The Importance of Auto Transport Owner-Operators
Auto transport owner-operators are a vital part of the industry. Heck, in any logistics-based industry, owner-operators are a crucial piece of the puzzle. Some operate as contractors for larger fleets, which helps them secure freight regularly. More, however, are simple mom-and-pop operations with a single truck, a single driver, and sometimes a person back at home doing dispatch work.
Whether they operate an open auto transport truck, an enclosed trailer, a flatbed, or a hotshot truck, they’re important. Fleets are as well, and we at American Auto Shipping work with both fleets and independent owner-operators to help us move our customers’ vehicles.
In the wake of a new bill in California that might reclassify independent owner-operators, we’re going to tell you just how important auto transport owner-operators are.
A brief overview of fleets vs. independent owner-operators
In a lot of logistics-related industries, fleets tend to be the norm. Big brand names such as Knight Transportation are all over this nation’s many, many roads and highways. Big fleets suck up more freight and make more as a result.
But many independent owner-operators are out there still, even though you may not know it. This is especially true in the car shipping industry, where independent owner-operators tend to be more common. There’s a few different reasons for this, but a lot of it has to do with how the industry is regulated and how freight is handled and moved.
The typical Joe who needs to ship his car doesn’t go straight to the carriers. They go through brokers, like us, who hire carriers on their behalf. This is typically how the auto transport process works, and it works because we force the carriers to compete, which keeps prices lower.
In other industries that move other types of goods, such as groceries, you don’t usually see this. Brokers aren’t uncommon in other industries, of course. They’re often given the more neutral term “freight forwarder,” but they’re brokers nonetheless. They just move different types of freight.
But in other industries fleets tend to have more control over their freight and contracts. For instance, a carrier fleet may haul furniture for a major furniture manufacturer, and that furniture manufacturer moves a good percentage of what they make through that one company.
The car shipping industry doesn’t really work like this. For regular folks who need to ship cars, there’s not one place they can go with, but hundreds. This alone makes independent owner-operators much more important.
The bill in California that’s putting owner-operators in jeopardy
The bill, known as AB-5, would bar motor carriers from contracting independent owner-operators as independent contractors to “perform tasks that are a part of the business’ core function.” Basically, a fleet like Knight would not be able to hire an independent hauler to handle some of its freight.
This is a very common practice across the nation. But California, apparently, sees an issue with how owner-operators are taking breaks and abiding by standing regulation. The state argues that owner-operators should be classified as full employees of a trucking company. This would mean they are required to take mandated breaks at regular intervals and both pay scales and taxes would have to be changed.
It’s a really convoluted and tricky situation. Part of it has to do with companies who lease trucks to operators with bad terms that essentially leave them as indentured servants. Which, to be fair, can be a problem for independent truckers. There’s also issues the other way, where employees of a fleet are classified as contractors to avoid certain pay and break requirements.
It’s messy and likely won’t be solved any time soon, but AB-5 would likely do more harm than good. Already, companies like Swift Transportation – one of the largest in the nation – is no longer working with independent owner-operators in the state of California. If more follow suit, it’s going to leave a lot of people who rely on freight from larger transport companies high and dry.
How this bill might impact the auto transport industry
Because of the nature of the industry, car shippers may not feel the effects of this bill like others. In fact, it could result in some owner-operators actually moving into an industry where they can actually be owner-operators.
Right now, there’s not a lot of fleets in the car shipping industry. There’s a few, sure, and there are some pretty large ones as well. But unless I’m misinformed, the vast majority of transport fleets own their own trucks and don’t lease to other independents. They keep their freight in-house because there’s not an overabundance.
Not only that, but it’d be hard to lease freight gained from a broker to an independent owner-operator. The fleet would already have to have the truck driver on-call and in the area. Most of the time dispatchers are only keeping an eye on their own trucks, not trying to find others to handle freight they’ve booked. It just doesn’t work like that.
And it’s mainly because of the existence of us brokers. We don’t own our own trucks – we contract with other trucking companies to move our freight. For them to turn around and contract with a different company is kind of a violation of the terms and conditions of the dispatch.
At the same time, this could have long-ranging ramifications for larger fleets that operate as if their trucks are all independent contractors. Now, I’m not saying that they do – I don’t know because I’m not with a company that owns its own trucks. This is pure speculation.
But say that a carrier company has 25 trucks under its umbrella. If the contracts they have with the drivers state they’re not employees of the company, but independently-contracted shippers, this bill could definitely affect them.
The importance of auto transport owner-operators
Without independent owner-operators, fleets would dominate the industry. Large fleets have a lot more sway over brokers because they have so many trucks on so many routes they can refuse to take freight. Oftentimes carriers will refuse freight if the asking price is too low. Independent owner-operators often can take freight that fleets don’t want to take due to lower overhead.
The inverse can also be true. Sometimes, fleets can take freight at cheaper rates because they have more trucks, and when all of those are taken into account, profits are still made. But typically owner-operators will take freight at a slightly lower rate if it keeps their trucks filled.
This isn’t to say that operating an auto transport truck is cheap. But they definitely help us brokers when it comes to moving freight that might not be as attractive to fleets.
This is especially true for unpopular routes. Most fleets stick to major routes. One of the largest car shippers is based in Chicago, but all their trucks operate on major highways. They don’t service areas like Montana or Wyoming or Maine. Independents do.
Without auto transport owner-operators, the industry would be a lot different than it is now. Freight would be harder to move and prices would likely be higher as a result. The industry as we know it might not even exist without them. This bill in California may or may not impact independent trucks in the car shipping business, but even then, the industries it does effect will likely see drastic changes that will make it harder for people to work and make a living doing what they do now. And that’s a shame.