Pulse

Max Heine | May 01, 2012

A resilient model

mheine@rrpub.com

The picture hasn’t been as mixed in trucking. Demand for drivers returned as the recession lifted. Sign-on bonuses re-emerged. Income per mile for owner-operators rose in 2011, especially for flatbed and dry van. Still, it can be tough to grasp exactly how the turbulence of the last five years has affected the viability of the owner-operator in trucking.

Today’s owner-operator population is the highest it’s been since 2008.

Overdrive commissions some of the industry’s most specialized research that focuses on owners of fewer than 10 trucks who work in for-hire transportation. It covers leased and independent operators. Our most recent report, from Commercial Motor Vehicle Consulting and based on governmental and private sources, gives insight into the owner-operator population. The news is good.

Two turning points between 2005 and 2011 stand out for the key numbers tracked – businesses, trucks operated and fleet size. One of those turning points is 2006, when the numbers all peaked. The other is 2010, when they hit a trough and turned up.

The one exception is that average fleet size among owner-operated fleets still declined in 2011, to 1.47. That’s because the number of owner-operated businesses increased by 5,600 in 2011. Most of those, being new, were one-truck operations, so they pushed the average fleet size further down. As these new businesses get established and expand under the continuing strong freight market, the fleet size should begin to grow again.

“The expansion in the owner-operator trucking population in 2011 is the beginning stages of a long-term recovery as an expanding U.S. economy stimulates freight growth,” says Chris Brady, who compiled Overdrive’s report.

So carriers are back to heavy competition for drivers and owner-operators. That demand “is putting upward pressure on wages that will stimulate individuals and company drivers to establish owner-operator trucking businesses,” Brady says.

None of this is to say that being an owner-operator will be any easier as demand returns. Regulation has gotten much more aggressive. Diesel is much costlier. Owner-operators’ ability to buy new trucks isn’t as great, due to expensive emissions technologies.

But looking at the overall need for owner-operators, their health tracks freight demand. Even prior to the last seven years, you can see the same correlation.

A recession doesn’t void that basic connection, though it does cull inefficient operators from the market. Those who survive have proven they have what it takes, and will do even better as the economy improves.

While OverdriveOnline.com strives to maintain an open forum for reader opinions, it does not welcome comments reflecting racism, vulgarity or spam. Violations of this policy can be grounds for removal of a comment or banning a user from the comments system.