Fuel is painfully expensive. Freight rates are frustrating. But parking your truck will not fix either problem, and it may do more damage to your business than the market ever could.
Social media is buzzing again with talk of a nationwide trucking shutdown. The basic message is simple: Park the trucks, stop the freight and force the country to listen.
I understand why that message connects with people.
Fuel prices are brutal. Insurance, equipment, maintenance and nearly every other operating expense have increased. Freight rates have not consistently kept pace. Plenty of owner operators and small fleets are working harder while watching their margins disappear.
The frustration is legitimate. But frustration is not a business strategy.
One widely shared shutdown flyer even included the words “satire” and “fictional organization” in tiny print at the bottom. People were discussing whether they would participate without first verifying whether the organization behind it actually existed.
That should concern every business owner.
If you would not accept a load without knowing where it came from, where it is going and what it pays, why would you park your business without knowing who organized the shutdown, what the specific demands are or how success will be measured?
A Shutdown Is Not the Same as a Strike
A traditional strike usually involves employees withholding their labor from a common employer. They have organized leadership, defined demands, a negotiating process and some way to determine when an agreement has been reached.
That is not how trucking is structured.
The trucking industry includes company drivers, independent owner operators, leased operators, small fleets, large carriers, private fleets, dedicated fleets, specialized carriers, brokers and thousands of individual shippers. They do not answer to one organization. They do not share the same customers, expenses, contracts or financial condition.
If you own the truck, parking it is not really a strike against an employer. You are temporarily closing your own business while thousands of competitors remain open.
Your revenue stops immediately.
Your truck payment, insurance, permits, plates and household expenses do not.
The Freight Will Still Move
The United States freight market is enormous and highly adaptable. If a relatively small number of trucks park, shippers and brokers will find other carriers. Private fleets and dedicated operations will continue running. Some shipments will be rescheduled, consolidated or shifted to another transportation option.
Most of the freight will still move.
If enough trucks park to create a temporary capacity shortage, spot rates may increase in certain lanes. But that creates another problem for the shutdown. The carriers that continue operating will receive the better rates.
Parked operators will see those rates and begin returning to work. Capacity will come back into the market, and the temporary increase will disappear.
Everyone wants someone else to park so their own rates improve. Very few businesses can afford to remain parked once better freight becomes available.
The first truck back to work collects the premium. The last truck holding the line gets another truck payment without the revenue to make it.
Why Freight Rates Are Low
Here is the uncomfortable truth: Freight rates are primarily driven by freight demand and available truck capacity.
When more freight is available than trucks, shippers compete for capacity and rates rise. When too many trucks chase too little freight, carriers compete against one another and rates fall.
The market does not know what your truck payment is. It does not know how much your insurance increased. It does not know what you need to support your family.
It only sees the amount of freight and the number of trucks available to haul it.
A temporary shutdown does not permanently remove capacity. It merely postpones it. The trucks still exist, the operating authorities remain active, and their owners eventually need revenue.
Capacity truly leaves the market when carriers sell equipment, surrender their authority, move into another segment or go out of business.
That sounds cold, but it is how an oversupplied market corrects itself.
Ironically, an unsuccessful shutdown could accelerate that process. Financially vulnerable operators would lose revenue while their fixed costs continued. Some might not recover. The remaining carriers would then benefit from having less capacity in the market.
In other words, participating in a shutdown could help your competitors more than it helps you.
Fuel Prices Are a Separate Problem
High fuel prices make low freight rates considerably more painful, but freight rates and retail diesel prices are not controlled by the same market.
Freight rates are largely influenced by freight demand and truck capacity. Retail diesel prices are influenced by crude oil prices, global supply, refinery production, regional inventories, pipelines, terminals, taxes and distribution costs.
Parking a limited number of trucks for a day or two will not materially change any of those forces.
Fuel stations have already purchased their inventory based on wholesale market prices. They will not reduce diesel prices because some trucks stayed home.
If fuel tanker deliveries were interrupted, a shutdown could actually create local shortages and temporarily push prices higher.
Fuel is one of the largest expenses in trucking. It absolutely matters. But combining high fuel prices and low freight rates into one complaint does not make them one problem with one solution.
Trucking Is Easy to Enter and Hard to Understand
Another uncomfortable truth is that our industry makes it relatively easy for someone to buy a truck and enter the business without requiring that person to understand the business.
Knowing how to drive a truck is not the same as knowing how to operate a trucking company.
When freight is plentiful and rates are high, weak business practices can hide behind strong revenue. Almost everybody looks smart during the good part of the cycle.
When the market turns, the problems become visible:
- Equipment was purchased at the top of the market.
- Truck payments were based on unusually strong revenue.
- No maintenance reserve was established.
- Personal and business finances were mixed together.
- Fuel surcharge revenue was treated as profit.
- Deadhead and unpaid time were ignored.
- Rates were measured using loaded miles instead of total miles.
- The operator knew the rate per mile but not the cost per mile.
The downturn did not create every one of these problems. In many cases, it exposed problems that were already there.
The Best Defense Is Knowing Your Costs
We are not telling owner operators to haul cheap freight.
We are saying that a symbolic shutdown is no substitute for knowing your numbers and running a disciplined business.
Every owner operator should know:
- Total fixed costs per month
- Fuel cost per mile
- Maintenance and tire cost per mile
- Cost per total mile, including deadhead
- Weekly break-even revenue
- Minimum acceptable rate for a particular trip
- Cash needed for the next major repair
- How long the business can survive a downturn
Your true cost must include more than fuel and the truck payment. It should include insurance, permits, plates, tolls, maintenance, tires, accounting, communications, interest, depreciation and reasonable compensation for the person driving the truck.
If the business only works when the owner drives for free, the business does not work.
Operators also need to calculate revenue across every mile