Since the peak of the COVID-19 supply chain crisis, prices for over-the-road trucking in the United States have fallen steadily for several years. The entire industry — from owner-operators to large public trucking companies — are waiting for the market to turn and enable more profitable operations.
At base, this requires either freight demand to increase or supply — particularly small trucking companies and owner-operators — to tighten (Exhibits 1 and 2). The current climate of economic uncertainty is lowering expectations of sustained demand growth. And high interest rates have been slowing important drivers of freight demand: home building, furniture, and industrial investment. E-commerce growth is largely net neutral or negative for commercial trucking, since home delivery vans typically replace large trucks delivering to stores.
Small truck fleets and owner-operators providing plenty of swing capacity
Trucking, particularly long-haul, is always a tough business. With fierce competition, margins are thin. Unlike other transportation modes, and despite being an asset-based business, the supply of capacity is widely dispersed: 23% of the 2.1 million semitrailer tractors are operated by carriers with less than five tractors. The biggest five fleets account for just 4% of the tractor fleet, even if they do control 10% of trailers.
The barriers to entry and exit for this sizeable share of capacity are low. During the pandemic, the number of new motor carrier certificates approved each year increased by 59% compared to 2019, to about 70,000 per year (Exhibit 3). While many small trucking firms are short-lived, the incentives are high to keep operating a tractor that’s already paid for, even at lower rates.
Supply did tighten somewhat in 2018-2019 with the implementation of electronic logging devices (ELDs) but that has not slowed new motor carriers entering the market. And driving may have become more attractive during the pandemic as employment slowed in comparable industries (such as oilfield services, construction) and supply chain congestion increased demand for drivers.
Truck owner-operators making money despite freight recession
Trucking is a well-paid profession, with the average owner-operator making $70,000 per year in net income, according to the American Transportation Research Institute (ATRI). While owner-operators are seeing lower pay in 2025 compared to 2021, driving 100,000 miles still earns an owner-operator about double what workers without a college degree make (per the Bureau of Labor Statistics). It continues to be a chance to start a business, be your own boss, and travel the country.
During 2021-2022, the new owner-operator segment of the market saw record cash flows and built a cash pile that continues to provide support. If that cash was used to pay off equipment debt, many owner-operators are operating at rolling costs of less than $0.80 per mile prior to paying themselves, according to the latest ATRI cost of trucking report (Exhibit 4). This is almost $1.00 below the May DAT.com spot rate of $1.72 (deadhead adjusted by 10% from $1.91) and implies that owner-operators may still have fight left in them.
Technology also has played a significant role in the growth of load boards like Uber Freight, which enable instant load booking for drivers and shippers. Active brokerages (based on broker operating authorities), increased by 79% from December 2016 to the freight peak of December 2022. Today, the number of active brokers is still 44% higher than in 2016, boosted by the continued survival of owner-operators.
Why low trucking rates will eventually lead to tighter capacity
Large and mid-sized motor carrier fleets face continuous competition from owner-operators and small carriers that have different economics and incentives. What it will take for this capacity to exit the market is an open question and an important one for the industry, as it waits for rates to increase. Until then, medium and large size for-hire carriers will continue to face tight margins and limited ability to price up even as costs rise.
Eventually, of course, as low rates continue, owner-operators will no longer be able to maintain excess cash, and today’s debt-free tractors will have to be retired and new ones financed. That will force some capacity out of the market and rates will rise once more. That said, any material increases in freight demand from nearshoring or reversal of trade policies could trigger an increase in demand that enables future-focused owner-operators to succeed through the next economic cycle.
The next article in this series will examine how shifts in owner-operator economics are prompting national carriers to rethink their approach to dedicated, specialty, and bulk trucking.