You'd move to save $1000 on base plates? C'mon GMAN :shock:

 

No, but perhaps for $1,100. :wink: I would question those numbers unless they were purchased through a carrier. Some will add several hundred dollars to the cost if they buy them for the lease or owner operator. Illinois seems to be the highest, or at least I thought they were. If these numbers are correct, then California is higher than any other state, as far as I can tell. :shock:

 

Boneebone, the figures you quote may have been what you paid, but they are not necessarily the norm. You made very specific statements about what owner operators pay or don't have to pay when leased to a carrier as compared to someone running their own authority. When you make specific statements and those are incorrect, you should expect those who know better to take exception. And just so you know, not everyone pays $8-9,000 for cargo and liability insurance. Some of us pay less, although others can pay more. A friend of mine just applied for his authority and I believe he told me that he is paying over $6,000 including collision or comprehensive. Those with little or no experience could pay a higher rate. He has a number of years experience but has never ran his authority. His rates will likely go down as long if he doesn't have any accidents or major claims. He will be getting his own base plates after paying for his own plates while leased to a carrier. I believe he told me that he will pay about $1,500 for his base plates. He lives in Virginia. Some costs can vary from state to state, where you run and where you base your truck.

Most of the higher paying carriers do not pay the base plates for their owner operators. They may advance the money, but will take a flat rate out of each settlement check until they are reimbursed plus interest.

It does cost more to run your own authority. Most of the higher cost is associated with cargo and liability insurance. Those costs can be more than offset with greater profits. Let's just say that your monthly gross while leased to a carrier is $10,000 and you receive 75% of the rate. If you run your authority you should automatically give yourself a $2,500 monthly raise. Even if you pay $750/month (9000/12=$750) in insurance premiums, you will still have $1,750 more in monthly income for the same number of miles. It comes down to how much you want to do and your level of expertise. There are additional responsibilities when you run your own authority. There are no guarantees. When you lease to a carrier you are actually paying for their cargo and liability insurance by being paid a smaller percentage. When you run your authority you have all the responsibilities and receive all the profit. When you lease to a carrier you receive a smaller percentage or mileage pay instead of all the profit.

 

Not necessarily! Cause, that 75% is from the 100%(customer freight), and those 100%, from the broker, could be in reality, even less than that!

I've been with my current company, for a long time, and i know people, and people know me!
We are very small trucking division, for a very large outfit!
Last year, I've called to one of the guys "in charge", and asked him, if that would make sense to me, to get my own #, and haul for them thru brokerage
department.

After talking to him, I've come to conclusion, that I'd haul for-may be, a bit more money, more expenses, and more headache! :roll:

 

Viewed from the other end of the value chain, would it be possible to come up with a ballpark percentage range of how much more one can make as an o/o leased to a carrier vis-a-vis a company driver who, for arguments' sake, runs the same number of miles as the former ?

 

That's a tricky question!
Cause our company drivers, run on mileage, and can't "choose and pick"!
And if % paid O/O, making his choices solely on a amount of miles, or gross, that of course, will reduce his per mile average.
But just a ball park figure, I'd say about 20 grand extra! :roll:

 

It would be difficult to come up with a percentage of how much more you could earn being independent than leasing to a carrier. There are so many variables. The numbers I noted above made the assumption that you could find loads equal in pay or better than if you leased to the same carrier. Those numbers are realistic. You should be able to do much better with your authority than leased. However, running your own authority is not a guarantee that you will make more than if you leased to a good carrier who has higher paying loads. However, the OPPORTUNITY is there if you only take full advantage of it. Your income will be most limited if you lease to a carrier who pays a low mileage rate. It will be better if you find a carrier who pays percentage and has good paying loads. It can be best if you run your authority and either find your own shippers or brokers who have good paying freight. Even after paying the additional insurance, I do much better running my own authority than I did leasing to a carrier. When you run your authority you are the one who must decide what you haul, where you go and for what rate. You can choose to haul cheap freight or find the better paying ones. To cite an example, this week I was offered loads from about $1.30 to over $4/mile. That is a very broad range. I most likely would not have been offered the higher end loads had I been leased to a major carrier. In any case, I would probably only have earned 75% of those rates. Most carriers broker some of their loads. They don't always only haul freight from their own shippers. Now, you can choose to haul the first loads which come along and either go broke or make less than you could at a good percentage carrier. The choice is yours. I don't sit on my duff waiting for the telephone to ring, although I do receive a lot of calls. It takes time to build a business. Mistakes will be made. I have a systematic way in which I do business. It works for me.

I know owner operators who have been leased to carriers for a number of years and could not be happier. A friend of mine used to run his own authority and had about 16 trucks. He got tired of dealing with drivers, sold all of his equipment, except for what he drives, and leased to another carrier. He could not be happier. He makes about $80M/yr and takes time off when he wants. He prefers not having the added pressure. He works on percentage, by the way. Most percentage carriers are non-forced dispatch.

 

GMAN, my query was more about the difference in income between a company driver and an o/o leased to a carrier. While being an independant is at the high end of the value chain, for a newbie like me, I have to first try and figure out whether or not to take the first step, which is to get leased with a carrier ( not lease purchase, mind you ) as an o/o.

In order to do that I'm trying to determine whether the risks ar commensurate with the incremental benefits, or would the incremental benefits be marginal when compared to what I would get to take home as a company driver. Your thoughts on this issue would be of immense interest to me.

 

Is it possible to be an independant carrier, but carry only Company X's loads as if one were an o/o leased with that company ? And, from time to time, haul for different such companies....say, for eg, 1 week with company x, the next week with company y, the following week back with company x, and so on ? By company, I'm referring to companies like Crete or Superior or Knight, for eg.

 

I am sorry that I misunderstood, Graymist. I know you would like a concise answer, but there are still some variables. You can earn a good living as a company driver. The nice thing about being a company driver is that you can forget about the business when you go home. If you own the truck, there always seems to be something which needs to be done. On the other hand, the opportunity exists to earn more as an owner operator. Notice I said the opportunity exists? I have seen owner operators do well and others lose their shirts. If you want to become a successful owner operator, you MUST treat it as a business. Start by learning all you can about how the industry works while you are still a company driver. You won't know it all by driving a truck for someone else, but it can be a great learning experience. If you own the truck, that means that it is your responsibility to see that all maintenance is performed as needed and to pay for all expenses. It isn't cheap running a truck. The key is finding the right carrier. Personally, I could not imagine leasing to most of the mileage carriers. The rates are simply too low. However, they don't seem to have a problem finding people to lease to them. In most cases, you will earn more money leasing to a carrier who pays percentage. The majority of percentage carriers don't have forced dispatch. That gives you the opportunity to find the better paying loads. Most carriers have areas they run which have better paying freight than other areas. It takes time to learn their system and where the best freight is running. With a mileage carrier, it really doesn't matter where you run since you are paid the same rate regardless.

There are some owner operators who do well running with a percentage carrier and others who fail miserably. You can't always run only where you want to go. You need to follow the freight. That is where some owner operators get into trouble. They want to see a particular area of the country, so they take a cheap load to that area, then get stuck because freight is slow or rates are cheap. When you run on percentage you absolutely MUST have good rates. Good rates come from good freight areas.

A driver is an employee. A owner operator is a businessman. With proper planning and hard work, you should do much better as an owner operator than a company driver. The percentages and income will differ according to the segment of the industry you are involved and experience. There are company drivers who earn from $80-120M or more. Those are not the norm, but those positions do exist. There are owner operators who only net $40M or less. Those are two extremes. I don't know the average income for all drivers, but I would guess somewhere around $40-60M, on average. I would guess the average net for most owner operators would lie somewhere between $50-80M. Again, there are exceptions to every case.

I keep going back to treating this as a business. Some people are better managers than others. You can have 3 people who are owner operators and leased to the same carrier and each will have a different net. One final note. They type of freight you haul can significantly impact your income.