Rachel PremackThursday, July 21, 2022
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Back in 2018, when trucking was red-hot, Texas native Mike Dow got famous — if just for a moment. An article in The Washington Post featured his insights on why companies were struggling to retain truckers.
Dow was as confident as ever. That year, he and his brother founded their own trucking company. He told the Post reporter he was planning bringing in a serious salary: up to $120,000.
That turned out to be a modest estimate. In 2021 alone, Dow grossed up to $375,000, thanks in part to retail’s wild uptick. Retail sales grew by 14% in 2021, while it increased on average 3.7% annually from 2010 to 2019. “When you run your own business, it’s a 24-hour-a-day job,” Dow told FreightWaves. “It consumes your life.”
Business slowed down as the months went on — and not for the better. Spot rates for dry van, which is what Dow Brothers Transportation specialized in, declined by 24% from the beginning of the year to the week of July 17, according to data from load board Truckstop.com. Expenses, meanwhile, have soared. The break-even cost to run a truck in 2022 is $3.27 per mile, significantly up from $2.16 per mile last year.
That spelled the end for Dow Brothers Transportation. Dow and his brother ultimately shuttered their company, sold off their trucks, and got regular jobs earlier this year. Now Dow hauls construction equipment around the bustling Dallas area. He’s home every night for dinner.
Big, public trucking companies are reporting their second-quarter earnings. So far, it’s been gangbusters. But small trucking companies are suffering amid the collapse in spot rates, increase in diesel prices and ongoing challenges in finding equipment. Despite rates still being historically high, truckers say that they’re not high enough to deal with the inflated cost of everything else.
“Nobody has the same cost structure on anything,” Thom Albrecht, chief financial officer of transportation insurance agency Reliance Partners, told FreightWaves in June.
It’s sparking what one freight broker called trucking’s “Great Purge,” with small trucking companies going out of business at a historically high rate. Dry van companies like Dow’s are particularly at risk as the pandemic’s unhinged retail spend cools. Truckers that haul more specialized freight, like grain feed, are still chugging along.
FreightWaves spoke to Dow and two other longtime truckers to learn why 2022 has been the year that killed their businesses — and what they think it means for the industry.
Why the ‘Great Purge’ is hurting small truckers more than big ones
The three truck drivers all operated in different parts of North America and in different industries. But they shared one common fear: Big trucking companies are getting bigger, and it’s at the expense of the owner-operator.
“Those small mom and pops have to compete with the big boys,” Dow said. “They’re not always successful. There will always be a need for small companies, but those conglomerates are trying to push us out.”
Data enthusiasts might disagree with Dow’s assessment. Trucking has become increasingly dominated by smaller carriers since the pandemic. One particularly stunning number shows that. Avery Vise of FTR Transportation Intelligence previously told FreightWaves that almost 195
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