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Advantages of Using Owner-Operators Limited investment in equipment.

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.

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Advantages of Using Owner-Operators Limited investment in equipment.

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  1. 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. 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. Overview • Introduction • Background Literature • Methodology • Results • Conclusions

  4. 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. Background Literature Congressional Support of Owner-Operators Previous Research Counter Trends

  6. 1980 Motor Carrier Act The Motor Carrier Fuel Cost Equity Act of 2002 NAFTA Issues Congressional Support

  7. Previous Research 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)

  8. Driver Shortage Landstar Johnson and Schneider (1990) Counter Trends

  9. Hypotheses Data Set Analytical Procedure Methodology

  10. H1: Use of owner-operators by truckload general freight carriers has not significantly decreased since 1989 (Corsi and Grimm) H2: Operating expenses of truckload carriers is not significantly different for firms that use owner-operators than for those that do not (Corsi and Grimm) H3: Profitability of truckload carriers is not significantly different for firms that use owner-operators than for those that do not (Corsi and Grimm) H4: 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. TTS Blue Book Data Class I Carriers O-O Dependence Sample Size T-Tests in Excel Data Set

  12. Table 1 Average Percentage of Owner-Operator Use: 1989-1997 Year Use of OO Observations 1989 26.1 172 1990 24.7 216 1991 20.9 230 1992 20.9 221 1993 16.9 268 1994 15.9 291 1995 17.7 305 1996 13.5 283 1997 17.5 316

  13. Percentage Use of O-O: 1989-1997 35 30 Percentage 25 20 15 10 5 1992 1994 1996 1998 2000 1990 1988 Year

  14. H1 Use of owner-operators by truckload general freight carriers has not significantly decreased since 1989. REJECT H2: Operating expenses of truckload carriers is not significantly differentfor firms that use owner-operators than for those that do not. REJECT H3: Profitability of truckload carriers is not significantly different for firms that use owner-operators than for those that do not.REJECT H4: 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

  15. 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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