The Long View
by Jim Park
Ten years is an eternity in an industry that measures time in three-month intervals. Quarterly reporting is everything to the business community, and next quarter had better be an improvement over the last one. Measuring profits and losses quarter-by-quarter is a way of life in manufacturing, but that time frame is no way to plan a career. Owning a truck is a long-term commitment: five years for a new one, typically, and 2-4 years for a used truck. Either way, you don’t wade in one month and just walk away the next if the numbers turn against you.
In planning a business, you need to know where you want – and expect – to be at a certain point in time. Those goals are how you measure success, and predict the various stages and cycles of the business. But before you go into a business venture, continue with an existing business, or lay plans for expansion, there are a few things you need to know, and many more to take into consideration.
Over the next couple of months, we’ll be looking at some of the factors that will affect trucking’s future, focusing on how owner-operators and drivers will fare. This, the first installment, looks at where the steering-wheel crowd is today. What you’re worrying about, where you see trucking going, what are your 10-year plans, and what strategies do you use for planning for the future.
This isn’t a poll to detect trends, just the thoughts of a few drivers with some interesting things to say, stuff that may get you thinking about your own position.
Where We’re At Now
Called upon to sum up the state of the driver population today, in a few words I’d have to say owner-ops are blithely optimistic, while company drivers are disenchanted generally, with some leaning toward suspicious and resentful. Like shipwrecked castaways awaiting a plume of smoke on the horizon, owner-ops see their continued existence as inevitable, but few seem to be taking proactive steps to ensure their own survival. Company drivers see that trucking is having a good time of it now, with rates more or less firm and profitable, but they don’t see themselves sharing the spoils. Esprit de corps is in short supply, and they find the regulatory burden becoming more of a challenge to bear, with little reward for the additional strain.
Wayne O’Leary, a 51-year-old, 30-year owner-op from Nova Scotia, is just starting to look for his next and probably last truck. He says the last couple of years have been pretty good as far as rates and demand for service go. He hauls a flatdeck and has seen a steady increase in the number of machinery loads moving around eastern Canada.
O’Leary says he’d like to get in under the EPA ‘07 wire to avoid paying the premium price for the new engines, and hopes he can get eight years out of the next truck.
“I’d rather not have to buy another one before I retire,” he says. “I’d like to get the next one paid off and then slow down a little, easing into retirement.”
He’s got a bit of land in Nova Scotia with a small wood lot, and he believes the truck, the value of the land, and his savings will be sufficient to see him through.
Terry Cole is another veteran owner-op from southern Ontario. He too is spec’ing his next truck, but sees one more after that one in his future. He’s concerned about the $166,000 price tag for the truck he “wants,” and admits he’s likely going to have to look downmarket to keep the thing within the constraints of his budget.
“I’ve always had nice trucks, and I’ve got lots of equity [in the present truck], so trading up won’t be a problem, but I just can’t justify that cost based on what I’m making today,” he says. “I’ve no idea where the price of fuel is going, but I know it isn’t going to get any cheaper. If Iran goes ahead with its plans to develop enriched uranium and the U.S. applies sanctions, fuel is going to skyrocket. I don’t want to be tied to huge truck payments when the price of fuel goes through the roof.”
Several other owner-ops expressed similar concerns about rising costs, not just fuel, and said they’d be rethinking the purchase of another truck.
John Coleman of Richmond, B.C. told us he’s concerned about the confluence of rising costs and tighter regulatory controls (HOS, black boxes, border security) on his ability to earn enough to support the truck and his personal commitments.
“The rates are there now,” he says. “But if the economy slows down for whatever reason, I might not have enough work to keep me going.”
Where They Want To Be
Coleman is one of what is likely many drivers and owner-operators who are nearing retirement age – he’s 57 – but are in no position financially to retire.
“I’ve got some RRSPs, but nowhere near enough,” he says. “I’ve been the sole income earner in the family all along. My wife decided she wanted to stay home and raise the family, and in the early years, we could afford to do that, but having only my income didn’t leave us with much savings. She’s been working for the past 11 years, and frankly, most of our savings have come from her income. We started too late, and we’re not going to be skipping down the beach like that couple in the life insurance commercial.”
Coleman says his truck is three years old now, and while he’d like to get one more new one, the prospect of being locked into payments for another three years doesn’t excite him. He claims he’s pretty handy with a wrench, and should be able to keep an older truck going for a few years after it’s paid off.
Orville Arnold, 67, is a semi-retired container hauler living near Halifax, N.S. He remembers the good days. “We made good money up ‘til they deregulated. Back then, the company paid our on-road expenses. You don’t see that anymore.”
He’s on Canada Pension, now, but still works part-time for his previous employer, as well as doing other driving jobs to make ends meet. “When I went in to sign up for my Canada Pension, the guy at the pension office was asking what had happened to the contributions from truckers in the last few years. He said they were way down from what he can remember years ago.”
It’s not surprising that many drivers and owner-ops are down a little at the bank. O’Leary tells a story of a close relative, a 30-year driver who had inquired about hiring on with a major eastern Canadian carrier. “They offered him the same starting wage they give all their new hires – 26 cents a mile,” says O’Leary. “You can’t do anything more than live on that, and still it would be tough. But never mind that, imagine offering a guy with that kind of experience 26 cents a mile? He told ‘em no, and they eventually came back with a better offer, but to insult a guy with 30 years’ experience by starting him at a trainee’s wage? And they wonder why they have trouble hiring.”
A Newbie’s View
Not surprisingly, many of the company drivers I spoke to expressed an interest in someday owning a truck, with a few saying that they wanted to go all the way to independent status. The lure of someday owning a small business is alive and well in trucking, but when asked if they had formulated a plan and were ready to go shopping, only two said they had progressed that far.
Tim Shilling, a company driver from Moncton, said he’d been talking with two carriers in the area, though he works for another, about hiring on with his own truck.
“The picture they painted of life as an owner-op was realistic. They told me I’d never get rich at it and warned me that I should be careful how I spec the truck,” Shilling says.
Shilling has lingering doubts about the short-term prospects, citing fuel pricing as a significant concern. “That’ll probably keep me out for the time being,” he says. “I can’t see how fuel surcharges they’re paying around here can make up the difference.”
Shilling’s long-term view is a little less clear. He’s 34, and has three years’ experience, so he has a future in trucking. But he says his family has a hard time with his absence. “We can deal with a week or so away, but when it stretches out to more than 14 days, I get complaints from home,” he says. “That would be a limiting factor for me, especially when it comes to buying a truck. That would be a long time to be locked into an situation we couldn’t live with.”
He notes that the money he’s making isn’t what he was led to believe he’d make, and he certainly wasn’t prepared for the cost of living on the road.
“The job is alright for now,” he says. “And while I’m not really looking for anything else, if something came along in some other field, I’d look at it.”
He moved back to Moncton after getting married and starting a life in Toronto eight years ago. He had worked as a computer programmer before being let go in 2001. He took a retraining package and became a driver, then moved back East to be closer to his wife’s family in Fredericton.
“I wouldn’t call myself a trucker. I’m just a guy who drives a truck for a living,” he notes. “I’m not married to this business. If I can get what I want out of it, I’ll stay. If not, I’m done.”
While there are no guarantees in life except death and taxes, a life in trucking seems to come with fewer assurances than some other trades. There’s work there, and there always will be – within reason. But will the job offer the kind of long-term security some other industries offer? Not if you listen to the veterans. Any number of things could happen to trucking in the next ten years, so the future is anything but clear.
Check out the next installment of this series to see what could happen on a sector-by-sector basis. I can see the eyebrows being raised already.