From the Ashes

| October 07, 2002

When terrorists struck America on Sept. 11, 2001, Jerry and Judy Reese responded quickly. The couple left Michigan that day with a load of batteries, supplies and water and delivered it to within a few blocks of Ground Zero.

“It was devastating to see the faces and talk to the people,” Jerry Reese says. “You couldn’t get out of the truck for long, and you had to wear masks. It took a week to get all the film off of our truck.”

Weeks after the attack, the Reeses experienced their own disaster – a financial one. The company they worked for, which recruited drivers for large carriers at truck shows and truck stops, went bankrupt when the economy slowed and the driver shortage dwindled following Sept. 11.

“We almost lost our truck,” Jerry Reese says. “We were sitting with a $175,000 truck that we didn’t have the money to pay for.”

The Reeses weren’t alone. While financial hardships among owner-operators were severe before the attack, the subsequent economic downturn – a steep decline in freight and an increased cost of doing business – pushed many over the edge. Those who stayed in business these past 12 months have faced bigger delays at border crossings, more scrutiny from law enforcement and more security at shipper and receiver locations.

“The last year is the hardest year it’s ever been to be an owner-operator,” says Jeff Amen, vice president of American Truck Tax. “Failure rates doubled. Repossession rates went way up.”

While not all of the downturn was related to the Sept. 11 attacks, the economic climate afterwards hastened the descent of struggling carriers and slowed freight to the lowest level in years. Amen and his brother Todd, president of American Truck Tax, say owner-operators tended to do the best. Small fleets often have one customer that makes up the bulk of its loads, and if that customer continued to survive, so did the carrier, the Amens say. At large national carriers, the diversification of customers guaranteed owner-operators loads even in a scarce market. But most medium fleets downsized quickly and at the expense of owner-operators when they lost one of their primary customers.

Tom and Angie Cameron know all about that. The Camerons are based in Coopersville, Mich., where they are leased to Foreway Transport. Like the Reeses, they delivered supplies to New York City and then saw their own situation worsen.

“There was no freight from January through March,” Tom Cameron says, citing a slump in rates and freight. “I literally did not receive a paycheck. We’d make a little run here and there. Even C.H. Robinson did not have any loads.”

The Camerons also saw costs increase. Their insurance premium went up about $60 a month – a small amount compared to increases some owners faced. Insurance providers picked up billions of dollars in claims related to Sept. 11 and raised their rates for businesses across the board. Fleets, in particular, have been hit with double- and triple-digit percent increases. Owner-operators who get insurance through their carriers have shared those large increases.

Owner-Operator Independent Drivers Association customers have experienced slight rate increases, says Brenda Guffey, OOIDA’s property and casualty insurance manager. “But they’ve gone up due to loss history and regular increases in rates. A lot of the motor carriers have been getting fleet discounts, and their loss ratio doesn’t substantiate that discount.”

Still, owner-operators buying building and excess freight insurance have seen substantial increases, even at OOIDA. The spike in insurance rates has even forced bridge and toll road operators to increase tolls in some states. “Scales have gotten more expensive,” says Tom Cameron. “Everybody is raising rates. Each thing dribbles more and more out of your pocket.”

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