2024 has proven to be one of the most difficult years for trucking in recent memory. The question is… when will it be over?
In this article, we'll give a recap of the year and answer questions including:
The difficult market has certainly washed out some capacity, why haven’t we seen rates improve?
What are the latest trends with miles, rates, fuel costs, and maintenance?
Has IC pay hit the bottom?
What are other carriers seeing with turnover, rates, and what technology are they utilizing to cut litigation risk?
What's in store for the rest of 2024?
Interested in learning more? Check out our full Mid-Year Independent Contractor Benchmarks and Trends Webinar, where we give a more in-depth recap of how owner-operators have performed so far in 2024!
Table of Contents
Freight Rates
From May 2020 through April 2022, we saw one of the biggest increases in spot market
load volumes and rates in the history of trucking. However, in April 2022, while contract rates remained somewhat stable, spot market rates and load volumes began falling dramatically.
Here are some numbers to illustrate this shift in the market:
Peak - November of 2021
Loads: 240 loads per 1 truck looking for a load
Rates: $2.74 per mile (without fuel surcharge)
February 2023
Loads: 55 loads per 1 truck looking for a load
Rates: $1.80 per mile (without fuel surcharge)
September 2023
Loads: 60 loads per 1 truck looking for a load
Rates: $1.93 per mile (without fuel surcharge)
Today - September 2024
Loads: 60 loads per 1 truck looking for a load
Rates: $1.84 per mile (without fuel surcharge)
Both the amount of loads per truck and the rate per mile (net of the FSC) have remained stable over the past year. We also continue to see signs of the spot market building momentum towards better rates and load availability.
This didn’t come without pain. Those that remained in the spot market have likely seen cash reserves depleted due to increased fixed costs and a longer than normal difficult market.
Miles
Miles are up tremendously year over year. This was needed in order for drivers to stay in business during a prolonged difficult market. However, drivers running more miles have had a direct correlation to more capacity, which has likely extended the down spot market!
Overall, miles have dropped significantly over the past 20 years. In 2003, owner-operators averaged about 140,000 miles per year. At the minimum, in a booming freight market, it dropped to 85,000 miles per year. Today it is up to 93,000 per year. Some carriers think we are at the peak of miles now as truck driver’s work life balance.
Revenue
Owner-operator revenue per mile is down 8.1%, or 17 cents per mile on a year-over-year basis. A significant portion of that has come from the reduced cost of fuel resulting in a lower fuel surcharge. True rates have also fallen simultaneously.
ICs are working a lot harder to reach the revenue needed to remain in business. Due to the increase in miles, total revenue is only down 2% and we are starting to see signs of recovery.
Fuel
Fuel cost per mile is down 13% and continues to go down. This type of trend can be expected to continue throughout the year. Many ICs perceive this as a good thing but savvy drivers know they can take advantage of high fuel costs by making money off the fuel surcharge.
As freight rates have continued to decrease, we’ve seen owner-operators focus more on fuel mileage. Our average client is up to 7.11 MPG and we’ve seen increases in MPG across all segments. New technology on trucks and better driving habits can be attributed to why we’ve seen this increase.
Maintenance
Despite miles being up 7%, we saw a 0.6% decrease in maintenance costs. Generally speaking, when we see miles go up, we should also see maintenance go up at a similar rate.
We believe there are two main reasons for this. First, owner-operators have been able to upgrade their equipment more so than at any time in the last three years. Trucks are now plentiful and prices have gone down. Newer trucks mean lower maintenance costs.
Second, we often see deferred maintenance in a down market. When owner-operators are strapped for cash, they put off mechanical issues. This is a recipe for disaster because the No. 1 cause of owner-operator failure is a major mechanical issue and we’ve seen mechanical failures up overall.
The average IC is paying $1,000 per month for maintenance. This cost depends on the age of your truck, the routes you run, and the mileage you drive. You need a custom maintenance plan to make sure you are covered for the repair, the fixed costs when you are down, and your home bills while not generating revenue.
Fixed Costs
Fixed costs are up 3% or $1,771 year over year. Over the past few years, fixed cost averages have been a roller coaster. However, we seem to be back to normal levels for the first time since the pandemic as fixed costs increased accordingly with inflation.
Net Income
Overall, owner-operator net income is down .2% to $63,000. Dry van has hurt the worst but we’ve actually seen increases in reefer, flatbed, and independents.
Most of the damage to net income occurred last year and we are starting to see positive signs. For instance, June was up year over year.
The hungry drivers who have taken extra miles and focused on their fuel economy have started to see gains over the past few months. ATBS clients who are using our services effectively are averaging a net income of $86,215.
+1/-10
Incremental and small changes are the best thing you can continue to do today. The two charts above illustrate the top two things the average IC can do to dramatically increase their income, increase their revenue, and decrease their costs. Increasing your revenue could just mean one more load a month, which is illustrated above.
There are many ways to decrease your costs, but fuel is your biggest cost and the one you can control the most. Just one mpg better means taking home $8,000 or more in profit!
If you do one of the two things above, you’ll increase your net income by $150 a week or $8,000 per year. If you do both, you’ll take home nearly $300 more per week, or $15,000 a year.
It might not be possible to run 500 more miles a month or get one mpg better, but if you do a little bit of each, you’ll see drastic improvements to your net income.
Rest of 2024 Freight Outlook
Freight rates are expected to remain flat as carriers reject lower rates
Slowed spending through the election cycle as consumers and businesses deal with uncertainty
Falling used truck prices and lowered interest rates could create an opportunity for an equipment upgrade. This could lead to higher revenue generated and lower costs in maintenance and fuel
The best businesses and owner-operators are still doing well. The increased cost of fuel gives drivers the chance to improve fuel efficiency, run a little harder, and continue to succeed in trucking! The bottom line is that owner-operators control their own destiny, and they can make changes today to ensure profitability and success!