Overdrive Magazine

September 2020

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16 | Overdrive | September 2020 His prediction of an "uncertain" 2020 proved true by an unimaginable degree, noted Todd Amen, whose Aug. 24 webinar recapped owner- operator performance into this summer. While it's unlikely trucking will see economic gridlock as severe as what happened in the spring and into June, the lingering pandemic means continued uncertainty, said Amen, president for owner-operator financial services provider ATBS. His presentation was an Overdrive's Partners in Business virtual session as part of Overdrive's GATS Week, a series of online programs initially planned for the Great American Trucking Show in Dallas. It was canceled due to coronavirus concerns. "I don't think another nationwide lockdown is going to happen," Amen said. "Most people I know are getting back into the world. They're out driving, buying things, going to stores, but COVID's still out there." Amen said continued coronavirus concerns will translate broadly into a lower gross domestic product for the balance of 2020. Owner-operators should manage for generally less freight, factoring in a high measure of uncertainty that could even produce surprising profits if things turn out better than expected. By late summer, larger carriers with longer-term freight contracts with shippers were having trouble keeping up with demand, sending freight to the spot market. As such, typical spot fluctuations were nowhere to be found. Following a big upswing in March and a falloff for independents in April and May, the spot market in late August was on a big upswing, as measured by the number of loads posted versus the number of trucks available. "In the last six weeks, we've gone from 16 to a high of 77" loads per truck, Amen said, adding that since the chart was produced, the high had climbed to 99. "Rates today overall in the spot market are about $2.33 per mile." Amen compared the volatility to experiencing "a three-year economic cycle in the last six weeks," as demand "plummeted and then reached back up to the top." When spot market rates rise, that draws truckers back to the boards and brokers. If too many do that, "we could be back to that 16 loads to a truck in a month," Amen said. Combining all segments tracked by ATBS, the 12-month period ending in June showed an average net income of $63,700 for all clients. Leased reefer and independent clients showed gains. Leased flatbedders took the biggest hit, reflecting the pandemic slowdowns and so-so conditions before it took hold, though their income still easily topped the other categories. Comparing July 2019-June 2020 to the 12 months ending in June 2019: • Independents gained $260, to $64,259. • Leased dry van owners were down $1,389, to $64,296. • Leased reefer haulers gained $1,308, to $57,530. • Leased flatbedders were down $4,851, to $68,712. Government stimulus to the economy to the tune of $3 trillion over the course of this period minimized losses, Amen said. It sustained freight flow to an extent over "what could have been a tremendous depression." Owner-operators are making more money on far fewer miles, he said, and for those who can "stick it out and manage your business, the long-term trend in net income is a good thing." Midyear checkup: Bright spots, uncertainty B U S I N E S S This graph shows ATBS' tracking of freight demand on Truckstop.com via its posted load-to-truck ratio. Analysts once held that 12 loads for every posted truck indicated a normal level of demand. Any level above that indicated favor for the negotiating carrier. Following the boom in rates in 2018, though, as more brokers, carriers' brokerages and shippers looked to spot markets to get freight covered, ATBS changed its interpretation of where the balance begins to tip to 30 loads per truck. BY TODD DILLS Freight imbalance shifts = 12X Freight imbalance shifts = 30X 90:1 80:1 70:1 60:1 50:1 40:1 30:1 20:1 10:1 0:0 Truckstop.com's broker load vs. truck index Aug 2020 JUNE 08 JUNE 09 JUNE 10 JUNE 11 JUNE 12 JUNE 13 JUNE 14 JUNE 15 JUNE 16 JUNE 17 JUNE 18 JUNE 19 JUNE 20

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