Owner Operators — Dead or Alive?
I’ve been in and around trucking for 30 years now. The demise of the owner/operator has been projected several times in those three decades. Yet, the lure of starting your own business in the USA and the low cost of purchasing a used truck through most of the years has continued to allow owner/operators to stay in the market. But, I think the odds are stacked against them. Even today, most owner/operators exist as an extension of the large fleets. The large fleets often provide the financing, assure the loads, and collect fees for the on-board telematics equipment. Here are 4 reasons that owner/operators are likely to decrease in numbers in the next decade.
1. Financing favors larger fleets. Especially right now, getting financing on just about anything is tough for everyone. Large fleets can often finance themselves and they are likely to get better pricing from the vehicle OEM’s. That’s why you often see the large fleets providing the owner/operators with the opportunity to buy the fleet spec’ed vehicles. And, it’s a good deal for the wise owner/operator that really wants to be a business person. That fleet truck is going to get much better mileage than the decked out beauty trucks with lots of chrome and poor aerodynamics and oversized engines. The large fleets will even help with the cost of maintenance. That all sounds good. But, just how independent is this owner/operator that gets everything from the large fleet?
2. FMCSA’s Compliance-Safety-Accountability favors fleet drivers. In the new world of safety, the fleet is more responsible for the actions of all drivers than ever before. The fleets have a strong interest in making sure all of its drivers do the right things for inspection, maintenance, driving behavior and record keeping. Over the years, large employers have lost court cases when they used lots of part time workers or used contractors for long periods of time. These court cases are likely to push large fleets toward using their own drivers rather than owner/operators in the future.
3. LEAN favors fleet drivers. What’s LEAN? It’s the never ending task of every business to control costs, increase quality and improve time to deliver products and services. It’s hard enough to get employees in a single building to work together. It’s harder to get a remote workforce like drivers to feel part of the overall effort and contribute to it. It becomes nearly impossible if that workforce is actually multiple, independent businesses with their own ideas.
4. Regulations favor fleet drivers. The burden of paperwork required as an independent business person is growing. It’s bad enough for a business in a single state. It’s another level of complexity to be dealing with fuel taxes in multiple locations and all the other permitting and issues that can arise. Large fleets are better positioned to handle this overhead activity than an individual owner/operator.
There is, possibly, one small positive for owner/operators. The Affordable Health Care Act favors smaller companies. I’ve talked with quite a few business people that have come to learn that 50 employees is a magic number to avoid. Reach that level and you have to deal with health care or pay fines for each employee. Some business people are already thinking of staying under that number rather than continuing to grow. Either larger companies will look to classify more drivers as owner/operators to avoid the extra expense; or more small fleets of 5-45 trucks will start to appear.
Are owner/operators dead or alive? I’d say their health is in danger.