2014: Prosperity, regulatory chokehold and driver demand
2014 promises to be a good year for owner-operators. Good, at least, if you don’t mind an increasingly restrictive regulatory environment.
The overall economy was strong enough for the Federal Reserve to ease its stimulus measures in mid-December. Earlier in the month, unemployment fell to its lowest rate in five years. The stock market on Tuesday concluded its best year since 1997.
Trucking, too, has some things going for it. Half of fleet executives polled in November by Commercial Carrier Journal, Overdrive’s sister publication, expected business conditions to be “better” or “much better” in the next six months. Only 3.1 percent said conditions would worsen.
For owner-operators, notes Todd Amen, head of financial services provider ATBS, there are some clear pluses:
- One is “significant money coming back into the market to finance owner-operators.” If you’re among those who have been hamstrung since the recession with marginal credit and a truck in need of trading, this should be good news.
- Lower fuel prices. A chart on page 20 shows how cheaper diesel in mid-2013 helped boost owner-operator income.
- Finally, there is “a good demand balance between freight and trucks,” notes Amen. Dry van freight volumes were static or falling each year since the recession ended, says Bob Costello, economist for the American Trucking Associations, but by the second half of 2013, they were showing “solid year-over-year and quarter-over-quarter gains. … The acceleration of dry van freight gives me the idea that things are going to be better in 2014 than they were in 2013.” Internet Truckstop data shows dry van and reefer rates spiked in November.
As for what’s not going right, possibly the biggest hindrance to running as an owner-operator in 2014 isn’t callous fleets, ignorant inspectors or brain-dead four-wheelers. It’s the ever-tightening headlock of regulation.
Economist Eric Starks says 2014 will contain the largest concentration of regulatory changes in trucking’s history. The initiatives are too numerous to detail here, but among them are California Air Resources Board emissions rules, hours of service, greenhouse gas/mpg regulations and requirements for electronic logging devices and speed limiters.
“The problem is not so much the regulations themselves,” said Starks, president of FTR Associates, addressing the Commercial Carrier Journal 2013 Fall Symposium in Scottsdale, Ariz. “It’s the fact that they’re all happening at once. But make no mistake – these regulations will be game-changers.”
Such roadblocks can filter out operators who simply can’t — or don’t want to — comply. “Between increasing demand for freight services and regulatory pressures,” says Costello, “I expect fleets to remain challenged finding enough qualified drivers, and we’ll be contending with driver shortage-related issues for the foreseeable future.”
Will that driver demand be strong enough to run up rates significantly? Hard to say, but if you can stay compliant and hang in there, you’ll find out.