Risky Business: Rethinking the Whole Authority Thing

Independence has its cost and a close look suggests the price is becoming too high for most owner-operators.

Own Authrority

Sure, the image of a stalwart, over-the-road, owner-operator, a noble “knight of the road” transporting what makes America Great across the plains has become an indelible symbol of what makes the U.S. and the trucking industry great. It’s a romantic notion and many truck drivers are likely to confess that besides personal economic necessity, the allure of the open road, as well as the personal liberty and independence, were among the reasons they purchased an over-the-road truck and started their business in the first place.

Table of Contents

1) The Logistics of Trucking Entrepreneurship

Shipping freight by truck long-distance has come a very long way since those foundational post WWII decades when the U.S. became manufacturer not only to the world but to millions of American boomers yearning to be free, wanting to consume more of everything in ever farther-flung suburbs.

Hauling U.S. industry’s growing post-war manufacturing and agriculture output meant a growing industry that today moves more than 70% of all the freight, some 10.5 billion tons of freight annually via 3.4 million heavy-duty Class 8 trucks. According to ATA, it takes 3.5 million truck drivers to...

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2) Owner-Operators under Pressure

The number of available, working owner-operators running independent truck-based hauling businesses has been fluctuating over the past few years. And while trucking industry opinion leaders are currently both bullish and bearish on the future prospects for owner operators in the business, most point to a significant decrease in the ranks during the past recession as a harbinger of things to come.

The recession, according to industry observers, put significant downward pressure on freight rates which in turn, significantly cut owner-operator revenues and profitability. The economic...

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3) Rethinking the Authority Business Model

And although the number of owner-operators obtaining their Authority has rebounded to a certain degree (in light of the rising Trump economy and an uptick (finally) in shipping rates), the business model that led to the rise in the number of owner operators prior to 2015 is swiftly losing its economic edge, its financial attractiveness and profitability being impinged upon by a number of factors – with most centering on the rise of the regulatory burden being thrust on all players in the industry.

Figures for the number of drivers transitioning from owning and operating their own...

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4) Fewer Good Roads to Owner Operator Business Success

Todd Spencer, vice president of the OOIDA cited “government regulations” among the key reasons why the owner-operator “micro carrier” no longer has a viable business model, one that’s both profitable and sustainable over the long run for most players.

Even the staunchest advocates of the owner operator industry have their doubts and most all agree that the realizing any economic benefit to maintaining authority is incredibly tough and getting tougher for even the most experienced and savvy operators.

Even OOIDA’s Spencer recognizes that traditional lease arrangements are no...

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5) No Country for Inexperienced Drivers

Owner-operators as a group are quite vocal and even the most veteran among them are voicing their concerns about the viability of the business model, as well as their recognition that retaining authority a and forwarding a going shipping enterprise with your own truck is growing more expensive and complex every day. Increasingly, it’s a hostile place to go at it as the lone proprietor.

As it stands, on average, owner-operators need to drive more than 100,000 miles a year to net $50,000. That means some make more than $50K a year, but that also means many also make less.

One...

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6) You Own, and Therefore are Responsible for E-V-E-R-Y T-H-I-N-G

As an owner-operator Truckie-D says, “Trucking is a whole lot more than just “steering and gearing.” And he reminds all his readers “You’re not buying a truck, you’re buying a business.” Owner-operators have complete liability.

And that is the bottom line isn’t it. But when you own the means of production, not only are you responsible for every aspect of its safe operating performance but the rig has to comply with all regulations and be subject to regular safety audits. One industry source says to keep a truck on the road legally the average annual cost of operating a tractor...

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