver managers. Study and experience have shown that driver managers can be

assigned as many as 60 drivers on a regular basis 12. That also entails the management of 60

trucks, 60 trailers, and possibly 60 loads of freight. There may also be issues related to shippers,

receivers, or brokers in between. A lot can go wrong. Delays, weather, traffic, etc. Literally

anything under the sun. When driver managers are in this situation, they are only able to react

to issues as they develop, or when they are so informed. This precludes their ability to be

consistently proactive, and readily anticipate the needs of their assigned drivers. Intercepting

the accumulation of potential mishaps before they culminate into driver quit events would be a

more effective approach toward driver management. This would require that driver managers

be assigned fewer drivers to manage from the outset.

12 http://fleetowner.com/driver-management-resource-center/dispatchers-drivers-don-t-blame-us

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Let’s not lose sight of the possibility of losing 2,300 drivers in a single year averages out

to 6 driver quits per day. With the estimated cost of each driver “quit” standing at $11,000,

that’s $66,000 per day walking out the door. A number that tends grab your attention. For a

comparison, a look at job postings for driver managers reveals that their salaries are fairly

similar to those of experienced truck drivers, ranging from $40-$60,000 annually. When so

much revenue is being lost through quit events on a daily basis, and given the salience of

increased driver manager contact, decreasing the driver-to-driver manager ratio by increasing

the total number of driver managers may be the most effective and immediate solution that

any motor carrier can employ beginning today. Even a pilot program to test the idea would be a

great start. Given the math, however, a doubling of the number of driver managers may be

warranted for some large motor carriers. If 2,300 drivers were being managed by driver

managers averaging 60 assigned drivers each, that would leave only 38 driver managers to

handle the entire fleet. The cost of doubling the size of the driver manager work force from 38

to 7613, or even tripling it to 114 pales in comparison to the estimated $25 million driver

turnover figure already being lost. Motor carriers must better understand how to listen to and

anticipate their driver’s needs. In order to spend more time with each driver, more and better

trained driver managers must be understood as the most effective and immediate solution.

There is a significant amount of social science and organizational behavior theory to

support this approach. Michèle Lamont and Lawrence Ouellet are two social science authors I

refer in in my own research for their excellent work offering extensive contextual examples of

13 At an average of $50,000 annual salary per driver manager, at 38, the estimated base salary number for all driver managers in one company of similar size would be $1.9 mill ion; a doubling would be $3.8 mill ion; a tripling would

be $5.7 mill ion.

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behaviors related to the formation and maintenance of work-life identities. Within the domain

of organizational behavior, Kevin Sheridan’s The Virtual Manager is particularly useful. Drivers

are similar to virtual employees in many ways. People that telecommute, especially in the tech

industry, present notoriously difficult challenges for their managers. This is even truer for long-

haul truck drivers. One key difference is that virtual employees are likely working from home;

obviously not an option for truck drivers. Even with this apparent advantage, virtual managers

must engage very proactively to manage their teams effectively.14 This is an often overlooked

detail within the trucking industry with respect to driver managers and their relationships with

their assigned drivers. I am not suggesting that increasing the number of driver managers alone

will solve all of the problems related to driver retention. However, increasing both the number

and level of training for driver managers will certainly have a significant and positive impact. As

this issue is addressed, and driver retention will likely increase, which should allow motor

carriers to be more selective with the truck drivers they hire from the outside. With greater

selectivity, real benefits can accumulate exponentially. From there, the next area of focus

becomes getting the motor carrier’s clients on board with driver retention efforts. There are

several motor carriers that have already begun to address issues related to the driver-to-driver

manager ratio, as well as scoring client facilities related to accommodations that support driver

well-being and productivity. It is my hope that the findings revealed through my study will help

reiterate the wisdom of this decision as well as add greater context for the reasoning behind it.

In Closing

14 The Virtual Manager by Kevin Sheridan 2012 ISBN 1601631855

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Attracting new drivers to the industry during the current driver shortage is another

challenge. To that end, offering late model equipment has become a staple of recruiting efforts

among several motor carriers for some time now. With the added allure of the development

related to autonomous vehicle technology, especially the Level-1 through Level-4 variety which

continue to require human operators, wider interest in the trucking industry may soon be

sparked among later generations. In the meantime, I contend that motor carriers not yet give

up on more immediately available means of affecting driver retention through improved

management practices and ensuring related resources are made readily available. Logistics

industry publications discussing autonomous trucks will continue to make headlines for the

foreseeable future with all the hype one can stand to read. To counter this, I recommend a

closer look at the more sobering ATRI report on the subject of AVT discussed above, and taking

action regarding the suggestions I have provided here.