December 7, 2021

Top 4 challenges owner operators and carriers face to ‘keep on truckin’

Trucking has always played a critical role in our everyday lives, delivering goods ranging from the food we consume to the clothing we wear. But as businesses closed their doors and people sheltered at home during the COVID-19 pandemic, our nation began to truly realize the importance of commercial trucks and how crucial their ability to continue rolling down the nation’s highways really is. However, keeping trucks on the road isn’t as easy as it looks to an outsider. As many carriers and owner-operators can attest, the challenges they face regularly to ‘keep on truckin’ are many. So, what are these challenges and how can they be navigated?

#1 Government Regulations

Trucking companies have to comply with a variety of regulations from federal, state, and local authorities. These regulations center around hours-of-service (HOS), electronic logging devices (ELDs), minimum wage, and driver eligibility requirements.

  • HOS: Dictates the number of hours a truck driver may drive consecutively, including required 30-minute breaks, sleep provisions, as well as caveats pertaining to driving in adverse conditions and short-haul exceptions.
  • ELDs: All motor carriers and drivers who are required to keep records of duty service (RODS) under the hours-of-service (HOS) regulations must have ELDs in their trucks. An ELD will automatically track hours driven, whether the engine is running, miles driven, and much more.
  • Minimum Wage: Truck drivers are traditionally paid by the mile. This pay structure is legal, but carrier and owner-operators need to ensure that the total wages received in a week, when divided by 40 hours, fall within the federal minimum wage.
  • Driver Eligibility: Most states require drivers to obtain a Commercial Driver License (CDL) to operate any commercial vehicle. In addition, in order to drive those trucks across state lines, drivers must be at least 21 years of age.

There are also state-specific regulations, like California’s AB5, a law that redefines and limits the way businesses classify workers as independent contractors (as opposed to employees). This law can make it more challenging for California-based carriers to hire independent contractors as-needed. With two of the largest U.S. ports located in California (Los Angeles and Long Beach), this law has an impact on a large number of carriers.

Tracking and adhering to government relations is critical to keeping trucks on the road, however it’s a lot for carriers and owner-operators to do on top of all the other daily responsibilities associated with running a business.

#2 Fluctuating Fuel Prices

Fuel prices are always changing, and those ever-changing peaks and valleys are difficult to keep up with. If the supply of petroleum declines due to refinery issues or lagging imports, prices surge. This, in turn, forces carriers to either eat the cost, or raise their prices. Neither option is a great one, as loss in revenue is never a plus, and shippers don’t take kindly to frequent price increases.

This year has been particularly tough on the trucking industry as national average gas prices have continued to rise steadily. An October report from AAA found that gas prices across the U.S. hit their highest average levels since 2014.

In addition to fuel prices, trucking companies also struggle with fuel efficiency and sustainability. Carriers and owner-operators are facing more and more pressure each day to improve the fuel efficiency of their trucks and provide more environmentally friendly ways to deliver. As consumers become increasingly outspoken about how they want to receive their goods, carriers and owner-operators have the added burden of reinventing how they move goods to stay relevant and keep their shippers happy.

#3 Driver Shortage & Retention

A recent headline in the New York Times read, “​The Biggest Kink in America’s Supply Chain: Not Enough Truckers.” Long hours and uncomfortable working conditions are leading to a shortage of truck drivers, which is compounding shipping delays. Drivers are also feeling underpaid as wages aren’t keeping up with inflation. Historically, long-haul truck drivers have made up the difference by working longer hours, but due to tightening regulations and ELDs, this is no longer possible.

The American Trucking Association (ATA) estimates that the truck driver shortage will hit just over 80,000 drivers in 2021, a record high. This figure is the difference between the number of drivers currently in the market and the optimal number of drivers based on freight demand. There are a multitude of reasons for this driver shortage, such as:

  • Older workforce means more drivers retiring
  • Women make up less than 10% of the driving workforce
  • And, the federally-mandated minimum driving age of 21

The ATA estimates that the industry will need to recruit almost one million new drivers to replace retiring drivers, and address industry growth. That’s a lot of drivers! Clearly, carriers are facing this pain daily, and are tasked with not only increasing their investment in hiring methods, but also in keeping drivers happy so they commit for the long-haul.

#4 Cash Flow Woes

Like most businesses, a certain amount of cash flow is necessary to keep operations running smoothly. However, the waiting time for a carrier’s payment can be long, and that can have an impact on their growth and cash flow. Some carriers may opt to use freight factoring, a process in which the carrier sells their invoice to a factoring company who pays the full amount of the invoice, minus a small percentage. This can work in the short-term, but losing a percentage of one’s profit for every single load adds up quickly, leading to more revenue loss carriers would rather not experience.

Navigating Challenging Times

Clearly, carriers and owner operators have a lot on their plates. On top of running a business, they must navigate government regulations, fluctuating fuel prices, a looming driver shortage, and cashflow crunches. According to Ajesh Kapoor, Founder & CEO at SemiCab, “It’s just too much. More than 3,000 trucking companies were forced out of business in 2020. At a time when we can’t afford to lose a single truck on the road, that’s insane.” Smaller trucking companies that tend to rely on the spot freight market were particularly hard hit as, “Spot rates got to a point where they were just too low for anyone to operate and turn a profit.”

What carriers need today is a way to avoid the volatility of the market. Kapoor says that, “Technology solutions, like the SemiCab platform can help. Because we are able to aggregate demand and supply in an optimal way, we ensure our carriers generate predictable revenues at healthy profit margins every week of the year. For this reason, an increasing number of small and mid-size carriers are starting to dedicate their fleets to us. This gives them steady cash flow and the ability to focus on growing their businesses, versus scrambling to find loads on different load boards that may or may not be available. They are able to invest in new trucks, driver retention programs, and operational excellence that ensure they’ll be in business for the long-haul.”

To find out how SemiCab can help your business thrive, reach out for more info or set up a time to speak to one of our executives. Let us show you the power of community at work. Let us show you SemiCab.


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