FMCSA grants common operating authority to many in 2020
The Federal Motor Carrier Safety Administration (FMCSA) granted common operating authority to almost 58,000 new motor carriers. That’s 36% more carriers than 2019. Most of these carriers were certified in the later half of the year. The record for monthly new authority registrations was broken every month from July to December. Much of this can be attributed to the pandemic forcing companies and carriers to change how they do business.
The upswing was largely prompted by a change in spot market conditions. Volumes and rates skyrocketed as the demand for goods rebounded from the spring shut-downs. Meanwhile, furloughs, reduced miles and lower driver pay forced larger companies to divert freight from leased owner-operators to company drivers. This helped them keep utilization as high as possible. The owner-operators displaced by this change turned to the spot market, which required them to apply for operating authority. It’s this shift in business that drives the rise in the FMCSA issuing new authority to so many operators.
Just as the pandemic pushed industries to rapidly adopt new work strategies like telecommuting, the trucking industry has had to adapt to new technologies and legal requirements. Improvements in digital platforms make it easier for third-party logistics companies and brokers to manage available capacity across small carriers. This should act as a buffer against changes in spot market conditions, keeping available trucks on the road as much as possible. Meanwhile, California’s AB 5 bill complicates the process of identifying owner-operators as independent contractors or employees. For most businesses, it makes sense to shift from leased carriers to small carriers. This puts the burden of categorizing employees on the carrier.