Choosing a Trucking Company (Part 2)
Probably the most controversial section of the book “Making Your Miles Count: Choosing a Trucking Company” is the proposed analysis of carrier contracts beginning in 1996 and ending in 2012. The origins (and restrictions) of the data is explained in the book and the charts expose significant industry changes.
1996 represents a time just as deregulation was finishing its final phase. Taking thirteen different Carrier contracts and charting them reveals a general outline of three classes or levels (A,B,C)of Carrier financial projections (figure 22). Though there is a little blurring of the class between A and B, class C was fairly obvious.
2012 represents a time after deregulation, actually well over a decade past deregulation. Another sample of Carrier contracts shows a much clearer separation of the three different “classes”. A closer analysis shows Class A has pulled itself up and ahead of the two others while the lowest has dropped in performance relative to 16 years before. This spread of earnings reflects how Carrier contracts in an open market react to the freedom of deregulation.
There may still be some advocates of regulation, but the net affect towards operators is relatively clear. Some have even greater opportunity for wealth accumulation while others have multiplied their poverty. Now, more than ever before it must remain clear, all Carrier contracts are NOT the same. Taking care in Choosing a Carrier is much more important today than it was twenty years ago.
Deregulation has greatly increased competition and the net effect displays both good and bad outcomes. Some market niches/sectors have provided higher margins for their operators while other market niches/sectors have cut into operator profits.
The only way this can really happen in a free market is when the lower margin niches/sectors benefit from ignorant or uneducated operators. The assumption that all contracts are basically the same justifies uninformed drivers to take the plunge into the operator market. False assumptions (or unrealistic expectations) are one of the many reasons failure (and turnover) occurs in the operator industry
The phenomena displayed would not be unique to the trucking industry. Any industry that would go the deregulation route would experience a spread of results. Some would produce an increase of earnings while others would fall to new lows.
It must be understood that Lease operator contracts are presented in a supply demand market. Fr example, if you are in an area where there is an over-supply of operators the rates will have downward pressure. If you work/live in an area where there is a high demand (but little supply) contracts will be much more generous.
Research and education is more important today than ever before in the lease/owner operator industry. I’d like to thank the people at Over the Road Magazine for their continual commitment to the industries success.
