Premium
The Effect of Truckload Driver Turnover on Truckload Freight Pricing
Author(s) -
Miller Jason W.,
Muir William A.,
Bolumole Yemisi,
Griffis Stanley E.
Publication year - 2020
Publication title -
journal of business logistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.611
H-Index - 79
eISSN - 2158-1592
pISSN - 0735-3766
DOI - 10.1111/jbl.12252
Subject(s) - turnover , trucking industry , truck , panel data , economics , business , industrial organization , labour economics , monetary economics , econometrics , microeconomics , automotive engineering , engineering , management
High rates of truck driver turnover have long plagued the full truckload (TL) sector. While greater driver turnover raises TL carriers’ costs, no research has examined how changes in industry‐wide TL driver turnover rates affect industry‐wide prices shippers pay for TL transportation. Drawing on economic theory regarding firms’ asymmetric adjustment of prices in response to changing costs, we explain why increases in driver turnover are expected to increase the prices carriers charge for their services, whereas decreases in driver turnover are expected to have limited effect on the prices carriers charge for their services. We further explain why the positive impact of increases in industry‐wide TL driver turnover rates on prices will be more pronounced when industry employment is rising more rapidly. To test our theory, we assemble a time series data set combining proprietary driver turnover data with publicly available data regarding TL pricing, trucking employment, diesel prices, and aggregate industry activity. Results from fitting a set of time series econometric models corroborate our theorized predictions. We explain the implications of these findings for theory and practice.