Trucking company CEOs have a deep concern for the future availability of qualified drivers as the combined impact of CSA 2010, increasing freight levels and aging demographics begin to unfold.

Obviously, truckers can't generate revenue without drivers. Depending on the type of services a trucking company provides, individual drivers generate anywhere from $70,000 - $120,000 of revenue a year and every trucking company CEO knows exactly what their Revenue per Driver number is.

A number many CEOs may not know, however, is their specific cost of driver turnover because determining turnover cost is not based on a universally accepted calculation.

Trucking companies that do attempt to calculate turnover costs at a minimum include per driver recruiting and training costs. Some companies include lost productivity in their calculations. Others include depreciation or lease costs of idled equipment and the opportunity cost of lost revenue.

Expressing turnover costs on a per driver basis, the Trucking Industry averages $6,000 - $10,000 of cost for each driver termination; a fairly wide range as a result of the variances in calculations and operations.

Understanding the significance of turnover costs is important and requires looking at it from different perspectives than simply cost-per-driver. Using an average of $8,000, a fleet of 200 trucks with an 80% turnover rate has a total annual driver turnover cost of $1.28 Million. If that same company averaged 90,000 miles/truck/year, their cost per mile would be $0.071.

Now let's compare driver turnover costs to fuel costs. Using the same 200 truck fleet and $3.00/gallon fuel costs, a 0.2 improvement in miles per gallon performance (6.6 to 6.8) generates $241,000 in savings. To obtain that same $241,000 in savings from improved driver retention would only require a drop of 15 percentage points in our turnover rates.

Taking the time to compare driver turnover costs to fuel costs should make trucking executives ask: “If I were to allocate the same amount of costs, activities, awareness and labor to improving driver retention that I do to improving mpg, how much could I reduce my turnover costs by?”

Let's take a look at one final measure of driver turnover - Effective Driver Counts. High turnover forces companies to operate with fewer drivers than their target size (our example above has a minimum target size of 200 as that is how many trucks are in the fleet).

Effective Driver Counts are calculations of how many drivers a company has that are effectively working a full year. Here's how to make that calculation:

1. Assumption: Each time we lose a driver it takes 60 days to replace him/her due to recruiting, training and lost productivity associated with a new job learning curve.
2. Assumption: Average days worked for a full year equals 265 days.
3. Assumption: Target Driver Size is 200. Turnover rate is 80%.
4. Calculation: Each year, 160 drivers need to be replaced (200 X 80%).
5. Calculation: Each year, 9,600 work days are lost due to turnover (160 drivers X 60 Days).
6. Calculation: Each year, effectively 36 drivers are lost due to turnover (9,600/265).
7. Conclusion: At an 80% turnover rate, we are only operating with an Effective Driver Count of 164 (200 Target Driver Size - 36 Driver lost to turnover).

Regardless of how you calculate Driver Turnover costs, the impact of high turnover on your business is significant. Many trucking companies are already ramping up their recruiting efforts to meet increasing freight demand and the stringent hiring requirements indirectly imposed by CSA 2010.

Unfortunately, if history repeats itself many of those same trucking companies will not significantly increase retention efforts, and that will be a huge strategic misstep for two reasons.

First, increased driver demand provides increased employment opportunities for drivers - your drivers. Competition for driver labor will drive up wages, improve working conditions and allow for quick transitions into a new company. Without an effective Driver Retention Program, your drivers will find employment at your competitors a more attractive alternative than remaining with your company.

The second reason increasing your retention efforts are critical is that your own company is your best source for safe and experienced driver staffing. Think about it. A 200 truck fleet that cuts turnover rates by 20 percentage points has effectively found or hired 40 experienced drivers each year. Based on the costs discussed earlier, those 40 drivers represent an annual savings of $320,000 while allowing you to increase your effective driver count by 9. Those are numbers every CEO can appreciate.