Owner-operators feel pain of rate decline due to pandemic; protest blocks freeway in Houston

In the past month, there has been a plethora of efforts to show appreciation for the nation’s drivers. Free lunches are great, but some of those drivers who operate independently are worried about how they’ll keep their businesses afloat when rates are tanking, insurance rates are rising and regulations continue to tighten.

Some owner-operators have become very selective of the loads they accept, with some parking their trucks until rates improve. Others are working but are complaining and attempting to make their voices heard via social media and other avenues. In Houston, 75 truckers were issued misdemeanor citations for impeding traffic on Houston’s East Loop Freeway on April 20. Another person was arrested and charged with inciting a riot and obstructing a highway. Both charges are misdemeanors, according to Houston Police Chief Art Acevedo.

“Everyone that was blocking the highway in protest has been cited with a Class C misdemeanor,” Acevedo said in a media briefing following the incident. “These are independent drivers protesting nonpayment by companies that have hired them to move [freight]. We’ve explained to them that this is an ongoing problem, and this is no way to fix that problem by engaging in illegal activity.”

Acevedo stressed that there is a “distinct difference between protected First Amendment rights and illegal activity.” Blocking the flow of traffic on a freeway falls into the latter category.

No matter how they’re coping, truckers are feeling the pain of the COVID-19 economy. Unfortunately, it’s not going to get better any time soon. Rates that had begun to rise in March plummeted in April and are still falling as of this writing. According to DAT Trendlines, April 13-19 rates for van freight average 15 cents per mile less than the March average. The April average is $1.72 per mile. Flatbed fared worse, dropping 19 cents to a flat $2. Refrigerated dropped by 20 cents per mile to an average of $1.99 per mile. Rates for all three modes will likely continue falling for the remainder of the month.

However, rates are only one part of the data to be considered. In the van market, for example, the load-to-truck ratio was 0.9. Anything below 1.0 means there are fewer loads on the DAT load boards than there are trucks. Good loads are taken up almost as quickly as they are posted, leaving the loads with less-than-average rates to pick from.

It’s no secret that near-record buying of Class 8 trucks in late 2018 and early 2019 resulted in an overcapacity situation in the freight market. Throw in crashing oil prices, which actually traded at less than zero at one point, and the shutdown of oil fields, and the result is a large number of trucks looking for other freight to haul. Shut down shipping from the largest U.S. trading partner, China, and another group of truckers is looking for new freight. To all of this, add the closing of businesses all over the U.S. and the loss of freight those businesses would normally generate.

Large carriers are scrambling to keep trucks moving and to keep drivers busy so they don’t leave. Many carriers are hitting the spot market more than usual for loads to supplement those from their own customer base. It all adds up to not enough freight to go around.

Accusations of broker malfeasance are commonplace, but whether those claims have substance is sometimes questionable. Undoubtedly there are brokers who take advantage of their trucker clients, but brokerages are watching their revenue dwindle too, as shippers refuse to pay more in a market where supply exceeds demand.

In the case of the Houston protest, claims were made that brokers weren’t paying owner-operators, but it wasn’t clear whether that meant some were not paying at all for loads hauled or they were simply offering lower rates than they did prior to the COVID-19 restrictions. Acevedo announced that the department will look into allegations of fraud by brokers, but he was also clear that truckers who participate in further obstruction will have their equipment impounded. Additionally, Acevedo urged the drivers to work with the police department to find other locations for them to exercise their First Amendment rights.

“Theft of wages is inexcusable and a criminal offense,” the department tweeted following the event, noting that the department will be “initiating a criminal investigation into allegations of widespread theft of wages. We won’t tolerate exploitation of hard-working people, or unlawfully impeding the movement of traffic.”

In the meantime, owner-operator Amet Borrego has organized a GoFundMe account in an attempt to raise $15,000 for Stephany Ramirez, another owner-operator who was charged with inciting a riot and obstructing traffic as a result of the protest.

A DAT press release dated April 20 states that the last two weeks of April and first two weeks of May will be “crucial for small carriers and independent operators.” The release cautions of a significant impact to agricultural and food supply chains if rates become or remain too low to operate or even if trucking businesses don’t financially survive.

Ken Adamo, chief of analytics at DAT, warned of continued rate declines in an earlier interview with The Trucker, saying, “I’m starting to think we’ll see a steep drop-off.” Adamo encouraged owner-operators to be as knowledgeable as possible and to use technology, such as DAT load boards, to make sure they’re getting the latest information. Add to this some standard business advice: Accounting for every penny and making sound decisions becomes more critical in a tough market.

In the meantime, expect more grumbling — and possibly more protests — as independent truckers struggle to keep their businesses afloat in tough economic times. Truckers will continue to serve in the COVID-19 era, but will they survive economically? Time will tell.

Photo courtesy of Houston Police Department

Following a protest blocking Houston’s East Loop Freeway, Houston Police Chief Art Acevedo addressed the demonstrating truck drivers, advising them to protest in other ways than blocking city roadways. The drivers were cited for impeding traffic, but the police department has said it will investigate the drivers’ accusations of fraud by brokers.

Cliff Abbott

Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.