Should Owner Operators Welcome Reduced HOS?

Truck drivers are a hard working bunch. That raises a question. Are we working too hard for our own good? The new changes in the hours of service will cut our production. Drivers are complaining about having to take a 30 minute break before exceeding 8 hours of driving. We aren’t happy about only being able to work 70 hours a week-with no overtime. Industry organizations are complaining that profits will be lost. Are they wrong?

It was low freight rates that put many owner operators out of business in the last decade. The smartest and best positioned owner operators survived. We lost many good owner operators and even some fleet due to the low freight rates. A dip in freight tonnage gave shippers the upper hand in dictating rates. Companies were trapped between rising fuel costs and the low freight rates. Shippers while paying fuel surcharges did not want their overall freight rates to rise. So, as they paid higher fuel surcharges the actual freight rates went down. That put trucking companies in a bind so much so, that the company that I was leased on with had to close its doors.

The two biggest economic factors in rates are supply and demand. We saw what a drop in demand did for freight rates. It hurt. Man, it hurt. Now, the government wants to lessen the supply of available truck miles. If you lessen the supply, rates, will rise, all else being equal. And we are complaining about it. Maybe we should take a step back and look at the longer view.

The trucking industry is made up of many companies. No one company can control freight rates for the entire industry. If shippers could control rates, they would want to lower them. So, the only true ways to raise freight rates are to raise demand through the increased tonnage that comes with an economic boom or to decrease supply. That could get done by either lowering the total supply of drivers, or by reducing the potential production of individual drivers. Remember that when OPEC wants to raise oil prices they reduce production.

I am a big sports fan. Major League Baseball has 162 games a year. The NFL has 16. The NFL is gaining popularity, while baseball struggles to maintain. Even within MLB look at the Red Sox and the Cubs. They have small venues. Tickets are harder to come by and that makes ticket prices higher.  The new ball parks average about 42,000 seats.  Take for instance the San Francisco Giants. They moved out of Candlestick Park at the end of the 1999 season. At the time its capacity for baseball was 58,000. They moved into Pac Bell park for the 2000 season. Seating Capacity is just under 42,000. They sell 99.3% of the seats and have among the highest average ticket price. They have increased ticket revenue after reducing capacity by over 25%.  Major League Baseball decreased the size of stadiums and increased revenue.

While it is our natural inclination as an industry to maximize productivity, we may be lowering our rates by doing that. Through the next rounds of HOS changes the government is reducing the supply of available driver miles. Instead of fighting against them, maybe we should sit back and think 2 or 3 steps ahead. The FMCSA just might be handing us a freight rate increase.

Comments (12)

Jeff Clark

Jeff Clark of Kewaunee, WI has been driving a truck for 24 years. He has been an owner operator for 11 years.

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Tony could you tell us how you really feel. I respect your opinion. The point of the blog is to point out the simple supply/demand effects on pricing- The more we drive the more the supply increases thus without a corresponding increase in demand rates will decrease. The opposite should also be true. I have been around this business my whole life. Trust me, I have a clue. I saw thousands of truckers go out of business when rates declined. That is what I fear most. And I found it pretty amazing and agreed with you 100 % on the Mexican trucks driving sown rates. Than they did not show up except for a very few. I am quite surprised that only 5 Mexican companies have gotten authority to run in the US-and I believe that those are very small 1-2 truck operations.

July 01, 2013 22:24:52 PM

I believe anyone who thinks the FMCSA HOS rules are good for American truckers have no clue as to what is really happening here. The goal of this government is redistribution of our wealth to other countries. The FMCSA will never stop passing more and more restrictive rules on the trucking industry, their jobs depend on it. The FMCSA recently concluded the pilot program to allow Mexican trucking companies to do business in the United States. As reported by Overdrive Magazine, five Mexican trucking companies now have full operating authority in the United States. With the hours of service rules as they are now I'm lucky to get two good paying loads a week. When they mandate the use of EOBR, and they will, I will be reduced to one long run and maybe one short low paying run per week. By restricting American truckers number of loads per week, it will open up more freight for the Mexican companies who will haul the loads cheaper than American companies will, putting the American truckers in direct competition with low rate Mexican companies. If we, the American truckers, wish to continue making even the modest profits we now make, we must abolish the FMCSA now. Before they do to the trucking industry what has been done to the steel industry, and almost every manufacturing industry in this country, and that is to destroy it.

July 01, 2013 19:05:13 PM


I confess that I don't know much about what you do (power only). I di see that Wal Mart (for examlple) uses several companies to pull their trailers. Power only could also apply to intermodal. We could all use a little more money. I don't think the 7/1 HOS changes will have much of an effect on rates. The actual hours cut are fairly minimal-more of an inconvenience than anything else.

June 08, 2013 6:54:45 AM

I hope that freight rates do come up for my Power Only business.

My 10 drivers at the agency can't hardly make a living pulling for 1.20 a mile when we have to hook to a van to do regular freight and i have to fight tooth and nail to be compensated for my deadhead to get to my usual power only loads that i do.

These brokers and these shippers are going to have to stop with the cheap rates. It's killing us out here.

June 07, 2013 21:40:01 PM

That is a cool idea Craig-about the FMCSA educating shippers/consignees. Chris, I definitely hear ya on the 0 in the log book vs. a restart. I think that alot of us have forgotten how to recap. There have been times when it was a close debate. If you have a 700-800 mile run over a weekend to bust it and do a restart or relax and just burn 5-6 hours a day.

June 01, 2013 16:22:42 PM

Sorry, I forgot to add that my previous post isn't grounded in much reality, but rather in the way I believe it should be. It is completely wrong for people to make promises they don't have to live up to without first checking to make sure it's doable with the person that has to make the delivery. The other side of that is we shouldn't have to make commitments knowing we will have to break laws to keep them just to stay in business. Just another crazy thought.

June 01, 2013 14:44:42 PM

I like your comments. I have a crazy thought regarding your comment about the customers not having requirements or penalties regarding the rules we live by. Since the FMCSA is making and implementing the rules, shouldn't they have at least 50% of the burden to educate the businesses in the U.S. regarding the new rules? If the IRS can reach out and touch every citizen, the FMCSA should be able to reach out and touch businesses. I think it is past time for the trucking industry to dictate our arrival times since we have to live up to those commitments rather than other people dictating arrival times that they don't have to live up to. Just a crazy idea.

June 01, 2013 14:39:13 PM

I've been running on the new HOS since the first of the year so I'm used to it before it becomes mandatory. The only big issue I've run into so far is the two mandatory midnight-5am periods required for a 34-hr reset. That being said, the way I run, if I'm off 24 hours for a one day period, I almost never need a restart. But if I do need a restart, and there are those occasions, it sometimes becomes a hassle getting a restart, keeping legal, and getting the product delivered by the time the customer demands. And it's not like "oh well, I got to restart, so I can't make it in until a certain time", in the bulk/tank industry, most of my customers are deliver whenever you get there. But there are those who if you don't show up in a certain window, you are missing out and could be waiting until x amount of products get unloaded first, or perhaps you can even mess up a whole production routine. It just depends on the customer really, and that is where the problem lies. There are no requirements or penalties on customers to respect the rules we have to live by.

June 01, 2013 11:52:23 AM

Less can be more in the long run. Trucking has always tried to do more ,more , more and the results have always been the same.

May 30, 2013 21:33:59 PM

I may be short sided and to simplistic but macro-economics of supply and demand should work here. The economy is picking up which translates to more demand. If the transportation supply is limited then that should equal higher rates. If it works that way, why wouldn't we want to run less and work fewer hours for more money?

May 30, 2013 11:30:30 AM

Thanks for the well thought out comment. Were there outside forces controlling rates and access in the SoCal ports? The individual productivity cuts won't raise the rates. Taken as a collective they could old joke-but a good one-Your business smart advice is spot on!

May 30, 2013 7:52:18 AM

Great blog Jeff, & an positive POV on our industry.
here are few things to consider:
'reduced productivity will NOT increase take home money. '
'reduced productivity WILL increase costs for peoples relying on transportation service'
'supply & demands markets do NOT react to individual capacity, they are SPOT markets.'
a business smart advice here:'be prepared for the new HOS, anderstands it's effects on YOUR operation, & comunicat your new costs of doing business with your costumers'.
a related joke here: ' 2 good friends camp in the Canadian Rockey's' in the middle of the night a black bear start tearing up the tent. one camper start putting his running shoes on, so his friend tell him "why?, you can't outrun a bear", so the other camper replay "i do not need to out run the bear, all i need is to outrun YOU"
same in business, be prepared to outrun your competition, so you can withstand a deep in rates & loads availability, so you can live to see a day when demands for your services will be on the rise...& then, only then you might choose to increase your rates.
the reduced individual capacity will increase rates ONLY for those negotiating their cost of doing business.
all one needs to do is take a hard look on what happened in southern Cal. and the ports, once new emissions took so many good O/O out of the service pool. port rates have been greatly reduced, and southern Cal. was flooded with trucking capacity. 3 years later, that market never really recovered.

May 30, 2013 7:00:26 AM