In its annual Independent Contractor Benchmarking Conference (March 20, 2019), ATBS revealed 2018 trends and 2019 predictions, based on the information collected from 15,000+ fleet Owner-Operators.
2018 was a great year to be an owner-operator and a spectacular year for the trucking industry. Predictions for 2019 reveal a slower growth, yet a stable and even a strong year.
“It was a record year in many areas and a great year to be an owner-operator,” says Todd Amen, CEO of ATBS.
Based on the data collected last year, the average owner-operator annual net income in 2018 exceeded $65,000 which is an 8.6 percent increase over 2017. Furthermore, 15 percent of ATBS clients earned an average annual net income of more than $100,000.
The company’s annual benchmarking study highlights a list of predictions for 2019, including:
Freight and rates will be moderate through 2019.
There will be a move for some owner-operators returning to fleets, as spot markets suffer. As the industry bar has been raised significantly, “we won’t return to pre-2018 contract rates again”.
Net income will flatten out and maybe a bit smaller in 2019 for owner-operators.
Fleet lease purchase program will help those entering the owner-operator market to expand.
“This is going to be a year where fleets have to transition their thinking away from it’s all about revenue, to have to manage their costs. The average driver can save $2,500 by just slowing down a bit, managing their fuel economy, not idling as much and just focusing on that cost,” Amen added.
DAT’s 2019 Report on the trucking industry reveals similar findings – 2018 was a spectacular year for the trucking industry while 2019 will bring a slower growth.
2018 RETROSPECTIVE: A record year.
» A spectacular year. ATA (American Trucking Associations) reported that, through November, the total freight hauled by for-hire truck drivers was 7.2% more than the first 11 months of 2017.
» The most explosive freight rates on record. Last year’s surge in truckload demand led to record-high rates, as freight brokers and shippers had trouble securing capacity on a regular basis. For comparison, there were 161 million loads posted on the DAT Load Board in 2017. In 2018, there were 260 million.
» The busiest markets: Van Lane: Atlanta, GA to Lakeland, FL | Reefer Lane: San Francisco, CA to Ontario, CA | Flatbed Lane: Houston, TX to Lubbock, TX.
» ELD – the topic of the year. Articles featuring the mandate dominated the list of most-read stories. A lot of predictions and speculations have been made. Some of them came true. ELD lead to higher rates and fewer trucks available.
2019 OUTLOOK: Strong, but not 2018 strong.
» The trucking economy will remain in solid shape. At least the first six to eight months of the year, the trucking economy will remain in solid shape.
“2019 looks to be an OK year, but people will feel in our business that it is not a good year, because they’re used to the wonderful things that happened in 2017 and especially 2018,” remarked Transport Futures Principal and Economist Noel Perry
» Modest growth with an expected peak in June. With a new fleet of trucks and more driver-friendly operations, contract carriers will see a 3-5% rate increase in 2019. Expanded truckload capacity will likely cause spot market rates to stabilize or slip lower in 2019.
“Though truckload rates grew at record levels in 2018 and we project volume continuing to rise, it’s likely that 2019 won’t match what we’ve grown accustomed to. However, the forecast for the coming year isn’t all downward trending.”
» Return to normal. Based on economic factors and historical trends, industry experts project an inevitable slowdown in spot market freight in the first quarter of the year and a rebound in Q2 that peaks in June.
» Contracts climb. On the upside, demand remains solid despite a slowdown in energy and other key sectors. Economic growth and record-low unemployment should balance the turmoil around trade and the financial markets. In the contract market, carriers should be well-positioned to capture a bigger share of freight with rate increases in the 3-to-5% range. In 2018, fleets bought record numbers of trucks and made operations driver-friendly, adding capacity and market share that will serve them well in 2019.
» Slower, but stable. Spot market capacity will also expand in 2019, but the capacity increase adds to pressure on lowering the rates. As demand remains strong, spot market pricing is expected to stabilize in 2019, but at levels that are slightly below the record highs of 2018.
2019 positives: GDP Growth, Low unemployment, strong consumer spending.
2019 negatives: Declining oil prices, Slowdown in the pipeline, Slowdown in auto manufacturing & new home construction.
2019 unknowns: Trade and tariffs, Interest rates, Agriculture, Weather events.
5 Regulations to watch in 2019
1. ELD Mandate.
2. HOS Reform.
3. Minimum wage. Several states have new minimum wage requirements this year.
4. California laws. The state supreme court set criteria that define whether a leased-on owner-operator is an independent contractor or employee, plus FMCSA announced that carriers are exempt from the state’s meal and rest break requirements.
5. Drug Testing.