According to the Bureau of Transportation Statistics, trucks move approximately 72% of the nation’s freight by tonnage and transportation makes up about 7.4% of the nation’s economy. Generating nearly $800 billion in annual freight revenues, the transportation industry employs roughly 8 million people in trucking-related jobs, including about 3.6 million truck drivers according the to the American Trucking Association (ATA).
Drivers are a critical component of the transportation industry. Last October, the American Transportation Research Institute (ATRI) presented the results of their latest survey on the most critical issues facing the trucking industry. For the fifth consecutive year, driver shortage remains the industry’s top concern.
Industry Concern Index - Drivers
Based on the latest estimates released from the ATA, the industry currently faces a shortage of about 60,000 drivers, and that number is expected to grow exponentially over the coming years. Driver Retention is a closely mirrored concern as competition for drivers leaves motor carriers struggling to retain the drivers that they currently employ, while simultaneously facing difficulties in filling their empty seats. Driver retention was identified as the second most critical issue in the same ATRI study.
Numerous factors contribute to the driver shortage, including the nature of the job (solitary, large amounts of time away from home, etc.), growing freight demand, minimum age of 21 as a historic entry barrier for interstate driving, shortage of new drivers entering the workforce, and an aging driver pool. Over the past two years, the pandemic and the resultant heath concerns have been another contributing factor to drivers leaving the industry.
Since the Transportation Insurance Industry considers driver quality to be one of the primary attributes used to underwrite a transportation risk, both the trucking and insurance industries share concerns with the current and growing driver shortage and the influx of inexperienced drivers.
Concerns for the Trucking Industry:
- Not enough available drivers to meet freight demand
- Lost profit due to idle equipment
- Asset costs of idle equipment (loan / lease costs, insurance costs)
- Driver Turnover rates of 95% among Large Truckload Carriers and 73% among Small Truck Load Carriers (American Transportation Association – June 2018)
- Costs of Driver Recruitment and Driver Training
- Production Loss while new drivers acclimate
- The Average Cost of Turnover per Driver was calculated at $8,234 in April of 2000 by the Upper Great Plains Transportation Institute (and has likely grown significantly higher in the 22 years since this study was completed)
Concerns for the Insurance Industry:
- In 89% of at-fault crashes, the driver is the critical reason for the crash event (FMCSA – Large Truck Crash Causation Study)
- Motor Carriers with high driver turnover rates experience 224% more DOT reportable crashes (Vigillo, a CSA Compliance Monitoring Firm)
- The odds of being involved in a crash increase when a driver has averaged more than two job changes per year (ATRI – 2003)
- The odds of being involved in multiple crashes are more than twice as high for drivers who average three or more jobs per year (ATRI – 2003)
- When analyzing their loss results report, most insurers note that more than 50% of their claims come from drivers while in their first year of employment
- Deteriorating Driver Quality as insureds make hiring decisions to accept less preferred drivers in an effort to keep their trucks moving
Effective strategies for Driver Recruitment and Driver Retention exist. A knowledgeable Retail Agent working with a Transportation Specialist Underwriter and a Transportation Specialty Insurer can offer valuable assistance. Call your RT Transportation Underwriter – we can help!