Recently we addressed the most frequent question asked on our weekly DAT iQ Live series: Is now a good time to buy a truck? This week, we asked a leading industry expert will weigh in with insights.
Todd Amen is President and Founder of American Truck Business Services and former Co-President and owner of Trans-Western Express. ATBS specializes in helping owner-operators manage their financial and compliance affairs through their Rumblestrip suite of products, which handles the “business of driving.” ATBS clients also produce the Independent Contractor Benchmarking (ICB) yearly report, which Todd shared on the recent Truckloads Carriers Association webinar.
By the numbers
According to Todd, “2020 was like a full truck economic cycle that takes four or five years, but happened in the space of just one year.” ATBS clients ended 2020 averaging 104,000 miles for the year, an increase of 3.2% year over year. All equipment types averaged $1.46/mile, excluding fuel surcharges, which was a 5.7% decrease – the equivalent of $0.09/mile lower.
One major trend in 2020 was the shift from owner-operators being 100% leased onto another fleet to running on their own authority as independent contractors (IC). ATBS calculates the costs of being an IC adds $0.48/mile (IFTA, permits, licenses, insurance, trailer and load fees) in expenses. In June 2020, spot rates took off, increasing by close to a $1.00/mile over a 6-month period. The average rate per mile for leased owner-operators in 2020 was $1.50/mile, but with spot rates averaging $2.11/mile in the second half of the year, many carriers decided to go independent.
With rates still up around $2.36/mile excl. FSC as we end the first quarter of 2021, the incentive to become an IC and/or remain one is high – as are the profits. In 2020, ATBS clients earned an average net income of close to $68,000 representing an 8% increase over the previous year.
Know what you’re getting into
One more time back to the original question. Yes, it’s a great time to buy a truck. It always is – provided you know what you’re doing, fully understand the business side of running a trucking business and have good partners to support you along the way.
Lastly, consider the advice from Todd Amen, who looks after the business affairs for more than 20,000 O/O’s: “Good times don’t last but people that manage for the downside do.”