2020 Brings Issues For Owner Operators

The last couple of years have brought some historical highs and lows to the trucking industry, most directly related to the spot market. A growing economy collided with enforcement of electronic logging devices. The results were a a big win for truckers, owner operators, or otherwise.

2018 netted pay raises, amazing shipping rates and some serious proffits. Contracts were re-negotiated, equipment was purchased at record rates, and big fleets were ready to take full advantage of this newfound potential.

2019 brought us a big reality check. Sadly, all the new trucks and trailers added to the market only went to lower rates. It has less to do with the national economy, and more to do with the commodity of empty trailers. With the help of an aggressive freight brokering industry, nearly every segment of trucking felt the hit.

What Issues Do Owner Operators Face In 2020?

Reading the news reveals 3 points that need to be discussed as any owner operator prepares for 2020. We’ll first look at each point, then put them together.

Detention Times

Waisted time at the hands of shippers and receivers has always been an issue. When the 10-hour break became law, we all thought it would improve. It didn’t. Again, we expected the ELD mandate to bring positive change. Things actually got worse.

This CCJ article points out how shippers are still only paying for distance while the trucker’s most marketable commodity is time. Until these paradigms shift, things will not improve. Shippers only want to pay for distance, but a driver’s biggest commodity is time.

Just this author’s opinion, but it’s been my experience that brokered loads offer the highest risk of waiting for hours to load or unload. At least with contract freight you can negotiate detention time and pay right up front.

Rising Insurance Premiums

CCJ is also the source of our second article. This piece is telling us we can expect to see a 25%  increase in insurance costs in 2020. That’s an average. Could it be even more for an independent owner operator? And what about the owner who’s had a recent claim? Either way, insurance costs will not be going down any time soon.

Large fleets can do things to compensate. Between adjusting the amount of self-insuring and lowering the total amount of coverage, they can mitigate some of the increase. I doubt you’re ready for a $50,000 deductible.

Sweating The Old Trucks

The third story is from AmericanTrucker.com and points out how large fleets save nearly $17,ooo per year by replacing trucks every 5 years. You could be the owner who upgraded and bought a new truck in 2019. If so, good for you.

But what about the new owner operator who is purchasing one of these 5-year-old trucks. The bottom line from the big fleets is telling us you’re at a huge disadvantage.

This leads us to ask how an independent owner operator can buy one of these 5-year-old trucks, deal with even higher insurance costs and detention issues, yet still turn a profit. Or, enough of a profit to make buying your own truck worth it.

Side Note: Although they aren’t specific with numbers, I have to assume the big figure includes tow bills, down time and full shop rates. At 5 years of age, these trucks were long ago depreciated, so the depreciation savings of the new truck is also most likely figured in.

The independent owner operator job just got harder, especially if you’re getting all your freight from load boards. Finding your own customers and freight that needs more than meat in the seat is what’s going to set you ahead of the game.

There’s also a lot to be said for buying a pre-ELD truck, even though you’re going back 20 years. So much of the service issues on the newer trucks involve systems and components that aren’t even on a 1999 or older truck. Oh, and you’ll never have to worry about California. Just don’t go there.

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