Creatures of habit

| December 12, 2008

Knight puts it this way: “To know where you’re going, it’s best to know where you’ve been.”


TRADING PLACES
The 2007 Owner-Operator Market Behavior Report saw leased and independent owner-operators running almost even in average income, a mere $1,400 putting leased operators on top. In the prior year’s report, it was independents whose average income was highest.

The current report is based on surveys conducted in 2006, with respondents stating income for 2005.

Independents’ drop in 2005 income might have been caused by the wide availability of freight, analyst Chris Brady says.

“In a pretty good freight environment, the guys looking to expand will go independent,” he says. “The successful business managers among the independents will drop from our data as they develop small fleets and lose the time to operate a truck of their own.”

Behavior Report income stats primarily are based on single-unit owner-operators. As small-fleet independents exit the stats, they leave behind less successful independents, who bring down the average. This, coupled with wage gains among leased owner-operators in recent years, might explain the disparity.

The surge in freight demand during 2005 contributed to a third straight year of increase in overall owner-operator income in spite of the post-Hurricane Katrina spike in diesel prices. That demand continued in 2006, Brady says, but in 2007 it may subside.

“Owner-operators probably won’t see the wage increases they’ve seen over the last few years,” Brady says. “Not because the supply has increased dramatically due to higher wages, but because freight is growing at a slower rate, so the need for carriers to expand capacity also has lessened. If they’ve seen 5 percent annual growth to now, it might be 2 percent this year.”

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