For good reason, owner-operators and small carriers are renowned as the trucking industry’s lifeblood. They account for a sizable share of the freight business, and the industry would be severely hampered without them.
According to the Federal Motor Carrier Safety Administration, there were 502,626 “very small” registered fleets – businesses involving one to six trucks – across the country as of December 2020. (FMCSA). This group accounted for 86 percent of all carriers and over 20 percent of total power units in the United States at the time.
The Owner-Operator Independent Drivers Association estimates that around 350,000 to 400,000 carriers in the “very small” category are actual owner-operators.
While owner-operators continue to move a sizable portion of America’s commodities, many of these important operators are feeling the uncertainty that comes with changing market conditions.
Carriers have had the market cornered for the previous two years, thanks to pandemic-fueled traffic surges and severely taxed capacity. However, there has been a definite market change in recent months as volumes balance out and spot rates continue to fall. At the same time, carriers are nonetheless feeling the pinch from increased diesel prices.
The Outbound Tender Rejection Index (OTRI) from SONAR represents the percentage of truck booking attempts that result in a rejection. Carriers will reject more load requests when demand exceeds supply. Tender rejections decrease as capacity increases.
Despite a minor increase during the last week owing to Memorial Day, OTRI is still 1,554 basis points below year-ago levels, suggesting that a return to double-digit percentages is improbable. This trend suggests that carriers are rejecting much fewer shipments than they were at this time last year, lending credence to the argument that the market is weakening.
OTRI contains information from all locations, markets, and equipment kinds. While some areas of the business, such as flatbed carriers, are now outperforming the broader market, bigger market trends can assist carriers in better positions to prepare for future disruptions in the coming weeks and months.
Carriers of all sizes are suffering the effects of these changes, but owner-operators are particularly vulnerable due to their inability to tolerate major financial losses and relative lack of expendable cash.
“Owner-operators operate their businesses in the same way as any other carrier, but they are more reliant on spot market prices,” PGT Trucking Chief Innovation Officer Paul Martin explained. “The spot market is currently falling, while other costs are rising.”
Current market adjustments may be difficult enough to put many owner-operators out of business. Joining larger fleets as independent contractors could give these drivers the support they need to weather volume fluctuations and rate decreases while also dealing with growing fuel and operating costs.
“By driving with PGT, owner-operators get to do what they love: they have the freedom to drive their trucks while knowing they’ll be taken care of even if the market swings.” “They have the security to continue operating their firm in the future,” Martin said. “I believe the most important thing we provide our owner-operators is security.”
PGT Trucking, a flatbed carrier, has an independent contractor program that allows owner-operators to maintain their trucks loaded and operating at the best possible rates, regardless of market conditions. When working with PGT, owner-operators earn 75% of linehaul revenue and 100% of fuel surcharges. This compensation structure, along with expanded freight access, typically allows these drivers to earn more than ever before, all while benefiting from a large carrier’s reputation and back-office support.
Partnering with PGT also provides owner-operators with cost-saving benefits such as economical insurance plans, maintenance reductions, and equipment rentals. According to OOIDA, the average owner-operator is still driving a truck from the 2008 model year, which adds to the value of these advantages. These benefits can help to reduce the expenses of aging equipment, such as extra maintenance and higher insurance rates due to a lack of new safety equipment.
PGT programs, for example, provide a highly important solution for owner-operators since, while dry van trailers are significantly more frequent in the entire market, the majority of owner-operators, according to OOIDA, pull flatbed or reefer trailers. Independent contractors who are used to driving flatbeds do not have to give up their preferred equipment type while teaming with PGT.
While independent contractors benefit greatly from collaborating with larger fleets, larger corporations benefit from adding these owner-operators to their teams as well. These drivers, on average, have greater experience and a better safety record than other drivers on the road.
According to an OOIDA research report, the average owner-operator drives 2.9 million miles over their career, the vast majority of which are without a Department of Transportation reportable accident.
Owner-operators not only tend to be safer drivers, but they also carry a wealth of experience with them. According to the group, the average owner-operator has been driving for more than 20 years, and 34% have served in the military.
When these highly qualified operators choose to work with larger organizations, they must consider what each company brings to the table, as well as their reputation and industry stability.
“PGT’s longevity speaks volumes.” “We’ve been in business for about 41 years,” Martin explained. “Some of the carriers that haven’t been in business as long may be riding the high, but will they be able to continue in business when it drops?” PGT can give the stability that owner-operators require in today’s market.”
PGT has a long history of working with independent contractors. The company was founded by an independent contractor, and today, owner-operators continue to account for a sizable share of the company’s driving power. PGT provides many customized programs for independent contractors, including competitive pay and incentives, 24/7 access to resources, and high-quality equipment.
“Our leadership understands the value of an independent contractor,” Martin added. “We work hard to establish those ties.”
Finally, PGT’s independent contractor programs are great for owner-operators who need a little more help to keep their wheels turning or grow their operations. PGT provides direction and assistance without requiring owners to give up complete autonomy, from back-office support to assisting operators in creating their own full-fledged fleets.
