Fighting Back
To help preserve the Independent Contractor (IC) model, a group of stakeholders has come together to create the TIE coalition. The purpose of the coalition is to educate policymakers on the value of the independent contractor model, identify successful independent contractors who can share their stories, and coordinate efforts amongst the companies, trade associations, and other participants. We are engaging Congress to ensure they understand the role the IC driver plays in the economy, their states, and also their districts. We are bringing in drivers to meet with members of Congress and share their stories as entrepreneurs and members of our communities.
We Need Your Help
Members of Congress want to hear from you! Contact your Member of Congress and let them know how the Independent Contractor model gives you the freedom to run your business as you see fit. Let them know that the proposed rule could have a devastating impact on your business and on the country’s supply chain.
What is the Owner Operator Model?
February 5, 2023
The trucking industry is massive and diverse, made up of different types of drivers specialized in operating various types of machinery and hauling a variety of loads.
One thing is clear though- truckers are an integral cog in the incredible machine that is the US economy, and part of that is due to the flexibility drivers have to adjust scheduling and other factors according to the demand of the markets they serve.
In this article we’ll focus primarily on owner operators and the role they play in supplementing the supply chain.
What is an Owner Operator?
An owner operator simply owns their truck and chooses the loads they want to haul. They do not work for a company or drive a truck owned by a company. This makes an owner operator an independent contractor.
Currently, there are around 3.5 million commercial driver’s license (CDL) holders in the United States. This figure doesn’t pertain solely to long haul drivers, but also includes delivery drivers, bus drivers, driving school instructors, and more.
Long haul drivers can be divided into two categories:
- For-Hire Carrier: This type of driver works directly with a company that has its own in-house fleet or they work “for hire” for a trucking company.
- Owner Operator: This type of driver can work for hire or as an independent contractor with their own business.
Statistics show that there are roughly 928,647 for-hire carriers in the US. Owner operators are included in this figure, selling their services and acting as business owner/driver.
What are the Different Ways in Which Owner-Operators Conduct Business?
The key here is flexibility. There are different ways owner operators provide services to shippers, based on the unique needs of the business and market demand. This is what makes them such an integral piece of the supply chain puzzle.
For instance, an owner operator might lease their vehicle or driving services to a motor carrier company. This is an attractive route for owner operators who may have trouble qualifying for owner operator insurance or possess a CDL driving license, but don’t have the vehicle or equipment themselves.
Another route owner operators take is to hold their own DOT motor carrier authority, which distinguishes them as a fully independent business. These drivers enjoy freedoms such as setting their own prices and schedules, but they’re also responsible for handling their own health insurance and business expenses.
There are also a number of ways owner operators can secure loads, whether it’s by working with a 3PL or motor carrier company, hiring a broker to do it for them, or by independently bidding on loads via load boards.
These are just examples of how an owner operator may function, but it highlights the flexibility that allows shippers to formulate a more efficient transportation plan while giving drivers more opportunities to shape their careers and make a better living on their terms.
Owner Operators and the Fluctuating Market
So where do owner operators stand in the truckload market? It all depends on supply and demand, which data collected over time has shown to be cyclical. When rates rise and the market is overwhelmed with capacity, truck drivers are relied upon to keep the supply chain moving without a hitch. Carriers need to hire more drivers, which makes owner operators a vital part of the system.
How Will Reclassification Impact Owner Operators?
The California Assembly Bill 5 (AB5) is being challenged, but threatens to overhaul the way independent truck drivers are classified in that state, specifically by making them employees of the companies they drive for.
This can impact livelihoods by reducing the amount of flexibility drivers have when it comes to providing services or equipment. At a national level, this can seriously affect how shippers work with drivers, causing possible disruptions to the economy.
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