The Rise of the Entrepreneurial Carrier: What Shippers Need to Know
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The freight industry has seen a historic run of tight capacity and elevated rates, with more than 18 months without relief from rate volatility and supply gaps. In 2021 alone 56% of truckers reported challenges providing capacity — up from 29% in 2020.
In a volatile and tight market, it’s crucial for shippers and carriers to have solutions that enhance their access to freight or capacity and strengthen their operations through speed of execution. With abundant freight but a shortage of capacity to move it, drivers have seized on the opportunity and leveraged new tools to bring new carriers to market.
There was a tidal wave of new authority carriers and owner-operators entering the market in 2021, with new registrations rising more than 300% year-over-year in May.
Drigert
This pool of new authority carriers and owner-operators is newly empowered — they’re younger, tech-savvy and experienced drivers leaving large trucking companies to start their own business.
And, contrary to previous belief, these carriers are high performing and highly committed, often performing better on key metrics, such as timeliness and reliability of deliveries.
In 2022, we’re approaching the dawn of a new era for entrepreneurial carriers. The industry should be ready to adapt with small carriers in mind by providing systems and technologies that allow them to succeed.
Who Is the Entrepreneurial Carrier?
While access to capacity is tighter than ever, the dynamics of capacity are changing, prompting the increase of new authority carriers entering the market. After surveying and speaking with those in our marketplace, we’ve found the majority of entrepreneurial carriers are professional drivers leaving their trucking companies to start their own authority.
As of 2021, there are more than 600,000 owner-operators employed in the United States, and that number is quickly growing. The average age of employed owner-operators is 47 years old. Owner-operators’ footprints are growing nationwide.
These drivers are experienced, having started as company drivers. They start their own carrier business because the opportunities in today’s market are abundant, and it is easier than ever to get started. Sixty percent of new authority carriers note increased pay and a more flexible work environment as key reasons for starting their own businesses, according to Uber Freight data.
With the technological revolution in freight over the past five years, motor carriers can also now download apps and start moving freight immediately, getting paid in days instead of the weeks or months that it took traditionally. I’ve personally had drivers tell me that they would never have been able to start their own carrier without the opportunities and easy access to freight that Uber Freight and other new providers offered.
How the Industry Can Embrace These Carriers
Entrepreneurial carriers are a vital part of the marketplace and a key solution to having a healthy pipeline of drivers and avoiding labor shortages. As an industry, it’s on us to make the market more attractive and sustainable for new authority carriers.
Technology can make the market well-positioned for entrepreneurial success. By providing flexibility and a level playing field for owner-operators, the industry can empower the smaller carrier.
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For example, carriers should have equal access to the loads in a network, giving them the perfect foundation to jump-start their new business. Loads have upfront pricing as well, so even if a driver doesn’t take the load, they have an option and good information on rates. Compare this to the opaque pricing that the industry traditionally offered, and it’s clear upfront pricing is empowering to new carriers.
Systems and technology within platforms also help carriers learn how they are performing in real time, giving them access to reliability and service metrics, and advising carriers on how they can improve their standing with shippers. We find that our carriers want to improve and they want to build a successful business. The better information they have, the faster they can improve.
We’re also seeing accelerated adoption of committed capacity solutions among owner-operators and small fleets. Committed capacity provides contractual freight opportunities from shippers of all sizes, to any sized carrier — even single owner-operators — who historically would never be able to participate in large enterprise customer freight bids. The most successful carriers build their business on a base of consistent freight, but those opportunities have been historically difficult to access for most carriers.
Shippers can also help support entrepreneurial carriers, ensuring that drivers have a good driving experience and can go from point A to point B in a timely manner.
Shippers should have visibility into their facility ratings so that they can get feedback on the carrier experience. By reviewing these ratings, shippers have pinpointed improvements to facilities in their network. This is critical for ensuring that we support carriers on the road — delays, lack of access to facilities, or poor personal interactions on site can all lead to burnout and low morale for drivers.
The carrier market is shifting, and small carriers are more empowered than ever. We like to believe that we’ve had a small part in the shifting carrier market by building a more sustainable, transparent and efficient market.
If carriers are successful and satisfied in their job, shippers benefit as well by accessing more experienced drivers offering better service.
Empowered carriers are making smart decisions for a more efficient and reliable network, and we must empower both carriers and shippers with better information, better execution and a better working environment.
Bill Driegert is the head of operations and co-founder of Uber Freight, a digital freight broker that uses a mobile app to match carriers with shippers. Uber Freight is a business unit of ride-hailing company Uber Technologies Inc.
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