As freight demand revved, carrier spending on leased and independent small fleets and owner-ops ballooned in 2018

Updated Mar 1, 2019

With economic growth accelerating through the first roughly two-thirds of 2018, larger carriers turned to small fleets and owner-operators to help handle the influx of freight demand, according to notes within earnings reports from large, publicly traded trucking companies.

For instance, Landstar, one of the country’s largest owner-operator fleets, spent $770 million more in 2018 on so-called purchased transportation than it did in 2017. Such purchased transportation is generally carriers’ spending on independent contractors (or leased owner-operators) and brokered loads to smaller independent carriers. Being a largely owner-operator fleet, the bulk of Landstar’s spending is on purchased transportation. The carrier, which employs about 10,000 owner-operators, spent $3.57 billion in 2018 on purchased transportation, compared to $2.8 billion the year prior.

Its gross revenue in the year was $4.62 billion, compared to $3.65 billion in 2017.

Schneider National spent $300 million more in 2018 on purchased transportation, about half of the revenue gains it saw in 2018 from 2017. The carrier’s gross revenue grew $600 million, to $4.98 billion.

Likewise, Werner Enterprises, USA Truck, P.A.M. Transportation, Marten Transportation and J.B. Hunt all reported tens of millions of dollars more in purchased transportation expenditures in 2018 than the year prior.

None of the carriers explain the increase in purchased transportation in their earnings reports, but the unexpected surge in freight demand in late 2017 and well into 2018 caused fleets’ capacity to max out, leading them to lean more heavily in 2018 on smaller carriers and owner-operators to help handle their shippers’ freight.

A report from LaneAxis in early 2016 made the case that carriers offload more than 40 percent of their contracted freight to smaller carriers, based on figures on carriers’ revenue from freight and their spending on purchased transportation.