Driver recruitment with Charles Gracey

President of Hot Seat Services talks about recruiting by leveraging changing technology

Thomas Wasson

9 months ago

All about driver recruiting with Charles Gracey

On Tuesday, Loaded & Rolling interviewed Charles Gracey, aka “The Dr. Phil of Trucking,” president and founder of Hot Seat Services and host of the Sense per Mile podcast, about the state of driver recruiting and recent tech developments. Gracey discussed the driver recruiting pipeline, which starts with the collection and vetting of leads for potential candidates. Historically, the cost per lead was viewed as an important metric, with many carriers focusing on minimizing the cost of acquiring each lead. The downside of this strategy was that driver recruiters wasted time and energy “chasing donuts” as they attempted to vet leads and gauge driver interest. Drivers expressing interest and successfully contacted are then encouraged to fill out an application for review. A recruiter will work on scheduling the necessary background checks before eventually offering the position, while setting up transportation and lodging arrangements for the driver to begin orientation.

Gracey noted that the recruiting process can be difficult even in the best of circumstances, with thousands of potential applicants but only a tiny fraction getting an offer and successfully completing orientation. For example, out of 1,000 leads only 10 drivers may survive the vetting process or complete the application process before showing up. A troubling statistic Gracey noted was the rise in orientation no-shows: After the company pays thousands of dollars in travel, lodging and other fees, the driver ghosts the carrier and simply doesn’t show up. This used to be around 1 in 3 but is now 1 in 2, a 50% success rate. Gracey believes part of this is a change in driver culture and norms, with many drivers preferring not to tell a carrier they are no longer interested and instead failing to show up. Gracey said carriers used to note these refusals on the Drive-A-Check report, but fewer carriers are recording the no-shows or other carriers are not taking them into consideration. For carriers, the challenge is finding better-quality leads and using technology to find the right driver who is both interested and intends on completing the process.

You can view the entire interview here.

January Class 8 Tractor orders up 44% y/y

On Monday, ACT Research released its January Class 8 net order data which saw final January Class 8 orders up 45% year over year to 27,125 units. The report noted that in the U.S. alone, Class 8 tractor orders surged 44% y/y to 16,765 to an above-replacement-level rate. FTR Transportation Intelligence, another market intelligence firm, noted preliminary Class 8 orders in January of 26,400 units, up 2% m/m and 35% y/y.

Kenny Vieth, ACT’s president and senior analyst, said in the report: “Seasonality is one component, but given the state of for-hire truckload rates, we continue to suspect private fleets as the primary driver behind US tractor demand. As well, the LTL segment remains a bright spot relative to TL and is likely also contributing. The US economy’s current strength doesn’t hurt either.”

While private fleets spurred growth, there remain concerns that inventory gluts may begin after fleets restock. Vieth adds, “Class 8 inventories rose 1,909 units m/m to 66,277 in January, up 14.3% y/y. Following December’s dash to get equipment finished ahead of regulations starting at the beginning of 2024, Class 8 retail sales totaled 24.5k units in January, up 2.9% y/y. Amid the weakest period of the year for retail sales, and with still strong production, we continue to see risk in the potential for rapid inventory escalation in early 2024.”

Market update: Cass January data reports ‘Frozen Freight’

Freight audit and payment provider Cass Information Systems recently released its January Freight Index data, which saw shipments fall 3.5% month over month but flat when seasonally adjusted. Expenditures and freight rates continued to fall compared to the previous year, with expenditures down 24.3% y/y and inferred freight rates off by 18.1%. Winter weather may have had an impact. FreightWaves’ Todd Maiden writes, “Inclement weather negatively impacted freight demand during January, meaning shipments would have likely been up sequentially in a normal year.”

The average cost of a shipment seasonally adjusted continued to decline for the 10th consecutive month, falling 2.6% m/m and 18% y/y. The report notes that while truckload rates didn’t decline as drastically, modal mix changes may be a contributing factor. There were some signs of optimism in the report which noted that, “While trucking demand remains soft overall, rising import and intermodal trends are key leading indicators of a recovery in trucking this year.”

Further freight expenditure declines are predicted, with the report adding, “U.S. freight spending, as measured by the expenditures component of the Cass Freight Index, fell 19% in 2023, after a record 38% surge in 2021 and another 23% increase in 2022. It’s set to decline about another 16% in 1H’24, assuming normal seasonal patterns from here.”

FreightWaves SONAR spotlight: Initial contract rate per mile back to 2021 levels

Summary: The steady decline in contracted rates has returned to levels not seen since 2021 as trucking capacity relative to truckload demand weighs down rates. The Van Contract – Initial average base rate per mile measures the average base rate without fuel or accessorial charges and is reported on a 14-day lag. The spot market linehaul-to-contract-rate spread is currently 54 cents per mile but is expected to widen, as linehaul rates fell 12 cents per mile from $1.75 per mile to $1.63 per mile on Feb. 19. Truckload carrier executives noted on their recent Q4 earnings reports that customers are still seeking rate concessions but fleets are attempting to push back, arguing that their costs are much higher than in years prior, or potentially reducing fleet truck count and increasing their dedicated offerings at the expense of over-the-road or one-way offerings.

Adding further challenges for fleets are ongoing declines in both all-in spot market rates and outbound tender rejection rates. The nationwide outbound tender rejection rate fell 16 basis points in the past week from 4.91% on Feb. 12 to 4.75%. While carriers are losing pricing power in contract markets, the spot market has not fared better in the past week. The FreightWaves National Truckload Index 7-Day Average (NTI) fell 5 cents per mile all-in from $2.31 on Feb. 12 to $2.26. Spot market uncertainty extends out to the NTI 28-Day Outlook, which projects the National Truckload Index Forecast (NTIF) rising to $2.32 per mile the first week of March before declining to $2.29 per mile all-in on March 19.