If you’re an owner-operator trucker, you could be well on your way to your best year in while thanks to favorable rates, reasonable gas prices and high demand for you.

 

ATBS predicts the current market conditions to last for at least the next 18 months – or mid-2019. “This is the best time – literally – in trucking in 30 years,” Amen said. “So if you’re not having success, you need to figure out how to get success and take advantage. The next year and a half is going to be a great time to be a trucker.”

“We have the most robust freight market I’ve ever seen,” said Amen, who has been collecting trucking data for 20 years. “There’s plenty of freight no matter what segment you’re in.”

He also pointed out there is a lot of money available for financing trucks and owner-operators. “There’s still a lot of money in the world that wants to invest and earn a return,” Amen said. “It’s not as easy as it used to be – it’s not the fog-the-mirror test to get in a truck – you have to be a legitimate person who wants to be in business and probably needs to put some money down on a truck. But if you can do those things, there’re people willing to finance you.”

With the electronic logging device (ELD) mandate here to stay, Amen said, those who are operating legally stand to be in good position to take advantage of rising rates. Anyone who isn’t in compliance with the ELD after the April 1 enforcement date goes into effect, he said, will start to be put out service because of rising CSA scores and insurance companies dropping those drivers.

“That means we’re going to reduce capacity,” he said. “All those guys who have been faking it on their logs and running 130,000 miles for the last number of years – that’s going to stop as we get further into this year. And maybe that’s painful for you if you’ve been one of those people – but in the end, that’s one of the big reasons that our rates have gone up 20, 30, 40 percent over the last few months and one of the reasons they’re going to continue to go up.”

Ultimately, this means good things for the industry.

“The best news about trucking at the moment is the driver shortage,” Amen said. “It’s tough for trucking but in the end, it’s good for all of you on the line.”

Unlike 2014, which was a good year until too much truck capacity was created too quickly. “I don’t see us creating that truck capacity in the near term,” Amen said, “simply because in 2014 we had been through the Great Recession and we had an 8%-plus unemployment rate – so there were a lot of people who had been displaced out of long-term careers that all of a sudden weren’t earning money and they needed to find something to do. They would love to drive a truck and make $50,000, $60,000 per year – so we could create a lot of capacity.”

2016 and most of 2017 “were struggling years,” Amen said. “And then things finally got good at the end of last year.”

With unemployment hovering around 4% these days, Amen said that “pretty much anyone who wants a job making $50,000 per year can find it. There aren’t a lot of people stepping up looking to become truck drivers. So that puts a lid on that capacity.”

Fleets seeking independent truckers

“Fleets expect to grow their owner-operator count this year because it’s a robust market and they want more capacity out there running because there’s more freight to haul,” Amen said.

Earlier this year, ATBS polled a “few hundred” fleet operators if they plan to add more independent contractors to their fleets this year. Only 9% of respondents said they don’t plan to. A plurality of 35% said they would add 5% to 10% more owner-operators; 26% said they expect to add 10% to 20% more independent drivers; 20% said they would add less than 5% more; and 11% said they would increase independent operators by more than 20% in 2018.

We really started to see robust freight at the end of last year after the hurricanes and we really haven’t slowed down,” Amen said.

There are more than 50 loads available for every one truck looking for a load, according to latest TruckStop.com index numbers released earlier this week. “In our opinion – over the last 10 years we’ve watched that index – when we’re above a ratio of 12-to-1, that means things are good for truckers,” Amen said. “When we’re below 12-to-1 – like we were during the recession – things are bad for truckers. So, at 50-to-1, we’re four times the break-even amount, which is an indication that things are incredible and the market is really good for truckers.”

A lot of spot rates have gone up 40 to 50% over the last nine months, which is more good news for truckers.

Mileage

“The average owner-operator miles last year were pretty much flat,” Amen said, comparing them to the 2016 numbers. “The average owner-operator ran about 110,000 miles.”

Amen also broke down the average mileage by segment:

• Independents: 100,000 miles
• Dry van: 115,000 miles
• Refrigerated: 123,000 miles
• Flatbed: 91,000 miles

ATBS has been tracking this data for over 15 years. Back in 2003-2004, the average owner-operator was running 139,000 per year. “Think about that today and it’s almost crazy to me because you had to run illegally and physically log that,” Amen said. “There were just a bunch of folks who ran around tired and were away from their home five weeks at a time. Just putting the most they could – 600 to 700 miles a day.”

ATBS, however, is projecting driver mileage to be down this year.

“That’s really counter-intuitive because when there’s more freight than anyone can possibly haul and the market rates are up, the sense would be that everybody would be out there driving as many miles as they could to make as much money as they can,” Amen said. “But what I think we will actually see and hear from our clients is ‘We’ve been running hard because we’ve been in a recession – we’ve had to run more miles to make enough money – and now that things are getting better and rates are higher, we want to slow down a little bit. We want to take a Saturday off and be home and relax and enjoy – maybe watch our kid’s football game or something like that.’”

“I can’t disagree with that philosophy at all,” Amen said. “Everybody deserves a rest and some time off. But the one thing I do know is these boom freight times don’t last forever. I think back to 2014 when we saw miles go down and I think everyone was hoping for an extended good period of trucking. Then it came and went in a year – quicker than we could blink our eyes. All of a sudden we got into 2015 and things slowed down again.”

“One thing to think about – and I am not here to tell you how to run your business – but things are good and if you have the opportunity to make some extra money during this year and maybe into next year, it’s a good time to run the miles. Maybe save up money for a down payment on a newer truck or put some money in the bank for a rainy day because we all know the slow times will come.”

 Revenue per mile

The average owner-operator revenue per mile was $1.35 in 2017, according to ATBS, which was up 7 cents per mile over 2016’s average. Here is how it broke down by segment last year:

• Independents: $1.46
• Dry van: $1.29
• Refrigerated: $1.23
• Flatbed: $1.72

While the average owner-operator made more money per mile last year, the same drivers also had to pay more for fuel as the year went on. “It wasn’t a drastic increase, it was kind of incremental week over week – we went from $2.25 to over $3 in fuel,” Amen said. “And a big chunk of that compensates for the fuel surcharge.”

Gross revenue

The average owner-operator made $150,000 in gross revenue in 2017, according to ATBS. Here is how it broke down by segment:

• Independents: $146,000
• Dry van: $148,000
• Refrigerated: $151,000
• Flatbed: $157,000

Fuel

“When fuel is down in the $2-range it doesn’t seem like anyone cares about it,” Amen said. “When it gets up over $3, we start paying attention to it.”

The average owner-operator’s fuel cost went up by 5 cents in 2017 to 40 cents per mile.

Here is how fuel costs per mile broke down by segment:

• Independents: 41 cents
• Dry van: 39 cents
• Refrigerated: 41 cents
• Flatbed: 45 cents

Noting the broad range in fuel costs per mile, “the only thing I can say is only you can judge what’s important to you: to drive faster and get to the next load quicker so you can haul more freight or whether to conserve on fuel and drive 58, 60 miles per hour,” Amen said. “It’s an individual decision that you can make but the bottom line is it impacts you by thousands of dollars a year.”

While fuel went up on average by 5 cents per mile, the net revenue per mile for owner-operators was up 7 cents per mile. “That tells me that last year there was a net-good or rate increases to drivers of 2 cents per mile,” Amen said. “If I put that in gross dollar terms, the average revenue increase was up $6,700 over the year before; but the average fuel costs were only up $5,400 last year. So we saw a net-good of about $1,300, which fell to the bottom line of the drivers.”

Miles per gallon

The average owner-operator got 6.61 miles per gallon on the road in 2017, according to ATBS. Here is how it broke down by segment.

• Independents: 6.51 mpg
• Dry van: 6.82 mpg
• Refrigerated: 6.49 mpg
• Flatbed: 5.92 mpg

“A lot of you have got vehicles that will tell you exactly what you’re getting while you’re driving down the road,” Amen said. “These are good numbers to benchmark against.”

Because dry vans tend to be the more aerodynamic and lighter weight, they get better fuel mileage; while reefers tend to have a heavier load and flatbeds tend to carry a heavier and less aerodynamic load.

Amen said that ATBS has clients with newer equipment getting over 8 mpg these days. “The difference between 6 mpg and 8 mpg can be as much as $15,000 to $20,000 per year,” he said.

Truck payments

“Ten years ago, we used to see the average driver spending around $1,750 a month for their truck,” Amen said. “That has gone up significantly over the last 10 years.”

A lot of that is because of four EPA mandates in 2008, 2010, 2014 and 2017 that led to a spike in truck prices. “A good new truck 15 years ago cost $80,000,” Amen said. “A good new truck today costs around $150,000.”

In turn, ATBS has seen its clients’ average truck payments climb to $2,300 per month. Some are still as low as $1,600 per month and as high as $3,000, Amen added.

“It all boils down to if I’ve got a brand-new truck that is going to cost me $3,000 per month that’s expensive and decked out, I better be getting 9 mpg, I better be spending 5 cents per mile on maintenance,” Amen said. “If I’ve got one of those older trucks, paying $1,500 per month, I might be paying 15 cents per mile in maintenance and getting 6 mpg.”

Truck maintenance

Before the EPA regulations of the past decade, owner-operators were paying 6 to 7 cents per mile, now it is about 10 cents per mile. “That’s the four- to five-year-old truck that’s got 600,000 to 700,000 miles on it,” Amen said. “If you’re setting aside 10 cents per mile, you should do OK taking care of the maintenance on your truck.”

Net income

In 2014, owner-operators averaged more than $60,000 per year for the first time in history, Amen said. “Then 2015 turned into a difficult year and ’16 and ’17 followed that. We saw net income go backwards – not drastically. We got down to about $58,000. But the good news is we crested that $60,000 mark again in 2017.”

Last year, owner-operators averaged $60,182 in net income, according to ATBS. Here is how it broke down by segment.

• Independents: $59,500
• Dry van: $61,400
• Refrigerated: $49,200
• Flatbed: $70,400

“If I’m a reefer driver and I made close to $50,000 last year and the flatbed guys made $70,000, maybe I’m thinking, ‘Man, I should get in that flatbed business,’” Amen said. “Maybe there is an opportunity for you. But what you got to think about is everything’s cyclical and everything changes. Last year, the flatbedders did good because we were coming out of a freight recession and housing was taking off and construction was starting in a lot of areas along with manufacturing.”

Amen said that the flatbed work can “pre-lead the rest.” Things are now on the upswing for dry van and reefer. “So it’s kind of hard to predict,” he said. “If you want to be in the flatbed business maybe two years ago was the time to get into flatbed so you could take advantage of it last year.”

“Trust yourself and trust what you know,” Amen said. “If you’ve been successful in the past, your odds of being successful in the future are good. And sticking with what you know is good. When you change, you have to start all over and learn different things. So before you see those huge sign-on bonuses – ‘I’m going to get $15,000 to sign on and do this with this fleet’ – really think about the opportunity cost and all the things that go into that because we’re in a good market. Today you should be able to make good money doing about anything in trucking if you’re a smart owner-operator.”

This article was originally posted by American Trucker.