WASHINGTON — New-entrant out-of-service (OOS) orders issued to carriers will surge to an all-time high in 2023, according to the latest government data, a trend that has mirrored the dramatic increase in new-carrier operating authorities issued since 2020.
The Federal Motor Carrier Safety Administration began keeping track of new-entrant OOS orders in 2012. Since then, after climbing to a record 24,363 in FY2022, such orders already topped that number as of June 30 in FY2023, with 25,955, according to FMCSA’s Motor Carrier Management Information System (MCMIS).
Data for the full fiscal year, which ended Sept. 30, will not be available until December. But OOS orders occurring in FY2023 likely surpassed 35,000, based on trends over the past eight quarters (see chart).
New-carrier entrants are defined by FMCSA as “a motor carrier not domiciled in Mexico that applies for a U.S. Department of Transportation identification number in order to initiate operations in interstate commerce.”
FMCSA initiates a safety audit within the first 18 months of a new-entrant carrier going into business. If the carrier fails or refuses the audit or cannot be reached to perform the audit, the agency issues an OOS order.
“A new entrant may not operate in interstate commerce on or after the effective date of the OOS order,” according to FMCSA regulations. In addition, “a new entrant that operates a [commercial motor vehicle] in violation of an OOS order is subject to federal fines and penalties.”
FMCSA was not immediately available to comment on the surge and its implications.
One explanation is that, because operating authorities increased to record levels over the past few years (made up mostly of single trucks or small fleets), new-entrant OOS orders would parallel the trend because the pool of potential OOS recipients has gone up as well.
Daniel Koors, an owner-operator and council member for CDL Drivers Unlimited, an advocacy group aimed at helping improve working conditions and lifestyles for commercial drivers, is not surprised that OOS orders are at a record high. He believes current economic conditions in the trucking sector are accelerating the trend.
“It’s simple — there’s not enough money in the market right now to maintain these new drivers,” Koors told FreightWaves. “Many are barely able to maintain their homes let alone their trucks.”
Koors said that in addition to maintenance costs, fuel costs and freight rates are working against new entrants.
“I would say a majority of the new entrants that have fallen out are the ones that started during the pandemic,” he said. “They don’t have the back-office support, they don’t have the capital, they jumped in when things were hot, and they didn’t set up the relationships needed to get them through this downturn.”
To the extent that the record new-entrant OOS orders might represent an overall decline in trucking capacity, it adds to evidence that a bursting “capacity bubble” looms, which could result in higher freight rates as the market attempts to readjust.
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