Truck drivers have received a lot of media attention in recent weeks. During the COVID-19 pandemic, many people are realizing how essential drivers are to the nation’s economy, society’s way of life and even our survival. For a change, nice things are being said about truckers in the nontrucking media. Restaurants are finding ways to feed drivers whose trucks can’t fit in the drive-thru lanes, food trucks are serving truckers at rest areas, and ordinary people are giving free lunches to truckers.
However, drivers in one segment of the driving population say they are feeling decidedly unappreciated. Owner-operators, who depend largely upon loads they find on the spot market, are fed up with low freight rates.
Tensions came to a boiling point April 20 when an estimated 75 drivers staged a protest on Houston’s East Loop Freeway, a portion of Interstate 610. The drivers were cited for obstruction of traffic, and one was charged with inciting a riot.
A few days later, on April 24, a group of more than 100 drivers participated in a “slow roll” along several Los Angeles and San Bernardino County freeways. Several of these drivers were cited for obstruction of traffic. A similar protest took place in Phoenix.
More protests are scheduled for Friday, May 1, in the Los Angeles area, Chicago, Washington and elsewhere as disgruntled drivers call “mayday” on the traditional May Day.
A lot of owner-operators depend on loads found on the spot market for their business, since many aren’t large enough to swing their own contracts with customers. Most of those loads are posted by brokers, who arrange for the haul, track the shipment, bill the customer, pay the owner-operator and keep a percentage of the load revenue for their efforts.
After an initial rise in the first part of March, spot-market freight rates have steadily fallen. Part of the reason for this is simply supply and demand. Throughout 2018 and most of 2019, trucks sold at near-record levels, causing capacity — the supply of trucks available to haul loads — to increase dramatically. This increased supply of trucks pushed rates downward. Then, after the initial surge of products shipped as people locked down due to the COVID-19 pandemic, shipments declined. Shipments from overseas fell dramatically as China and other countries shut down manufacturing, followed by domestic manufacturers doing the same. The end result was a double whammy of fewer shipments (reduced demand) combined with higher capacity (increased supply).
Another cause of declining rates is the cost of diesel fuel. Spot rates usually include any fuel surcharge amounts, so when the cost of fuel drops, so do rates. The national average price for diesel fuel, reported on Monday, April 27, by the U.S. Energy Information Administration, was $2.44 per gallon. A year ago it was 73 cents higher.
As business owners and managers, most owner-operators understand how fluctuations in freight rates and price can impact their earning potential. However, they are frustrated that rates have dropped further than market forces dictate and that unscrupulous brokers are taking advantage by keeping too large a percentage of what the loads pay.
Rick Santiago said he has heard enough. The Carteret, New Jersey-based owner-operator is organizing May 1 protests in Chicago and Washington.
“Enough is enough,” he said in one of the numerous live videos he has posted on Facebook. The videos are wildly popular. One has more than 130,000 views and has been shared thousands of times on the social-media platform. And interest continues to grow.
“What I would like to push is for legislation to have these brokers regulated with a just percentage, a small percentage,” he said in an April 27 video. “There is no room for price gouging during a pandemic,” he said in another video the following day. “We understand that it’s supply and demand. We understand there’s less freight, but it doesn’t give any broker the right to monopolize the freight.”
OOIDA, the Owner Operator Independent Drivers Association, weighed in on April 28, with Media Spokesperson Norita Taylor telling The Trucker, “Brokers have always been adept at getting as much as possible from shippers and giving as little as possible to carriers, with or without a national crisis.”
That’s what brokers do. It can be a lucrative part of the trucking business — so much so that most larger carriers have opened a separate brokerage department of their own, at times with profits large enough to overcome a bad financial quarter by other segments of the company.
While there are several regulations that regulate broker conduct and brokers’ relationships with carriers, there are no regulations that specify how much money the broker can keep or how much they must pay an owner-operator.
“My only objective is to bring awareness and bring resolve, now, during a pandemic,” Santiago claimed in an April 28 video. “Our only objective is to be treated fair. In no way am I trying to say, ‘Eliminate brokers.’ Our problem is, during a pandemic, they have exposed themselves by price gouging.”
OOIDA’s Taylor noted, “Truckers are generous. They like helping in disasters, but they need to make money.”
Editor’s note: This story is the first installment of a three-part series. Check TheTrucker.com tomorrow for Part II about owner-operators’ issues and upcoming protests.
Photo Credit: Rebecca Doty from The Disrespected Trucker Facebook group of Crystal McIntosh and her husband’s truck as they head to Washington D.C. to take part in the mayday protest planned for May 1.