Drivers

Five Trends Affecting Today's Owner-Operators

OOIDA's Todd Spencer shares insights from member surveys

May 2013, TruckingInfo.com - WebXclusive

by Deborah Lockridge, Editor in Chief - Also by this author

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OOIDA's Todd Spencer says the last round of hours-of-service changes cut the number of husband-and-wife owner-operator teams.
OOIDA's Todd Spencer says the last round of hours-of-service changes cut the number of husband-and-wife owner-operator teams.

Owner-operators are far from dead, but the population is experiencing some changes, according to Todd Spencer, vice president of the Owner-Operator Independent Drivers Association, with many of those changes caused by government regulations.

In a Stifel Nicolaus conference call Tuesday, Spencer outlined several trends among the nation's population of owner-operators, gleaned from the association's every-other-yearly surveys of its members and other owner-operator drivers since 1998.

1. More owner-operators are going independent

"Currently half of the new people that are getting their operating authority from FMCSA are one-truck carriers," Spencer said. "That's a trend we've been watching for quite a while now. The traditional lease arrangements have become less attractive to entrepreneurs, so they often go their own with their own operating authority and deal directly with carries, with shippers, with brokers. There will be many more of them going forward."

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Of course that doesn't mean these fledgling micro-carriers are always successful. Thirty percent of those new operations aren't still doing it a year later, Spencer said, typically because they were undercapitalized from day one.

2. CSA disproportionately affects the owner-operator

 "The CSA program is impacting every motor carrier out there except for the very largest," Spencer said. "Shippers and others make decisions based on CSA scores. A pretty significant percentage of our membership is made up of one-truck carriers with their own authority, and oftentimes they don't get the number of inspections that can actually result in a CSA score. Some shippers and brokers, when they review the CSA record and there's basically nothing there, to them that sends up a red flag."

3. Hours of Service changes shortchanged teams

While saying the industry needs to get ready for the hours of service changes going into effect July 1, Spencer noted that the last big change had a profound effect on owner-operator team operations.

"I can tell you that hours of service changes have previously had a negative productivity impact for over-the-road drivers. I looked back at the last material change, that did away with a driver's ability to split their sleep periods up. Prior to that over 5% of owner-operators were women driers. After that change, the number dropped to 3%.

"The reason they changed the regulations was presumably to create less fatigue, but what they did was make it harder for drivers to do their job, because it pretty much required straight eight-hour shifts instead of the shorter shifts which were common in team operations. The husband-and-wife operations common among owner-operators, that regulation provided a setback in that."

4. Equipment prices mean more used trucks

Spencer said EPA emissions regulations over the past decade have added at least $30,000 to the price of a new truck, along with causing some higher repair costs and reduced reliability.

"This hits smaller operators much, much harder," Spencer said. "What we see in our numbers is that it's made it less and less attractive for smaller operators to replace or upgrade equipment, because the equipment is pretty much priced out of the market for most."

Twenty years ago, Spencer says, OOIDA surveys showed almost half of owner-operators were buying their trucks new. Its most recent survey shows only about 20% are purchasing new equipment when it comes time to replace their trucks.

5. Sleep disorder regulations could drive truckers out of industry

The Federal Motor Carrier Safety Administration has been working on "guidance" (not official regulations) that would set tougher standards for sleep apnea evaluation for physicians handling driver medical exams. Advisory panels have decided that drivers with a body mass index of 35 or more should be required to be evaluated for sleep apnea. At one time there was discussion of making the BMI cut-off 30. Eventually there may be a formal rule.

"Roughly half of truck drivers currently have BMIs above 30," Spencer said. "Over 20% have a BMI of 35 or higher. Should these regulations be put into place, we suspect that half of those drivers who are directed to do a sleep disorder screening – which takes you off the road and can cost $3,000 to $5,000 – will simply leave trucking for another profession.

"Going beyond that, 71% of truckers don't have any kind of insurance coverage that could pay for that screening. That really could trigger a shortage."

However, Spencer said, don't go writing the owner-operator's epitaph just yet.

"Pretty much since I've been involved in trucking, going back to the 1970s, we've talked about the death of the owner-operator. They struggle, they fight, but generally they endure."

Comments

  1. 1. John Scott [ May 14, 2013 @ 04:57AM ]

    As a owner operator I see a stagnation for the single truck owner. For every positive their is at least a negative that negates that. I don't find many owner operators being able to do what was done in the 70's. If your not getting hit by cheap rates, high fuel or increases in operating costs. You are getting hit on the regulation side with EPA regulations, HOS regulations. Yet we wonder why turnover in trucking in general is so high?
    In the end I am disappointed in our government and especially this administration who has done nothing to address these problems. Well I guess the EPA should be happy. We have less pollution because we have so many less people working and going to work. How sad is that? When that has become this administrations goal. I am really close to being done with trucking. I am selling my trailer to make it easier to exit the industry if things do not improve. I used to consider my CDL a ticket to a honest living. Now I would never recommend anyone waste money trying to get one. You can make more money doing almost anything else then living on the road and dealing with a mountain of regulations dictating your life. EOBR's are not reducing this burden. Its just making it easier for everyone to make sure your micro managed easier.

  2. 2. thomas rychener [ May 18, 2013 @ 08:10PM ]

    stress causes health issues and CSA has caused much stress.We go down the road each day wondering what law enforcement is gonna bust you today with one of his pet peeves and some bogus regulation you never ever would have known about.I'm sick of it and I think i'm gonna start telling them and our govt officials how to do their job like they do us,after all they know nothing about my business as I don't know about theirs so it's a wash.Enough already!!!

  3. 3. DS Morris [ May 22, 2013 @ 06:24AM ]

    I decided to get out of the owner operator business back in 2005 when fuel first spiked. I used my veteran's preference and landed a sweet desk job working for the DoD in Germany. That was 8 years ago and I've never regretted my decision or once considered going back into trucking.

  4. 4. Robert W. Mayo [ May 29, 2013 @ 05:57AM ]

    Well I'm still in the box pitching for now, My truck is at CAT haveing the motor rebuilt. So I'll stay out a few more years, but I wonder sometimes and I guess if the right choice came along I would get out of trucking. But if we all could just get on the same sheet of music thing's would be better. We all should agree on a rate and stick to it. No more cheap loads.If we had a good govt. than they could set a price, but the way I see it we will have to fix it ourselves and it can be done we all just have to get together and do it.If we all stick together now we can to them what the rate is not the other way. Try walking into BK and trying the clerk what you are willing to pay for a wopper and see how far you get.

  5. 5. Charles [ January 08, 2014 @ 05:43PM ]

    I don't understand why everyone is complaining about how bad things have gotten over the year's. Why complain now over a regulation or such price hikes that happened over year ago? I bet you never stood up and voiced your opinion and concerns about it to your congressmen when it had the favor of doing some good and you knew so but sat back and did nothing and now here you are complaining about how it is impacting your bottom dollar. Only those who do not stand up and say "HELL NO" are the ones to blame. You let the government take control instead of controlling them like it should be. You made the bed, now you can either lie in it or toss in your keys and call it quits and keep enduring high prices as an average citizen. If you didn't stand up when something was an issue, then you can only blame yourself while those of us can at least say we tried!

 

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