It is easy to see the increased revenue that comes from switching carriers, but it is often overlooked how much money is involved. When you factor in the time spent searching for a new lease, attending orientation and other interruptions to your routine, the cost can be thousands.
If you compare revenue and costs, rather than just paying per mile, your net income may not be better with a different carrier. Search for carriers who haul the type of freight you want and operate in the area you are interested in. List as many carriers as you can.
Choose a name from the list and find a reason to not choose it. You might not be qualified for the job because of your lack of experience or if you don’t have a tractor that is newer.
Put it on your list of carriers you cannot eliminate. Follow these steps when you reach five:
Contact carriers directly. Request copies of their lease agreements. Make notes after reading each lease. List what you like, don’t like, and don’t know. If a fleet cannot or will not send an agreement, cross it off the list.
Call the carriers to ask about their lease. Make sure you fully understand and are satisfied with how cooperative they are. If you don’t get clear answers about the lease, you may run into the same problems later.
Visit the headquarters of each company if there are several. You may find it time-consuming and expensive, but you want to eliminate unnecessary risks when you design your business.
Interview key personnel. Request to visit each department that you would be dealing with as a lease owner-operator. Before your visit, prepare questions for each department – dispatch, safety, compliance, operations, and settlement. Do you think that they will still have time after you sign your lease to discuss these matters?
[ Related: Your rights under the trucking law]
Questions to ask prospective carriers
Compensation. Find out if fuel surcharges exist and if they’re included in the base pay or paid separately. Check if the fuel surcharges are nationwide or regional, and what miles per gallon rate is used to calculate the surcharge — 6 or 7 MPG is common. Confirm that the entire surcharge is passed on to the owner-operators.
Ask the carrier if it offers compensation for empty miles, pay for loading and unloading or reimbursement of lumper charges. Do they reimburse tolls? Do they pay fuel taxes or do they charge you back? When are settlements paid out?
Does the carrier impose a chargeback? Ask about the cost of liability insurance and fleet management systems, such as electronic tracking devices or logging devices.
The use of hourly pay for detention (the time spent waiting in the shipper’s and receiver’s locations) is becoming more common. Does the carrier pay detention? Is it guaranteed, regardless of whether the money is collected from the shipper/receiver or not?
Some carriers still use old practices, but many have moved to hourly pay plans with detention-pay systems. These are often billed at the end of one or two free-time hours.
Independent owner-operators operating under their own carrier authority can charge direct shippers up to $100 per hour for excessive detention.
Overdrive
Examining the average income plus fixed costs
ATBS
Clients in 2023
Detention rates were found to be $82.20 per hr
It would be appropriate to compensate wasted time on the docks.
Home Time. When assessing routes, miles and loads, ask if there are any routes or regions that could accommodate your desired home time. Ask about specialized jobs, such as heavy hauls or loads with high touch. Ask the carriers about routes and miles available, and ask their operators how many miles they are getting.
Culture. Some carriers want to control what you do and others will let you have plenty of freedom. Some companies offer limited benefits to owner operators, such as fuel networks or insurance assistance. Don’t ignore the possibilities of small carriers, especially if you want more operational freedom.
Business philosophy. Does your carrier’s business philosophy match yours? Ask if company drivers are dispatched ahead of owner-operators or if company drivers receive better loads. Even owner-operators working for the same company may receive significantly different pay. The difference can be up to 30 cents per kilometer. Would you be in the top tier of the carrier — or in the bottom tier?
It’s hard, but you can usually survive one switch per year. You could lose your business if you switch twice in a single year. If you enjoy the company culture, have a good working relationship with your manager and are able to get the pay and miles you need, you’re not going to be better off anywhere else.
[ Related: Understanding fixed and variable costs is key to success for owner-operator]