Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/649008
PULSE March 2016 | Overdrive | 5 By Max Heine Editorial director mheine@randallreilly.com As illustrated in last month's cover story, "The driver shortage alarm," inflation-adjusted income/ pay for owner-operators and drivers in trucking over the past 10 years has only just now rebounded from the Great Recession, an event precipitated in large part by those in the white-collar world of investment banking. While the economic pres- sures on trucking companies from the event were obvious and well-documented, the concurrent wild card has been regulation. As Carlisle put it: "If the government and regulators had sense, they would back off regulation for 10 years and leave the new regula- tion alone. If they did that and cut expenditures 10 percent a year for 10 years, the American economy and American dream could recover." Another frequent com- menter, posting as RC, re- sponded with his thoughts on regulation: "There is so much more regulation and push for electronic gadgets to mandate on us. … Basically, if you strip it all away, we do the same old job we've always done … I really don't see a need for all this new wave of gad- gets to follow and monitor us. If anything, it reduces efficiency. "Now if big company XYZ wants to use the lat- est and greatest technology in their trucks, that's their business. I really don't care. But leave the rest of us alone. Let us do things our way." W hen diesel dipped below $1 a gallon in late 1998, it was big news, even though the change was slight. Diesel prices continued to make news as they began an erratic, relentless climb to almost $5 in 2008. By then, the impact wasn't as great as it could have been due to the growing use of fuel surcharges in shippers' contracts with large carriers and, increasingly since then, with smaller ones, too. Now that surcharges are even more entrenched, the plunge to below $2 a gallon after about three years in the $4 range has generated relatively little notice among owner-operators leased to carriers big enough to command a surcharge. Senior Editor Todd Dills, reporting on page 6, notes a few who have seen their surcharge windfall dwindle. Consider an operator averag- ing 8 miles per gallon and receiving a sur- charge pegged to 6 mpg. The higher fuel costs go, the more he gets back as compensation for fuel. "We have certainly heard from a few that are missing the higher cost of fuel for this rea- son," says Todd Amen, president and CEO of ATBS, the na- tion's largest owner-operator financial services firm. Also, "The fuel surcharge adjusts a week in arrears, so drivers benefit from a higher fuel surcharge the prior week as they wait for the adjustment." The flip side is that when fuel prices eventually rise, especially if it's at a fast clip, owner-operators could get the short end of the stick. One other cash flow issue has worked in the favor of some owner-operators now that prices are so low, Amen notes. "A driver may have been only able to fill up half the tank because it was so expen- sive, so he was forced to stop more often. Now he can fuel up and run." Bigger fuel-price challenges face those operating in the spot market. Rates resulting from broker negotiations there are volatile enough load to load even when you don't directly account for the rise and fall of fuel prices, and even more complex when you do. As our Tomorrow's Trucker series in this issue makes clear, successful owner-operators are increasingly tapping into real- time data. In the case of spot market rates, for example, DAT and Truckstop.com, among other sources, can provide the kind of insight that helps you make tough calls on loads. Yes, it's extra work, but it beats the extra work of driving too far for too little money. Taming fuel prices $ 6 $ 5 $ 4 $ 3 $ 2 $ 1 Nationwide diesel prices Source: U.S. Energy Information Administration 1995 2000 2005 2010 2015 Fuel surcharges have largely smoothed out the impact of diesel price volatility, but not for all operators.