USA Truck Looks East to West Memphis

by Chris Bahn  on Monday, Feb. 25, 2013 12:00 am  

Cliff Beckham

Retaining drivers is traditionally a challenging prospect for trucking companies.

Drivers operate primarily as free agents, which gives them the freedom to leave for a better situation if they think one is available. And because the retention rates are so low, there are frequently jobs open elsewhere, which keeps the cycle going.

Some estimates put the national turnover rate at higher than 100 percent per year. That environment can put companies in a difficult spot. It can lead to millions spent on training and recruiting qualified candidates.

An example used by the Journal of Commerce puts the cost of recruiting a single driver at $5,000. Replace 500 drivers in a year and your company is out $2.5 million.

So replacing drivers isn’t just a headache. It’s an expensive headache, especially as the JOC points out, for companies that report $30 million or more in revenue. Those firms experience an average turnover rate of 106 percent.

USA Truck Inc., which reported more than $500 million in revenue in 2012 — a down year — is one of the companies trying to cut down on turnover among the approximately 2,200 trucks it has operating across North America. In fact the company, headquartered in Van Buren, currently finds itself operating at higher than the national average.

There is hope within the leadership, which seems to be evolving daily, that an expansion project in West Memphis will help solve the retention riddle. USA Truck will open a “full service operations center” next month as one part of that process.

Van Buren has served as a centralized operating point for USA Truck. There are eight different USA Truck service facilities in five different states. Those serve an important role for the company, but aren’t much in the way of promoting driver-company interaction. There’s a lot of highway in North America outside of the River Valley, making personal interaction with drivers tough at times.

That’s why the West Memphis terminal makes sense. Much of the nation’s trucking traffic runs through the east Arkansas town because — as anyone who has ever driven through it knows — that’s where Interstates 40 and 55 meet.

“It’s an opportunity for us to have people in the field to see our drivers on a more consistent basis, thereby providing greater support to those drivers,” CFO and former CEO Cliff Beckham said. “There aren’t a lot of places around the country where that makes sense. West Memphis is a natural spot.”

USA Truck has had a presence in West Memphis for the last 25 years, but the location has operated only as a service hub. This expansion is expected to generate 125 jobs and, Beckham said, should provide more support for drivers. Employees at the terminal will serve as on-site fleet managers, man the full-service maintenance facilities and assist with driver safety and training.

In theory, the decentralized location will help drivers feel a little more plugged in to USA Truck. And while Van Buren is no longer the only operations hub, no immediate impact from the West Memphis terminal opening is expected at the headquarters.

John Simone, who was introduced as Beckham’s successor as CEO last week, said improving the company’s driver-retention rate is critical to its long-term success. While Simone didn’t suggest a specific goal, he would certainly like USA Truck to perform better than the national average. Getting turnover below triple digits is a target.

Simone said USA Truck wants “an environment where the drivers are — I’m not suggesting they haven’t had this in the past — but creating an environment where drivers want to stay. Drivers today are like free agents. They can pretty much go anywhere and get employment because there is such a severe shortage in the industry.”

USA Truck has seen its share of drivers come and go. Beckham is hopeful that changes as the company opens the new terminal and transitions into the leadership of Simone.

Beckham points to a number of operational areas where USA Truck struggled in 2012, when it reported a net loss of $17.5 million. Right alongside freight mix, he mentions the management of driver turnover, but he’s hopeful that can improve in 2013.

“I think all of those things can be strengthened,” Beckham said.

 

 

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