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."
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."