Owner-operators scrutinize bottom lines to avoid belly-up scenarios

| Tuesday, March 25, 2008

As diesel prices continue to soar above the $4 a gallon mark in at least 21 states, some owner-operators have decided to park their rigs at home and wait until economic conditions improve. Others are trying to figure their operating costs down to the penny in order to survive.

OOIDA Regulatory Affairs Specialist Joe Rajkovacz drove for more than 29 years before joining the Association full-time in 2006. He said he understands the hardships many truckers are facing right now just to stay afloat as diesel prices continue to rise and freight rates continue to drop.

“After the Carter recession, I went through some rough times myself as an owner-operator,” he said. “I sacrificed a lot, including time at home with my family, in order to make money and put food on the table. Weekends at home were a luxury, not an expectation during that time.”

Because of the economic climate in trucking right now, Rajkovacz said it’s important for owner-operators to know exactly what their operating costs are, streamline their expenses, and find ways to increase revenues.

“Owner-operators have to be in the mind-set that they are going to have to do a lot more work right now to survive,” he said. “They have to be willing to take control and do whatever it takes to make money.”

One of the ways Rajkovacz said he increased his revenues when freight rates were low was to find LTL freight when he had a “truckload” shipment that allowed adding more freight. Rajkovacz said he would pick up freight from various shippers, which in turn, helped his bottom line.

“Sure it was a lot more work for me, but it generated revenue, which I needed,” he said.

During certain months of the year, California is the hotbed for produce, but not during the winter months. Rajkovacz said freight rates should improve in California in late May as the demand for produce in the Central Valley picks up again. That could be an opportunity for flatbedders to make money, as well, since not all produce needs to be refrigerated during transit.

“Onions, potatoes and watermelons can all be hauled on a flatbed; they just need airflow,” he said.

Kip Hough, assistant supervisor in OOIDA’s Member Assistance Department, said his department has taken hundreds of phone calls recently from members who are trying to combat high diesel prices by cutting their operating expenses where they can and by running their businesses “smarter.”

Hough said it’s extremely important right now for truckers to figure out their operating costs. If the freight rates being offered aren’t going to pay what they need to run, they shouldn’t take the freight.

“If the freight rate doesn’t pay you to haul it, let it sit,” he said. “Owner-operators need to know exactly what it’s costing them before they accept a load.”

Of those responding to a recent Land Line Web poll on how often owner-operators figure their costs of operation, more than 43 percent said they figured their costs right before taking their most recent load, 25 percent said they figured their costs last week, and 17.3 percent admitted they have never “put a pen to it” and actually figured their costs.

“Owner-operators are in survival mode right now, and they have to take all of their operating expenses into account with fuel being the biggest expense right now,” Hough said.

He said some owner-operators are refusing to accept loads without a fuel surcharge, but before refusing to haul that load, Hough recommends that owner-operators do the math. He said some line-haul rates may be just as good as the rate truckers are being offered with the fuel surcharge.

He said another way to increase revenues is by developing direct relationships with shippers, instead of going through a broker.

“Developing a direct relationship with shippers, convincing them that they should take a chance on you versus someone else may be more work, but you get to keep 100 percent of what they are paying for the load,” Hough said.

– By Clarissa Kell-Holland, staff writer
clarissa_kell-holland@landlinemag.com

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