Dive Brief:
- Landstar System saw its owner-operator headcount drop by 2.5% in Q3, compared to the previous quarter, as market effects take their toll.
- The number of owner-operators hauling for the carrier decreased to 10,742 as of Sept. 24, slipping from 11,023 as of June 25, according to securities filings.
- “I would expect us to see it drop a little bit further in the fourth quarter of this year and then hopefully bottom out going into next year,” Joe Beacom, vice president and chief safety and operations officer, said on an October earnings call.
Dive Insight:
Landstar executives cited market and regulatory effects as factors in the headcount decline.
Reduced demand, or declining prices, and delays in getting used trucks repaired contributed to the decrease, Beacom said.
He also noted around 360 owner-operators for Landstar were affected by AB5, California's landmark labor law. Many of those drivers will stay and not haul certain loads, or have started to relocate, and Landstar does not expect the law will affect its headcount further.
But spot market rates are down 20% YoY, creating complications, according to Jim Todd, vice president and chief financial officer. Owner-operators tend to look for loads that pay the most, and with declining rates, they’re not hauling as many loads, he said.
Still, Landstar executives suggested the position of their business is better off than competitors.
“Historically, Landstar spot market pricing trends month over prior year month often are less pronounced than the industry trends during both growth and contraction cycles,” President and CEO Jim Gattoni said. “We believe that has to do with the specialized non-routine nature of much of the freight we haul along with our drop-and-hook business.”
