The reality TV series “Survivor” pits contestants against each other on a deserted island where they use a combination of strategy and cunning to force each other off the show until only one is left.
Other than its $1 million prize, the show is a good metaphor for today’s trucking market Insanely high fuel prices and sluggish freight have truckers pitted against one another, fighting for survival. Many are losing the battle. In this year’s first quarter, as diesel prices pushed beyond $4 per gallon, 935 trucking companies with five or more trucks failed. It’s safe to say that at least as many owner-operators with less than five trucks also went under.
While the industry has not seen a failure rate that severe since the recession that followed 9-11, the owner-operator market has a long history of fluctuation. Ten years ago, for example, there were about 150,000 owner-operator businesses, according to Overdrive research. By 1999, that number had surged to 170,000. Then between 2000 and 2002, 19,000 owner-operators went out of business. By 2004, the owner-operator population had grown by 16,000. Today, at 175,500 owner-operator businesses, the market is more than 25,000 stronger than it was in 1998, not taking into account the most recent failures.
If you are among those who have closed shop, the owner-operator population growth of the last decade is of little consolation. Also of small comfort is the fact that there’s historical precedent for your plight: The owner-operator market expands and contracts based on cyclical market forces, such as freight trends and fuel prices. There is no set number of owner-operators needed to haul freight anymore than there is a set price for diesel fuel.
The challenge is to be one of the survivors. A congressional hearing last month on mandating the pass-through of fuel surcharges to the business paying for the fuel appeared promising. It’s only fair that owner-operators should receive whatever surcharge a shipper pays. Unfortunately, the bill as written contains no means of enforcement. Your only recourse would be to file a civil lawsuit if you believe a broker or carrier failed to pass the surcharge through. Financially strapped owner-operators can ill afford such time and expense.
Absent any real help from Congress, your survival depends on you. Owner-operators who know their costs should be able to determine whether or not they’ll make money on a load – with or without a surcharge. By holding rates to the best of your ability, you’ll drive less viable businesses, which serve only to depress rates, out of the market. Being a survivor may not net you a $1 million prize, but when the next upturn comes along – as it inevitably will – you’ll be in an excellent position to capitalize on it.