Overdrive Magazine

June 2019

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8 | Overdrive | June 2019 Visit Senior Editor Todd Dills' CHANNEL 19 BLOG at OverdriveOnline.com/channel19 Write him at tdills@randallreilly.com Twitter: @channel19todd I spoke with relatively new inde- pendent owner-operator Isaac Ho in late April. In a sense, his moves are emblematic of what many leased operators did as rates spiked in 2017 and into last year: He got his own car- rier authority. Of course, everything looked hunky-dory from a freight and rates perspective at the time. "I came out here with everyone else and was making good money, and then it really dropped through the oor," he recalls. " ere were all these people coming out and saying that it would be great for years and years and years" when it comes to rates and freight. "A lot of people went out and overextended and bought plenty of stu " based on rosy prognostication. "Luckily, I didn't go for that hype. I paid my truck o , and I was trying to buy my trailer" — he's still under a straight lease with his van, having hit roadblocks on a trailer purchase. Paying down the note on his 2015 Volvo took just more than a year a er getting his authority. He also began watching other costs closely. When we talked, Montgomery, Illinois-based Ho was biding his time in hopes that rates would get better for him via the mostly digital brokers' platforms (Uber Freight, J.B. Hunt 360) and other online load platforms he uses. "Last time we talked to a broker, he said something like, 'You're lucky you're in Chicago,' " Ho says. e broker cited rates out of the North- east at a paltry $1.10/$1.20 a mile, no more than what might be paid to a typical leased owner-operator who isn't saddled with the costs and other burdens of an independent opera- tion. Insurance is a particularly huge and growing expense for many new owner-operators with authority, given the in ux of so many and a limited number of insurance companies who even will consider a new business. "At least my truck's paid o ," Ho adds. It "cut my expenses in half. If things go terribly crazy, I can just park my truck and go drive for someone." HINDSIGHT AND FORESIGHT ON SPOT RATES CRASH Small- eet owner Monte Wiederhold and Old Time Express opera- tions manager and owner-op- erator Mark White were among truckers unsurprised by the eeting nature of the rates boom that resulted from lost productivity when the electronic logging man- date came into play at the end of 2017. White starkly casts the recent angst of so many one-truck busi- nesses working spot market freight: "Rates have come back to reality." As Wiederhold (pictured) told me in the May 13 edition of the Overdrive Radio podcast, the rates bonanza also corresponded with a huge buy of new trucks by eets large and small, including many new independents. at led to the situation of recent months as more competition has had its inevitable e ect. Find that podcast via Over- driveOnline.com/overdriveradio or in the May 13 post on the blog. Wiederhold's and White's ship- per-direct contracts bene ted from the run-up in spot rates, and their gains are holding relatively well, both say. "If 25 years have taught us any- thing, it's that this is all cyclical," adds White. While some carriers might be su ering from lower spot rates, his approximately 20-truck Hartsville, Tennessee-based eet is hiring since it "picked up nine new lanes for an existing customer" under contract and needs people to cover them. TOO MANY PLAYERS SPOIL THE RATES PARTY Contract rates for shipper-direct freight have held fairly well following the big run-up in rates around the ELD mandate. The same cannot be said about the spot market, based on the rates shown here from Truckstop.com. Adjusting for the rise in fuel over the same period, give or take some pennies per mile, rates were almost back where they started in April 2017. $3.25 $3.00 $2.75 $2.50 $2.25 $2.00 $1.75 Spot market paid rates Flatbed Reefer Dry Van April 2017 July 2017 Oct. 2017 Jan. 2018 July 2018 Oct. 2018 Jan. 2019 April 2018 April 2019

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