When we surveyed readers this time last year and into early 2022 about income expectations for the new year, the majority of owner-operators were overall optimistic about their prospects, with 36% expecting income to come in better in 2022 and another nearly 30% looking at likely more of the same, after a decidedly good 2021.
Yet it didn't take long for cost pressures to explode with the Russian invasion of Ukraine and the concurrent fuel-price spike and plenty other inflationary pressures continuing to mount: Equipment, maintenance, parts, insurance, every cost imaginable has been up throughout the year, just as those cost pressures and other factors have led to a kind of "back to normal" demand environment post-COVID.
The hay that could be made of the big spillover to the spot market of freight of all kinds during the height of COVID's scrambling of supply chain networks appeared to evaporate by mid-year, when ATBS reported its semi-annual benchmarking numbers for owner-operator clients showing some continued strength for contract rates among leased clientele, but with all revenue gains being driven by increased fuel surcharges -- that is, entirely offset by costs on the average.
Not to say that an owner-operator with a close focus on fuel efficiency couldn't still reap the rewards of any improvement in fuel mileage, of course, particularly given the sizable revenue to be gained from fuel surcharges. On average, though, net income was taking what amounted to about a $1,000 annual hit, across leased and independent segments, according to ATBS. For independents, the pain was three times that with spot market declines.
[Related: How Steve Kron took his 2001 International above 10 mpg]
Furthermore, more recently those hoping for seasonal spot-rates strength ahead of the current holiday season didn't see it materialize, as emphasized week to week the last month and more in Truckstop.com and FTR Transportation Intelligence's weekly spot market update. The latest snapshot, out just yesterday, charted further decline in rates in most segments, even after the previous week's big post-Thanksgiving jump in load-post volume (a typical pattern after the holiday).
The big Demand (load posts on Truckstop) and Supply (truck posts) declines make sense given the huge rise in the post-Thanksgiving week, yet the spot rates picture showed van and reefer rates both tracking below the five-year average for the week. Flatbed rates fell on average for the week but showed continued strength relative to van and reefer. Flatbed rates were still above the five-year average, yet the gain is wiped out by high fuel costs.
