Overdrive Extra

Max Heine

Is the owner-operator a dying breed?

| March 29, 2013

The common wisdom in some circles is that the owner-operator model is dying. There’s some reason for that conclusion. Major rounds of emission technology have added tens of thousands of dollars to the cost of new trucks. After years of loose credit ended in a recession, tight credit suddenly made the purchase of even a cheap used truck impossible for many buyers. Some owner-operators, fed up with an expanding regulatory maze, simply bailed out prematurely.

The owner-operator population has grown since the recession.
The owner-operator population has grown since the recession.

Be that as it may, the owner-operator obit isn’t the best conclusion to jump to.

During the recession, the owner-operator population fell to about 150,000. Then it climbed to 155,500 in 2011 and 165,100 in 2012.

This is based on our recently reported Overdrive-sponsored research, done independently by Commercial Motor Vehicle Consulting. CMVC uses data from the U.S. Census Bureau, The U.S. Bureau of Labor Statistics, and its own private research.

“Expanding demand for owner-operators has improved the business environment,” explained Chris Brady, head of CMVC.

I blogged to that effect last month, citing data presented by ATBS, the largest owner-operator financial services provider. ATBS records showed how, over the last 10 years, the owner-operator environment had mostly improved:

  • Much shorter length of haul and much more home time.
  • Net income per mile rising 3.8 percent each year, compared to 2.5 percent annual inflation.
  • On the down side, due to total miles dropping by a fifth, only 1 percent annual gain in total income, well below inflation.

The rosy parts didn’t sit well with certain readers. Out of 40 comments, almost all said it was “a bunch of crap,” “drivel” and corporate “lies and Propaganda.” I should be drug-tested, said one. Fired, said another.

So instead of looking at a decade of change, I thought perhaps more recent changes – say, from the fourth quarter of 2011 to the fourth quarter of 2012 –  would tell a tale of widespread woe, but they didn’t. Dry van owner-operators saw net income per mile rise modestly, from 43 cents to 45 cents, during that period, based on thousands of ATBS clients. But if you average dry van with reefer and flatbed, per-mile earnings rose from 45 cents to 49 cents. Independents did even better: 50 cents to 56 cents.

In some ways, running an owner-operator business is tougher than it used to be. Still, you can’t dodge the obvious: The economy is improving. A major part of the economy is trucking. And a major part of trucking is the owner-operator model, which has survived recessions, regulations, unionization efforts and other forces. It’s not going away.

 

  • http://www.facebook.com/delbert.vaughn.9 Delbert Vaughn

    yea you are correct, but the answer is never due while haveing 150,000 indepent attitudes on this subject. very much could be said here, but it,s only words in the air,that most cannot heir are undersatnd.

  • http://www.facebook.com/delbert.vaughn.9 Delbert Vaughn

    Dang brother keep talking. We might have a leader here. Yep–Yep that,s the deal. MAN here is another great attitude and a sound over sight of steering wheel holders. tHATS GOOD i HAVE TO REMBER THAT.

  • http://www.facebook.com/delbert.vaughn.9 Delbert Vaughn

    OK-OK. WHAT ELSE/

  • http://www.facebook.com/delbert.vaughn.9 Delbert Vaughn

    YEA, i CAN GO WITH THAT. The youg guy,s are raelly screwed,to get in this business. They have no idea of what is ahead of them.

  • Dave

    He still needs drug tested. Still riding on a cloud in a magical land. Not knowing what the hell he’s talking about…And Greek,$10,000 for someone to clean your house..I think i could clean my own.10g’s saved.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    That Emissions crap seems more like a way to WEED OUT guys who ill not Bow Down to authority…and OBEY….they want obedient modern day slave/robots driving today….who will “accept” all this Cop monitioring……..OBEY!!!!

  • localnet

    The economy is improving? Max, all of the REAL numbers regarding the economy paint recession. Real unemployment, if counted the old fashioned way of just a few years ago, point to a number hovering around 24%, not this 7% BS coming out of Washington. Then figure that nearly 9 million jobs have just some how mysteriously vanished in the past 4 years. No one ever reports on that number. Than we have GDP, sure a questionable number, but even that shows us at little to negative growth.

    Then we have all of the food stamp and disability crowd. That number continues to grow at a very brisk clip EVERY month. In a healthy, or recovering economy, those numbers would be coming down.

    Max, maybe you should attempt some real journalism, as you read like a low information voter. Comedy Central is not the best place to get ones information.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    At Least you have a Future with ACE…..in trucking there IS no future…..Obamas 11 Million are on schedule to flood trucking in APRIL..ATA backs them to the hilt…….Cheap Rates and Wages and Cop Inspections is the future for trucking.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    Yep..the pay is NOT worth the time spent and nasty lifestyle….YUK…..Pitiful and getting WORSE…Cop Inspections are the final straw.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    Monitoring and obedient conforming drones is the future for trucking…independence in trucking was Yesteryear.
    Those days are Finished.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    Yep the Elogs only works for mega Fleets with trailers being parked for loading at shipper..andhuge “Windows” for Pickup and Delivery…..you cant be confined to MONITORED TATTLE TALE LOGS/Hours of Service and BE of SERVICE to anyone as a small operator…Loose Leaf is more realistic if you like MONEY.

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    Si Senyor…….de Future Chofer…….de el truckey….10-4

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    March 29….The unions and the former boss of ATA and
    Congress AGREED to move AHEAD quickly with “immigration reformed/AMNESTY..and Guest Worker Legislation to become effective this SUMMER per OBAMA! 11 Million Legalized immigrunts will now be available for the Trucking Industry and ATA is ‘quite pleased’….to be gobbled up by megaFleets???
    This may be the nail in the coffin for truckers. They expect to sign off on April 8 and Ram it Thru!!!!!!!! Hello Braceros!!! Welcome to Trucking!

  • http://www.facebook.com/profile.php?id=1269137418 Mike Jones

    The Bracero truckers in the Southwest think that is Big Money compared to where they come from $8.00 per day is the norm. The whole family LIVES in the “trookey” and cook up rice and beans…….you just need to scale down your expectations…..economize!!!!

  • Thomas Duncan

    I am an Independant and run it all myself.I make some of the best $$$$ on the road available and very good at what I do(3.5 miliion miles)A few years ago I grossed $300,000 and my net was NOTHING.I got so angry I folded up and went to the local oilfield for 4 months.I went into the red $11,000 more.The business picked up and I bounced back.It is the REAL cost of doing business that kills you and the never ending reg’s that are stupid as hell and based on “studies”that mean nothing at all.

  • Superior Trucking

    I dont understand what you guys are doing…l work April thru October…and only great loads Nov – March…I grossed just under 180K – Fuel was 57, maint 12, plates 2, ins 5, misc 10, leaving me a net of $94,000. Using a tax lawyer (4k) I only paid 13k in taxes leaving me just over $76000. We spend (on average (4k a month) leaving 28k a year for my retirement. We live in Tenn, and we go to Europe for a month every year.Being an Owner Op is the best thing that every happened.

  • aa

    LOts of American left this job,new comer are mostly immigration .truck are not the job for human being ,for family ,for parents kids,and money are not good ,if you can find a job ,don’t do it .sad true stores : trucker is working hard on the load ,their wife ,girlfriend have affair .I heard this story lots of time ,I really worried my marriage right now ,do’t do it.

  • ilovdieselsmoke

    $.80 per mile is average price of fuel figuring mileage at five miles per gallon ( my truck averages around six but I figure conservatively all loads on five which is a safe bet ).. It always amazes me how these guys pulling containers at $.95 per mile make ends meet. I do however have a lot of them tell me their truck gets an astonishing 7.6 to 9 miles per gallon. I guess that includes all the idle time at the port , shipper, customer live loads, city driving, overweight loads, headwinds on boxes that they’re dragging behind mounted on 10×20 bias ply junk chassis tires, etc!!! So lets say even if true on the high end that leaves them approximately $.45 per mile to pay them self, their truck expenses, insurance, tags, taxes, maintenance, and drays unless they pick up their own box. Best I figure is they’re making a whopping minimum wage until repo Bob hauls away the stinking truck, the tag comes due, the first major breakdown ends their short lived independent career(or the company just takes back the truck and creates lease-truck/operator #39) OK, I know a few who do better than this but I’m just talking a random example here, average Joe hauling containers out of any port USA.. The “expanding demand for owner-operators” will steadily increase. One reason being there will always be that need by unscrupulous companies to take advantage of the contractor status to skirt employee taxes or other corporate responsibility’s. The oldest scam in the industry is companies who sell trucks to their drivers making them an instant owner-operator without any of the proper training or skills to survive. I see daily drivers who are fresh out of truck driving school become lease/operators within a couple weeks after going to work with one of these predator trucking outfits. Is it any wonder why transportation rates are so low today with a glut of people out here who have no idea of basic business cost?

  • jim stewart

    The leasing companies have the rates they pay out to an O/O trucker for his/her services down to science. They know the exact amount of money it takes to move the the loads. Only a very few companies I consider worth working for anymore. It’s truly sad how many drivers are willing to work for pennies within an industry that cannot survive without their services.

  • Angel

    Delbert,
    I have been and still doing things my way for the last 30 years, we all have ups and downs but that’s the nature off all businesses.
    its all about how to adjust and modify your working habits. i’m not going to published what i make per mile. Realistic its what you keep, but i can tell you is that before i pay anything i pay myself and my payroll taxes every month of a net income of $ 4,000.00 per month and all my bills get paid as well.
    I have watch companies fold and another one will open, in the business that i’m in. I run 50/50 meaning i work directly with a single shipper and get a back haul with a broker, at one time I ran direct from shipper and not brokers, so that’s what i mean about adjusting your working habits.
    and thats all i can say for now.

  • Angel

    Depends who you speak to, i don’t consider myself to be fished as a true owner/ operator.
    its like that old country song (LOOKING FOR LOVE IN ALL THE WRONG PLACES)

  • Angel

    UShip is not a place for freight, they made a TV Show from USHIP just to gain popularity, if not its a dying program.

  • rbd171

    ooida highly recommends NOT leasing. if you still want to roll the dice, contact them first. they have a short list of companies they will refer you to.

  • http://www.facebook.com/people/Craig-Fales/1766064360 Craig Fales

    You need to increase your rate. Start running your business like a business.

  • http://www.facebook.com/people/Craig-Fales/1766064360 Craig Fales

    With a mentality like that you will self-fulfill your own prophecy. Meaning you’ve been conformed already.

  • http://www.facebook.com/people/Craig-Fales/1766064360 Craig Fales

    I don’t understand why anyone would run empty ever. There are so many loads going everywhere if you needed a load back home it’s there, just look and know where to look.

  • http://www.facebook.com/people/Craig-Fales/1766064360 Craig Fales

    Every O/O needs to demand detention pay. I make it known to the receiver that if I’m not being actively unloaded the clock starts ticking at $100 per hour.

  • http://www.facebook.com/people/Craig-Fales/1766064360 Craig Fales

    The problem is that drivers aren’t thinking of their own capital gains. Quite honestly if it doesn’t pay what you need just walk away. Too many drivers aren’t doing that.

  • txslowpoke

    On the contrary. Companies small and large are starting realizing the O/O advantage. With expenses such as fuel and insurance as well as mandatory insurance req coming down the pipe shrinking thier bottom line, they (companies) are more wiling to oursource to an O/O or LP than ever before.

  • txslowpoke

    O/O with thier own authority is a Carrier. Simply put if your name is on the truck title you are an owner operator. Regardless if you are leased to carrier or “running under someones authority”. In the past O/O were classified as Independant or leased. With Independant having thier own authority.

    Agreeing with crispy critter; Independants have the full burden of expenses and regulatory compliance. As the saying goes they sink or swim on thier own.

    6 ways half a dozen the other. If someone thinks that owning a single truck is the path to riches are heading for a hugh disappointment

  • txslowpoke

    a “lease operator” does not necessarily mean they are refering to the dreaded lease-purchase abysis

  • txslowpoke

    agree too many new o/o today want to eat steak on a balony budget.
    long runs can eat up the profit margin quickly. Why some people think that it is all about the load with the longest miles. If moe people would break down their expenses on a per mile bases,including pm service,scheduled mx and normal wear and tear on the truck AS WELL as fuel,permits and fuel taxes and driver pay requirements-they would see that longest runs mostly amount to net loses even with a large number gross

  • txslowpoke

    AMEN TO THAT!!!!!!!

  • paul campigli

    I guess you’re not getting what I lovedieselsmoke is saying, I’m pretty much run my operation the same way as him. I make anywhere from $3.75 to $4.15 a mile with light hazmat loads and that rate per mile is loaded and empty, I am loaded one way and empty back to home. Or if you want to look at it your way and call it a rate for loaded miles then I guess you could say I’m getting up words of $7.50 a mile so why would I want to waste my time taking a cheap load from a broker that wouldn’t even cover your run after fuel and expenses if you happen to lose a tire or something, but as long as you jippo’s keep hauling for cheap rates that’s all the brokers going to pay. The cheaper he can get you to haul the load for the more he pads his own pockets. I feel bad for the owner operators I run into at restaurants that are actually excited to be able to afford a hamburger in a restaurant at the end of the week instead of peanut butter and jelly sandwiches in their sleeper…… If you only do what you’ve always done, you’ll only get what you’ve already got!

  • CHAYES

    Enlighten us please as to what it is that u do exactly.

  • Pingback: Long live the owner-operator! - Truck Hive Newsletter

  • UStruckingisdead

    The trucking business is terrible. Like I have said in the past if trucking OO’s , company drivers, have the backing like the PORTS DO IN CALI, (LONGSHOREMAN UNION) we all be better off. But since this business is a matter of supply and demand we are screwed. There are more more drivers that are going to drive just to break even to survive. Especially the the FOREIGN people who cannot even speak or understand English, even the traffic signs. Somehow they get there CDL. This business is more feasible if you have 10 trucks with Russian drivers right off the boat/plane and recycle them with new ones every 12 months. Wake the FU. It will not get better.

  • http://www.facebook.com/sharon.estes.338 Sharon Estes

    My husband was pulled in today in CA and Air Quality was there and asking him questions. We have a 2013 truck, already been inspected this year. My husband told him that, pointed out the sticker to him. He proceeded to ask my husband what kind of loads does he haul, got personal. My husband told him none of his business and refused to answer any of his questions. What is the deal with this? Not only do we get grief from DOT, CHP, Federal Motor Carrier and the list goes on, now we got Air Quality throwing their weight around? The man said, just doing my job. My husband told him to get a real job, tired of paying taxes for deadbeats like him! Needless to say, he was asked to leave..

  • Jimmy the Greek

    Well guess what delbert as is dead i made 70,000.00 that was what i paid taxes on , There is lots of money if wou know what to haul and who to haul it for , Right now i just loaded six tote tanks and six 55gl drums 20,000 gross wt . Houston to Miami it has to fly out of there monday morning it is now friday night i loaded friday afternoon came home , i well leave saterday morning , deliver monday morning , and deadhead out all the way back to new orleans , there I well have a frend save me a load back to houston it well only pay 700.00 , 800.00 if it’s HAz-MAT , the load to Miami well pay me $3,500.00 thats a $4,500.00 turn , I drive a 1998 frightliner that i had for the last 10 years ( it only has 168000, miles on it ) my traler is a 1998 lufkin , You well never make money leased to someone running by the mile , I am not leased I pay cash for my fuel and have no payments , the truck is not prity ,however it passes DOT Roadside insp with no problems .

  • Jerry G

    Up until 2.5 yrs ago I was an o/o. At 70.5 yrs old, retired from the road. Being an o/o was great! I had the oportunity to go broke, replace engine twice, loose my home to the bank,go into bankruptcy, and all that time thinking I was making a living.If you youngsters think there is money to be made, you’re dreaming. Best thing for you to do is drive for a large co. and get those benefits, like health insu, and 401s.

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