I struck dumb luck when I began my owner-operator business in the spring of 2003.
The U.S. economy began recovering in earnest that year from the 2001 recession, triggered by the 9/11 terrorist attacks a year and a half earlier. As a new owner-operator, I was pretty ignorant about most things other than driving, but good fortune was my friend.
Just as I signed the contract to purchase the truck, the salesman told me, “You got a deal on this one.” His boss had just told him to drop the price by more than $5K, more than 10% all told.
I counted it among many blessings that year.
Before long, freight rates rose, and though the balance of 2003 wasn’t great, 2004 provided a bit of a rush. Truckers were back in the market looking to cash in.
There’s something of a rush brewing again today, though rates recovery outside flatbed, benefiting from ballooning data-center construction, remains in early stages.
Study the California and Alaska gold rushes of the 1800s and you’ll find no small amount of sensationalism in the headlines of the time offering transport to fields of shiny metals and great wealth. It all fueled “gold fever,” a contagious disease that spread like wildfire. Like COVID.
The disease, I mean, through the pandemic period of course spawned a rush into trucking, too, and the long hangover in the aftermath we're just now really getting over.
[Related: Roadcheck spurs spot rates to new highs]
The truth about the old gold fever: very few got rich. Some who did were merchants selling to the prospectors rushing into the region hoping they'd get rich. A fun factoid I found: A single egg could fetch a price as high as $3 in one or another of the mining camps that sprang up out West. In today’s money that’d be $80 or so.
Most of last Fall’s freight recovery prognostications and this year’s analyses have centered on truck/driver capacity: reductions with moves against non-domiciled CDL eligibility and the uptick in out-of-service English proficiency enforcement. That’s all happened and continues to play out, and in tandem freight availability broadly speaking has risen through the year so far.
Well-established owner-operators are getting more selective of rates they’ll accept.
Within the last couple of months, a growing number of drivers, and it seems many couples who want to drive team, are asking on social media if anyone will take payments and sell or lease them a truck.
On the other side of putative deals, some owners have decided it’s a good time to try and sell.
If those groups balance each other out, capacity won’t continue to change as dramatically as it has this past year, and/or in past up cycles when new people entered in droves and put a damper on the party.
Balance would be good news, if freight availability continues up.
The caveat: whether any truck owner is selling to actually leave trucking, or just scaling back to be a company driver, shifting his/her truck capacity but boosting the driver ranks at another fleet.
[Related: FMCSA revoked 28,000 CDLs: Where's the rates bump?]
Iran war impacts
Fundamentals are improved significantly for flatbedders in the present moment, yet that’s not fully the case for vans and reefers as of this report from last week, much of the spot gains eaten by the boost in fuel costs.
My personal thought: Ultimate war impacts remain unpredictable. Every day, news about oil futures and inflation bounce around the world, and markets are reshaped.
Lastly, as I was thinking about all of this, and watching brokers in my network posting personal commentary these past few weeks, it’s hard to miss rhetoric about how great rates are. In bold print, too: Rates are not going to come back down!
(Rates will always retreat. No up cycle will last forever.)
My knee-jerk reaction to big boosts in spot rates is different, though we can likewise put it in bold print: Costs are going up and not coming back down!
Remember that $3 egg the gold prospector bought to feed himself.
Ask yourself every day, “What will it cost to haul this load?”
[Related: Calculate any load’s cost in relation to time, not just miles]
Record-setting diesel prices might dampen prospective owners’ excitement about buying or leasing that truck for the first time. Then again, emotional overinvestment for those inexperienced in business could push a prospective owner forward ever more quickly to a (potentially rash) decision.
I’ll caution anyone getting into business for the first time: Don’t let other drivers, or finance and sales staff, make decisions for you.
You’ll be the person paying the bill on the other side of it.
Again, don’t forget: most of those gold miners didn't get rich.
[Related: Used truck prices down after exceptional March, freight rates bounce]
