Reversing a longstanding trend among owner-operator clients of the ATBS business services firm, miles run were up in 2015 among all segments toward yet another record year for net income, says ATBS President Todd Amen. ATBS clients, largely leased operators but including a sizable subset of independent truckers with authority with various trailer types, “broke $60,000 in net income for the first time since we’ve been tracking this data,” more than 13 years.
The 2015 $61,167 income figure is computed as an average among all segments, separating out the top and bottom 10 percent of high and low earners.
Here’s the breakdown by segment:
Independents with authority: $63,375, up from around $60K in 2014
Dry van: $60,557, adding about $6,000 over 2014
Reefer: $52,782, fairly flat
Flatbed: $70,464, more than $10K above 2014 number
This is all in spite of what happened in the second part of the year, as spot market rates lost a lot of the heat they had gained over the prior years. It was, no doubt, “difficult in the second half of the year,” Amen says, speaking as part of ATBS’ annual Independent Contractor Benchmarking online seminar Thursday, April 7. “Spot market rates plummeted.”
At once, rates didn’t fall as fast as diesel prices, which shielded contractors’ and independents’ income from the freight-market issues to one degree or another, making, for instance, faster speeds less of a hit to net income, Amen says.
Looking out into the next couple of years, however, Amen believes a miles reduction could be in the offing as regulations — most significantly, mandated electronic logging devices — among other pressures, come into play.
As for the eventual capacity situation mandated ELDs could bring about, Amen believes “rates will have to go up to compensate for less trucks. That could be a good thing for drivers and fleets and everybody in this business.”
The most important thing to consider in the present moment is that “shippers are expecting rate reductions right now,” he adds. “It’s an important time to have a strong backbone and maintain the rates that we have.”
Amen covered a variety of other trends, spelled out below:
While it “doesn’t feel like we’re as low as 2009 from a freight perspective,” Amen says, “some do believe that. … Maybe this is the start of a recession.”
Long-term trends in maintenance show growing costs for those with owner-operated trucks. In 2003, owner-operators spent about 7-8 cents a mile to maintain a truck. “We have seen maintenance cost per mile creep up every single year but for the recession, due to deferred maintenance,” Amen says. The good news is that costs have leveled off to around 10-11 cents per mile after the years of rising costs.
Fleet owner-operator programs
Given marked decline in spot rates, Amen noted believes many independents are likely looking around for a solid fleet partner in this climate, citing a 42-cents/mile revenue premium an independent needs to earn to financially break even over the rate cut that comes with leasing to a fleet.
“In 2016 we’re for sure below that 42-cent-a-mile break-even,” he says. “Independents are looking for a place with contracts with shipeprs because the spot market has dried up.” Whereas in 2014, there was an almost $80,000 average revenue differential between being leased and independent “at the peak of the spot market.”