Long live the owner-operator!

| April 10, 2013
Trends among profitable owner-operators continue to show short-haul niche specialization bring high rates and good net income.
Trends among profitable owner-operators continue to show short-haul niche specialization bringing high rates and good net income.

The challenges in today’s market for owner-operators were on full display after Overdrive Editorial Director Max Heine asked this somewhat loaded question on the Overdrive Extra blog two weeks back: “Is the owner-operator a dying breed?”

A grain-hauling owner-op running short local/regional routes broke down business revenue from 2012, for instance, in a comment under the post. The business showed revenue of “$110,000 last year on paper. But after miscellaneous taxes, truck and trailer payments, fuel, tires, insurance, repairs and other expenses we had a profit of approximately $11,000 to support a family of four. That’s rough.” Indeed it is, and others verbally pumped fists to decry the conditions for owner-operators in the trucking industry today — while some of it was clearly little more than piling on with little substance behind it, numbers told the tale of where success seems more and more to be found among operators nationwide. Niche short-haul seems to be where the one-truck independent business retains substantial profitability, depending on the operation.

Take the example of this fuel-additives-hauling operator, who after taxes and expenses netted around $50,000 in 2012, which he considered a fairly good year. And get this:  he was “out overnight” through the year a total of only 58 days and “ran a total of 47,000 miles with a dry van,” giving the operator a profit-per-mile of more than a dollar. He explained his operation this way: “Each trip I have anywhere from 10 to 30 hours of waiting time before I can bring the empty tote tanks back. Sometimes they pump them out while they are in the van — other times I pallet-jack them to the back of the trailer, when they have to be taken out to a ship at anchor to be pumped out. All my loads are hazmat,” and he charges per hour for use of the truck at $50 hourly. “This goes to show,” he adds, “there is money to be made. You just have to find a niche.”

Adaptation to industry change with operational shifts was also stressed. An owner-operator posting as “Job Hopper” put the challenge of managing costs and revenue this way: “I’ve been trucking for 30 years and an owner operator for the last 20. I’m still here because I learned to adapt. I watched many of my friends lose trucks because they looked at the bigger runs. They thought the big check was the answer. My brother-in-law grossed $200,000 three years running and averaged $1.45 per mile and still lost his truck because he had to have a fancy Pete with a 550 Cat… After five years his truck was just about shot.”

At the same time, the operator added, “I made $150,000-$165,000 running within 100 air miles of my home with an average of $3.45 per mile loaded and empty. I did and still do run a 1998 9400 international with a 370 DDEC III, and she gets me 6.5 mpg.

“In 2012 my profit was $129,000. 2011 was $123,000 and 2010 was $105,000.I don’t have an accountant. I take care of all of it. Doing this I know how my truck is doing and where to make the adjustments. This formula doesn’t work for everyone but by the grace of God this high-school dropout isn’t doing too bad.”

We’ll be discussing various owner-operator business challenges on Sirius XM Thursday, April 11, at 2 p.m. EDT on Road Dog Trucking Radio channel 106 with host Mark Willis. Tune in.

For more of the near 100 reader responses weighing in on the current state of the owner-operator business model, digest the comments under Heine’s last post on the subject here.

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  • norlaw

    This was a good story and showed how difficult it is to make a living trucking. California’s new CARB law that takes effec 01/01/2014 will elimenate approximately 1 million trucks they figure so this will end trucking for many people. It is hard enough to make a living in the trucking industry with out State govenments interferring and making it harder.

  • bigred

    Let those CA. drivers get the new trucks and haul it all…I havent seen many them with any carb filter yet,,but i guess they can get by with this too.

  • Thomas Duncan

    There is a lot of truth to the story.A couple of years ago I grossed 300,000 and could not even get the Insurance down payment together.I folded for four months,ran oilfield,and went 11,000 more in debt.My oversize boat hauling business picked up and I got lucky and recovered.It does not make sense to have a huge gross and no net.Regulations,lost time,jumping thru hurtles,ect… are so out of control that myself and others I know are steering out of cross country oversize loads.It gets crazy.

  • http://www.facebook.com/kenneth.r.bevel Kenneth R. Bevel

    stop at the boarder and refuse to go into california,,,,simple no trucks in there no walmart purchass,and the wives will go crazy,,,,,

  • http://www.facebook.com/allan.ross.5 Allan Ross

    we made $75 an hour waiting time with dump trucks back in the 70’s
    whats the difference between an owner operator and a pizza?

    the pizza can feed a family of five

  • ectts

    You read this and you realize there are some VERY good reasons there is a driver shortage.

    -carhauler

    http://www.ectts.com

  • John Scott

    The challenge for a owner operator is no different then a small business retailer has against a Wal Mart. The small operator must be able to be smarter, leaner and more selective about what they haul, where they haul it and how much it pays. Not to mention be more adaptive about reducing operating costs. Such as reducing speeds for better MPG, spec trucks for MPG not power and being in general more aware of where they are spending money. I certainly think the new EPA regulations have already hurt the smaller operator like myself who now deal with more maintenance issues related more to emissions then anything else. For me I have one truck to earn me a living.

  • MarsRiver

    John, I’ve read many of your posts and most often you hit it on the head. Your comparison to Walmart vs Retailer in our industry is sickeningly accurate. We have a governing body that wants a one-size-fits-all solution and the model is flawed severly. David slew Goliath, but David had a sling and stone while Goliath had only his size. Our “Goliaths” want to take the sling and stone away. The additional common sense commentary tells me there are others like me out there who are dealing with the same issues on equal footing. Thanks for your consistency of input. You give hope from your heart!

  • William Melius

    Gross $300,000 and no profit? Hard to believe that!

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  • http://www.facebook.com/luisa.a.nims Luisa A. Nims

    Great article! The Long Haul Magazine profiled 5 drivers and their economic models. They were driving around the same amount of miles however two were making under 50k a year and the other two were making around 180k to 200k… something is up!

  • robjla

    I hate god.

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