Owner-operators are seeing strong freight volumes now but should prepare for a “freight cliff,” according to Todd Amen, CEO and president of American Truck Business Services (ATBS).
That was one of the messages from Amen during ATBS’ annual Independent Contractor Benchmarks and Trends conference call on Wednesday.
The call was a recap of data collected from ATBS’ clients. Amen provided insight on 2019 benchmarks, including net income, average miles driven and freight rates, among other things.
Amen said the coronavirus pandemic has provided the trucking industry with a “huge opportunity” to move freight.
“Right now, trade is strong, America is hoarding goods. We’re buying toilet paper and everything that you can buy to be in our home for the foreseeable future; shelves have to be restocked,” Amen said. “But a lot depends on how long the coronavirus epidemic keeps us all locked up.”
Amen said if the pandemic continues for months on end, many Americans will be out of work that much longer, affecting consumer spending.
“Ultimately, what happens to the sentiment in America is we close our pocketbooks, we’re going to stop spending money because we need to survive,” Amen said. “We’re going to stop shopping except for the essentials. That means freight stops moving.”
Amen said owner-operators can prepare for “darker days” by drawing down on lines of credit from their bank, as well as negotiating with banks, suppliers and vendors on how they can extend payments.
ATBS, which specializes in providing financial assistance and advice to owner-operators, including tax preparation, has worked with more than 150,000 drivers since 1998.
Amen said owner-operators took a hit during 2019 because of economic conditions and other factors.
“It was a tougher year, the population shrank by just over 3%, we lost about 4,000 owner-operators,” Amen said. “But when you keep that in perspective, in 2018, we grew by 10,000 owner-operators, up 8% over 2017. The net between the 2018 to 2019 is we’re still up about 6,000 owner-operators.”
Other economic conditions Amen discussed included the average owner-operator net income in 2019, which was $63,722. It was a decrease of around 2% from 2018 net income of $65,000.
Amen said the slight decline does not reflect a bad year, considering how tough the freight environment was for most of 2019.
Owner-operators also saw an increase in the cost of insurance during 2019, as well as the average cost of truck payments, Amen said.
The average owner-operator truck payment has gone from around $1,750 monthly 15 years ago to $2,400 in 2019. The average cost of insurance was around $12,500 last year.
Overall, Amen said owner-operators are driving less miles and making more money than they were 10 to 15 years ago.
Drivers have gone from making 35 cents a mile to making almost 70 cents a mile, from making $4,000 a month to making close to $5,500 per month, and from driving 139,000 miles to driving 100,000 miles per year, Amen said.
“It’s still a tough job, but it’s gotten much better in the last 15 years, being an owner-operator,” Amen said.
S. Swanson
What In the -inaccurate articles- is this???!!!
1. Drivers were making 50cents per mile 15 years ago and had benefits. NO driver is making 70 cents per mile in 2020 or in 2018 for that matter. That is completely inaccurate. Drivers are Making 40-50 cent a mile in 2020. (I even know some at 35 cents.) Second – if an owner operator is profiting 65k a year as the article says…why go through the HEADACHE of owning a truck, truck payment, repair, safety compliances, ifta, permits, Insurance payments etc etc etc. to make what a company driver makes??? That alone shows the flaws of the industry!!! And last – idk what board these guys look at but rates are not 6% lower than 2018. They’re about 40% lower long haul- which makes a huge difference in profit, huge difference in what drivers can be paid and a huge difference in being able to offer drivers benefits/no benefits. These days the average per mile to the truck is lower than the cost to run the truck the right way!!!
Brenda l Figueroa
This report is BS! I am a woman truck driving and have been struggling to break even every year. There is so much unfairness in this industry it is a shame. Poorly paid and poorly treated. The struggle is real and more so with this virus amongst us.
Imissi
Yeah but why owner operator looking for driver but not pay them like 2500.00 a week or better if you have good driver get there on time and get back pick up again but they won’t pay them all they money so what up with that.
S. Swanson
Because There isn’t $2500 a week profit on one truck. Trucking overhead is expensive. From fuel, to maintenance and repairs, to roadside, increased insurances and truck payments etc. mixed with overall lower rates to the truck. etc etc etc. Add in tons of overpriced services (or even shady service companies) and there’s not nearly enough left to pay a driver $2500 a week. Drivers see the gross number the truck brings in- which isn’t anywhere close to the net profit.
Ronald Terlitsky
Flatbed has declined and the Broker a’holes are raping the industry for all Independent OO’s and Contractors like myself. I asked one Broker “Do you think this MF runs on air or solar power you dumbass!” I hate the thought of more Government regulations but there’s a big need to slap these SOB Brokers in the mouth somehow. Out of control is what they are. Especially when Truckers are supplying everyone with food to sanitary necessities because of the viral outbreaks yet nobody is looking out for the Truckers (OTR especially)
Mohammad Faisal Akram
What the trucking fuck you are talking about. When did learn about truckers are making more than yester years everyone is losing money in Trucking we work just to survive.
Col. Yahim Golam
Green card? I’m
Roadrunner
That’s why we are where we are.
Statistics don’t reflect the real thing about trucking.
And behind computers all is more then virtua then realistic .
The brocker greedy practice is the problem for owners.
Broker take more then should.
Robert Hassell
Until we address the rogue companies from Canada, freight prices will never increase. Cavatas laws are being over looked by our own DOT and it kills the American Driver. Canadiens are staying a month at a time driving east and west instead of directly going back as the law states. You will see dozens of canadien drivers in every state. Mexican drivers are 99% only near the border, yet we stereotype the mexicans as the problem. Never more wrong!
Col. Yahim Golam
Cavtas laws? WTF?
Art
The digital brokers are going to further depress margins. Uber, Convoy have alot of money to burn to win customers with the lowest rate.
There is way too many brokers undercutting each other chasing the same customers.
Bernard Moore
Can I find a job now after I had completed my DOT requiredments
And have been given a sensitive return back to work I need to work please answer back
Marc Smith
Are you a driver Bernard? If so, feel free to send an email to info@theaifleet.com.
We are starting a new trucking company end of April with a goal of paying owner-operator drivers over $100,000 a year of take home income after expenses.
But we are only looking to hire experienced drivers with a great work ethic.