Small Fleets, Owner-Operators Still Struggle

This story appears in the Sept. 14 print edition of Transport Topics.

Owner-operators and small fleets haven’t seen any sign of a freight demand or price recovery, but those who survived said they have done it through hard work, perseverance and bold decisions such as expanding a fleet even as the recession hit.

“All that a lot of small-fleet owners and owner-operators do is whine about what they used to get paid and what they should get paid, but it’s a different world and a different time now,” Jeremy Gouge, operations manager and a partner in Iowa Motor Truck Transport Inc., Garner, Iowa, told Transport Topics. “We’ve survived by working harder than the next guy for the same money; we just put our heads down and kept our feet moving.”

David Owen, president of the National Association of Small Trucking Companies, Hendersonville, Tenn., said most of his members have survived, and new members have more than made up for those who left NASTC.

“We track tonnage, and those numbers have been down for five or six months — dramatically — and I know that there are a lot of drivers out there that don’t have jobs,” Owen told TT. “But our guys are fairly flexible; they’re good small businessmen and make decisions on the fly.”

Owen said he has seen data that fuel sales at truck stops are down 12% to 15% this year, compared with 2008, but his members have increased fuel purchases made through NASTC programs by 1.5 million gallons, to 18 million to date this year.

“They’re running miles and going, but we’ve also been fairly flat for freight growth,” Owen said. “So while they’re getting more miles, they were not earning as much per mile, while costs of operations were going up in most areas.”

Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, which says it has 160,000 members, said he believes the number of trucks run by owner-operators and small carriers has dropped 15% to 20% in this recession.

“Obviously, we saw a significant scaling back across the board, with those who may have been operating eight to 14 trucks now running one or two,” Spencer told TT. “We’ve see O-Os that had their own authority and trailers sell the trailer and go back to leasing to a company or even just parking the truck and going to work as a driver.”

Spencer said his members who worked for brokers were the most squeezed, with them “getting work from loads that have been double or even triple-booked.”

He said OOIDA members who have been dealing directly with shippers and those shippers “still had goods to move, they’ll be doing okay on those particular trips, but the rest of the story is that the economy has slowed down enough where they might get only one load a month instead of two.”

Spencer said many OOIDA members were “holding their breath, tightening their belt. The recovery won’t come back gangbusters. I just don’t see how it can.”

Gouge said that because Iowa Motor Truck Transport once was heavily into construction, the firm felt the recession as early as 2007, when the housing market started to collapse.

“What we did was to increase the number of our trucks, going up from 30 to 40 tractors,” he said. “As your margins drop, you have a certain amount of overhead that you have to maintain, so we countered the drop in margins by growing.”

Gouge said he has seen no im-provement in freight demand or any increases in payment per mile.

“We changed, finding the simplest way to survive was bending over backwards to do stuff we turned our noses away from two years ago,” he explained. “That was a good lesson, and I’ll never turn down profitable work again.”

Gary Roadhouse, general manager of United Motor Freight Inc., Seattle, also isn’t seeing any improvement in trucking. “In fact, it’s getting worse,” he told TT.

“The rates are going down, freight is going down and revenue is lower,” Roadhouse said. “Whoever in government who likes to say we’re recovering is wrong.”

He said the company has survived by diversifying.

“Brokers are extremely cheap now. We’re being offered a wide load for 80 cents a mile, probably a third of what we charged before,” Roadhouse said. “We now do container freight stations, warehousing, rigging, tie-down, specialized and super-heavy loads, so we do such a wide variety of work there is usually something going on.”

The United Motor Freight fleet consists of about 30 tractors and trailers and 37 container trucks — all run by owner-operators.

Roadhouse said he cut two or three unproductive owner-operators but otherwise has kept his entire staff — although July revenue was down 50% from last July.