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How Walmart has successfully recruited truck drivers amid a labor shortage crisis

Walmart ( WMT ), the world's largest retailer, ramped up its hiring of truck drivers amid a driver shortage and is still in search of hundreds more.

In 2018, Walmart hired around 1,400 new drivers, up from 922 in 2017. Since August, the big-box retailer added about 694 drivers in net fleet growth, a number which includes the turnover that's coming mostly from retiring drivers.

"We have a commensurate amount of demand and freight to move. And so, we've seen a need to grow our private fleet — that, we view as a competitive advantage, from a value perspective. We've been hiring a lot of drivers," said Tracy Rosser, a senior vice president of transportation and supply chain at Walmart.

The recruitment is occurring against a backdrop of a "truck driver shortage crisis," fueled by an aging workforce and high levels of turnover.

Drivers give high-fives at a Walmart hiring event in Casa Grande, Arizona. More In direct response to the shortage, Walmart began aggressively hiring drivers this fall by offering $1,500 referral bonuses, using social media to reach the younger generation, shortening the application time from 73 days to 31 days, and changing the format of its hiring events resulting in a higher pass rate. Drivers still must have at least 30 months of experience and meet other stringent requirements.

"Safety is our priority. We are not going to adjust our minimum standards due to a tight labor market," Rosser said.

Right now, close to 1,000 drivers remain in the hiring pipeline, including 200 who will attend hiring events in January and 400 referrals the company is evaluating.

A first-year driver can expect to make $86,000 driving for Walmart, or the equivalent of $0.87 per mile. The retailer also offers quarterly safe driving bonuses, benefits, and doesn't make its drivers load or unload freight. They can also accrue up to 21 paid days of vacation.

For a retailer like Walmart, trucking is its lifeblood, with drivers hauling freight from distribution centers and vendors to service Walmart's 4,700 U.S. stores. Walmart's founder Sam Walton recognized the importance of the role that he frequently relied on drivers to be his eyes and ears for what's happening in stores. Current CEO Doug McMillon spent his first day at the helm in Brookhaven, Mississippi on a ride-along.

An economy that gives and takes

The strong economy has highlighted this driver shortage because there's a demand to move freight. That includes a retailer like Walmart, with the latest U.S comp stores sales growing 3.4% in the third quarter .

"Over the last 18 to 24 months, as the economy has picked up, and demand has picked up, what has happened is there hasn't been enough capacity — both trucks and drivers — and the issue is really drivers, to move this large amount of freight that has come into the marketplace," Rosser said.

Meanwhile, Rosser, a 30-year veteran in the transportation business, noted that the trucking industry had lost drivers to other fields as the economy improved in recent years.

"You've had more demand that's been placed into an economy that's got super low unemployment levels pulling drivers out of the driving industry, because the driving industry is not the most favorable job in terms of quality of life, time away from home, unpredictable schedules, sleeping in your truck, those types of things, and pay. It's really created a shortage within the driving industry," Rosser added.

Retention has become a significant issue for the industry as a whole. According to the American Trucking Association, large truckload carriers are seeing an average turnover rate of 96% this year , the highest levels since 2013. According to Rosser, Walmart holds an industry low turnover average that's typically in the upper single digits or low double-digits, ranging from 7% to 12%.