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Owner-Operator Usage by Truckload Carriers Advantages of Using Owner-Operators Limited investment in equipment. The ability to meet peak demands without.

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Presentation on theme: "Owner-Operator Usage by Truckload Carriers Advantages of Using Owner-Operators Limited investment in equipment. The ability to meet peak demands without."— Presentation transcript:

1 Owner-Operator Usage by Truckload Carriers Advantages of Using Owner-Operators Limited investment in equipment. The ability to meet peak demands without surplus capacity at off-peak times of the year. An almost unlimited source of capacity. A way of coping with the driver shortage. Permits carriers to test alternative markets with­out a significant resource commitment. Avoidance of certain fixed expenses

2 Owner-Operator Usage by Truckload Carriers Disadvantages of Using Owner-Operators Lower level of company-owned asset utilization (from employing driver teams and related dispatching techniques) Reduced load matching capabilities and more empty mileage of company-owned vehicles Drivers typically are less productive, less reliable, and less safe than company drivers Higher insurance rates Lower levels of service provided to customers Firms with company drivers typically are more profitable

3 Owner-Operator Usage by Truckload Carriers Introduction Background Literature Methodology Results Conclusions Overview

4 Owner-Operator Usage by Truckload Carriers Past Predictions About Owner-Operators Continued Presence of O-O’s in the Industry Purpose of Study –Examine the role that owner-operators play in today’s trucking industry, –Assess whether or not firms can expect to prosper by incorporating owner-operators into their operations Introduction

5 Owner-Operator Usage by Truckload Carriers Congressional Support of Owner-Operators Previous Research Counter Trends Background Literature

6 Owner-Operator Usage by Truckload Carriers 1980 Motor Carrier Act The Motor Carrier Fuel Cost Equity Act of 2002 NAFTA Issues Congressional Support

7 Owner-Operator Usage by Truckload Carriers Corsi and Grimm (1987, 1989) Lane (1987) Legg and Larkin (1988) Rakowski (1989) Rakowski, Southern, and Jarrell (1993) Rakowski (1994) Harmatuk (1992) Allen and Liu (1994) McGinnis (1990) Murphy and Hall (1995) Previous Research

8 Owner-Operator Usage by Truckload Carriers Driver Shortage Landstar Johnson and Schneider (1990) Counter Trends

9 Owner-Operator Usage by Truckload Carriers Hypotheses Data Set Analytical Procedure Methodology

10 Owner-Operator Usage by Truckload Carriers H 1 : Use of owner-operators by truckload general freight carriers has not significantly decreased since 1989 (Corsi and Grimm) H 2 : Operating expenses of truckload carriers is not significantly different for firms that use owner-operators than for those that do not (Corsi and Grimm) H 3 : Profitability of truckload carriers is not significantly different for firms that use owner-operators than for those that do not (Corsi and Grimm) H 4 : Revenue per unit of truckload carriers is not significantly different for firms that use owner-operators than for those that do not (Harmatuck 1992; Allen and Liu 1994) Methodology

11 Owner-Operator Usage by Truckload Carriers TTS Blue Book Data Class I Carriers O-O Dependence Sample Size T-Tests in Excel Data Set

12 Owner-Operator Usage by Truckload Carriers Table 1 Average Percentage of Owner-Operator Use: YearUse of OO Observations

13 Owner-Operator Usage by Truckload Carriers Percentage Year Percentage Use of O-O:

14 Owner-Operator Usage by Truckload Carriers Owner-Operator Usage Less than 10%More than 90% Measure# of Obs Mean # of Obs Meanp-value Gross Rev , , Total Op Exp , , Net Op Inc1571 1, , Net Profit , Op Ratio Net Prft Mgn Rtn on Eqty

15 Owner-Operator Usage by Truckload Carriers Owner-Operator Usage Less than 10%More than 90% Measure# of ObsMean # of ObsMeanp-value Rev/Mile Rev/Ton Rev/Ton-Mile Exp/Mile Exp/Ton Exp/Ton-Mile

16 Owner-Operator Usage by Truckload Carriers Owner-Operator Usage Less than 10%More than 90% Measure# of ObsMean # of ObsMeanp-value Profit/Mile Profit/Ton Profit/Ton-Mile

17 Owner-Operator Usage by Truckload Carriers H 1 Use of owner-operators by truckload general freight carriers has not significantly decreased since REJECT H 2 : Operating expenses of truckload carriers is not significantly different for firms that use owner-operators than for those that do not. REJECT H 3 : Profitability of truckload carriers is not significantly different for firms that use owner-operators than for those that do not. REJECT H 4 : Revenue per unit of truckload carriers is not significantly different for firms that use owner-operators than for those that do not. Possibly Reject Results vs Hypotheses

18 Owner-Operator Usage by Truckload Carriers Supports prediction of Corsi and Grimm Firms using a high percentage of O-O’s appear to be at a competitive disadvantage Some Support of Harmatuck (1992) and Allen and Liu (1994) Conclusions


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