Breaking Free

Todd Dills | September 01, 2011

He also recalls the frustration of independents, who felt the ICC had outlived its original intent. “When it was first formed and set up regulated routes, carriers had to obtain rights so that no area of the country would be left out of the picture,” Margeson says. After trucking was well-established across the nation, “to the independent, it seemed like we didn’t need that system anymore. Areas would get taken care of without it – it seemed like a hindrance to interstate commerce to have rights to a particular area.”

Owner-operators leased to regulated haulers, too, banded together to force carriers and the Teamsters to recognize them. In the Midwest, the Fraternal Association of Steel Haulers formed to fight for the union’s consideration of the “unique economic interests” they had as owners of their “own expensive equipment,” Hamilton writes. They launched strikes in 1967 and 1970, feeling as if they were paying dues for little representation from the union.

As union disillusionment spread, volatile fuel prices and runaway inflation provided a key mobilizing force for industry change. During the independents’ shutdown during the 1973-74 Arab oil embargo, a new owner-operator organization emerged, the Owner-Operator Independent Drivers Association. OOIDA focused on regulation of carrier leasing practices.

As more all-owner-operator carriers emerged and operator numbers surged in the 1970s, abuses of leased drivers were rampant, says Charles Myers. Now general manager for freight at uShip, he was a district supervisor with the ICC beginning in 1976 in Harrisburg, Pa.

Myers recalls the typical owner-operator complaint in which an individual sets up an office, promises freight to “all these owner-operators who commit to running for him. He’d run them for a while and never pay them,” Myers says. “You’d have to come back and make a case for violation of the leasing rules of the time. Most of the time they’d just get an injunction and shut the guy down and try to get restitution for the owner-operators.” Penalties were small, so repeat offenders were common.

Congressional hearings in the ’70s exposed such practices, in part at the instigation of OOIDA. In 1979 the ICC adopted the Truth in Leasing regulations, adding “transparency to the relationships” between leased owner-operators and their carriers, Spencer says.

After a series of unsuccessful bills throughout the ’70s to allow owner-operators to compete in the regulated freight marketplace, conditions climaxed in the late 1970s. The leasing regs were hitting the books. Independents were shutting down in protests prompted by 1979’s fuel shock.

As Hamilton recounts it, the unstable economic environment was seized upon by Sen. Ted Kennedy, then eyeing the Democratic Party’s presidential nomination. Kennedy and others pitched wholesale trucking deregulation as a solution to the problems of independent owner-operators and price inflation of consumer goods. Deregulation was achieved when President Jimmy Carter pushed through the Motor Carrier Reform and Modernization Act of 1980.

The 1980s and ’90s: An industry transformed

The new environment did not immediately translate to more pay for independents. Unrestricted as to lanes, areas of operation and freight, carriers with capital to invest in new trucks and drivers expanded quickly. As a guy with one truck, says Margeson, “we were still out of the picture, because what can we do with one truck?”

Many have characterized post-deregulation as a “race to the bottom” in terms of rates and driver pay, says Spencer. “The rising stars rejected the mold that trucking had evolved to,” largely a patchwork of regional businesses. “Everyone was going to be a national carrier,” he adds. “They weren’t interested in hiring drivers who only wanted to work in regional areas with good pay.”

It’s one reason OOIDA didn’t support deregulation. “All we had to do was look at the already unregulated segment of the industry,” exempt hauling, to see where the rest of the industry would go if deregulated, Spencer says.

All the same, as competition soared throughout the ’80s, the owner-operator’s role was being established. Efficient single-truck businesses became more attractive to carriers. All-owner-operator “non-asset-based” fleets multiplied.

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