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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.

 

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