Overdrive Magazine

September 2019

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22 | Overdrive | September 2019 Even with the downturn that's affected the freight market since late 2018, owner-operators saw a marked increase in net income per mile dur- ing the second quarter of 2019. That's according to averages from thousands of owner-operator clients tracked by ATBS, a financial services provider. Owner-operators netted 66 cents per mile from April to June, up from 60.3 cpm in the first three months. "The per-mile net is going up because miles are coming down, yet net is holding steady," said Todd Amen, ATBS president and CEO. The broader "benchmark data is decent despite the slowdown in trucking," he said. With widespread concern about the general economy, flatbed is the key sector to watch. "Flatbed leads us out of recessions and into recessions," Amen said. "Typically it's longer-term capital invest- ment that moves on flatbed. With it being off, it's a sign things are likely turning negative for other segments." With the second quarter's seasonal boost for construction starts, ATBS leased flatbed clients saw miles and income rise. Net income per mile went from 79.3 cents in the first quarter to 82 in the second. Net income rose from $16,549 to $17,997. If second-half results are the same as the first half, flatbedders will earn $69,000 in 2019. Second-quarter net income for other ATBS clients was $16,562 for dry van haulers, $14,807 for reefer haulers and $15,980 for independents in all applications. Comparing the first half of 2018 and 2019 for all owner-operators, Amen said, "with net income only off 2% or $25 a week, 2019 is still a really good year." That was also the main message from Mike Hosted, ATBS vice presi- dent of business development, during an Overdrive's Partners in Business seminar at the Great American Trucking Show in Dallas last month. "Last year was a complete anomaly," Hosted said. "This year is slow, but it's just as good as many past years." For operators in 2018, Amen said at the seminar, "it paid for me to be out running my own business under my own authority." Indeed, many leased operators made that change in 2016-2018, and the rate differential was sufficient to cover the extra costs and responsibilities of running inde- pendently. Now, that's often not the case, Amen said. In addition, liability insurance rates have skyrocketed, especially for new independents. The high demand of 2018 made it profitable to run load boards, where load-to-truck ratios were off the charts. Now, "You can't just run load boards to make money. There's too much capac- ity on there now," he said, though rates have dropped enough that they might rebound a bit this year. Another indicator of the market's earlier strength was cost control. For the first time in many years, owner- operators' average miles per gallon in 2018 receded from the prior year. "That means drivers didn't pay atten- tion to fuel costs," Amen said. "They were making enough money." Looking at the long-term owner- operator market, compensation has clearly improved. From 2003 to 2018, net income rose from $47,600 to almost $65,000. Though the spread would be much smaller if adjusted for inflation, the average annual miles driven – 139,000 in 2003, 100,000 in 2018 – show a strong increase in earnings per mile. B U S I N E S S BY MAX HEINE Partners in Business tip: Carry a notebook with your receipt envelope The Partners in Business program, produced by Overdrive and financial services provider ATBS, is sponsored by TBS Financial Services. A notebook or a log kept on your mobile device can be used to record expenses for which you cannot obtain a receipt, such as a truck wash at a coin-operated facility. Forward this record to your business services provider monthly with your other receipts to be deducted at tax time. You must track the date, location, amount and reason for each expense to meet IRS regulations. Max Heine Operators' per-mile income defies slowdown While owner-operator rates haven't suffered much from the slowing economy, flatbed freight demand might well decline in the near future, signaling more of a downturn, says ATBS.

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