Independant vs. Leasing onto a Carrier as an O/O
 

I was listening to Kevin Rutherford this weekend and I heard him say that the average of last year for a person that was leased onto a company earned $1.18/mile while the independant only make $.05/mile more than one who was leased to a company. With such a small difference in pay why would anyone want to be an independant? For all the extra hassel it seems for only $.05/mile more.

What do you guys think about that? Do you think these numbers are accurate and to what degree.

If there was only a nickel difference between the two, then from a financial point of view, it probably would not be worth it. I don't know of any people whom I know who are running their authority and only making $1.23/mile. In fact, most owner operators I know who lease to a carrier are doing better than $1.18/mile. Most with with whom I talk are doing considerably better. I would be interested to see how these numbers were compiled. It would also be good to see a breakdown as to where these people are running, type of freight hauled, etc., The problem with statistics is that you can usually manipulate them to say what you want.

most people running their own authority are averaging $1.50+cpm, i have never heard of a guy running his own authority making 1.18cpm, only people leased on make that little.

I have my own authority and can tell you first hand the above is true.

Oh how I want to reply to this thread........but I will hold my comments.

Why don't you comment, I want to hear what you have to say? What's your take on all of this? I'm just going by what I heard on Trucking Business and Beyond. I was just amazed that someone would do all that extra work for only 5 cents more per mile than someone leased onto a company. If, however, that is not the case then it would make more sense to have your own authority. It seems that Kevin Rutherford actually is against people having their own authority and feels that people are much better off leased to a company.

Kevin also thinks the turbo 3000D adds horsepower/fuel mileage.

Is he talking about gross rate? That's pretty low for gross rate.

After doing the research and probing this board for answers, I came to the conclusion that an OO running on their own authority makes at least an average of $1.50+ per mile.
I would not have invested $45,000 of my savings (if I would only make 5 cents more than a lease OO) to make $1.18 per mile.

go to any load board, more then 90% of all the loads pay over $1.50pm, and getting $2pm is very common. a smart owner/operator running his own authority will clear $100K+ NET, a year.

I also own my own authority and avg between $1.85 & 2.00 per mile for loads with miles starting at 300. Anything below 300 miles goes up to the $5.00 mark. The other neat thing about having your own authority is that you run how you want. I've been business for 1.5 years and I never sat a day waiting for freight. Freedom to run is a beautiful thing. :P

Why are the rates higher for an independent, than for on o/o leased to a company ? Is it really worthwhile then, to be an o/o leased to a company, when you consider the marginal difference in the earnings you'd bring home vis-a-vis a company driver for the same company ? Is it possible to be an independent instead, and haul for the very same company ? Would it then pay more ?

Sorry for another post....should have asked this question in the previous post itself : what are the main points of difference between an independent and an o/o leased to a company ?

Leasing on to a company will give you more predictability. You can and will run almost everyday all year if you want. You will find more dedicated runs available that way also. Your own authority will bring more money but less predictable, unless you have good work already set up. That is hard to do when first starting out. Don't get me wrong, there are plenty of loads on the boards, you can work everyday. But you may end up taking a load somewhere you don't want to be because you have to keep the truck rolling.
You can run the boards but you won't have as much of a choice on dedicated area's to run, and you might not get home as much. You can stay close to home and run, but you will find it tough to make more money that way. When leased on to a company, most carriers will let you run under their authority with their insurance,(liability, cargo) therefore decreasing your costs per mile.
You need to figure out the difference in cost per mile to get an accurate figure on the difference of the two ways. :D

An independent is a carrier. He has his own authority. He pays for all expenses including insurance. He also is responsible for making sure all paperwork is in order and that he is in compliance with all rules and regulations concerning his business.

The owner operator leases to a carrier. His main responsibility is pick up a load and deliver it. He also needs to track his expenses and make a profit. His carrier assumes all costs for cargo and liability insurance as well as making sure that the owner operators and drivers under his authority are compliant. The owner operator is dependent on the carrier for his loads. The independent must find his own.

The independent keeps all the money. The owner operator only receives a percentage of the line haul rate. The owner operator typically receives about 75% of the rate. The carrier keeps the rest to cover operational costs, insurance and make a profit.

Re: Independant vs. Leasing onto a Carrier as an O/O
 

Such a blanket statement about amounts....needs to be broke down into refer, flatbed, n dry van.
Not to many places I can get $1.18 in dry van from a company....most offer the standard 90c+25c feul surcharge
Hmmm his .05c more hardly in dry van.....more like 10c t0 20c since no lease carrier wants to pay anything for dry van

Well I'm just commenting on what I heard from Kevin Rutherford on XM Radio. That's why I asked the question. I'm glad independants are making a lot more than $1.23/mile . I may want to be an O/O some day and that's one of the reasons why I asked. I mainly want to do trips that I can do in a day. I haul fuel right now and I may want to get into my own truck. Up here we can haul Super-B's which max out I think @ 63,500 KG's.

Having the insurance and base plates adds up especially if you are under two years on your license. All that came to over $8,000 out of my pocket. That comes to about $150 dollars a week. Of course even 10 cents more a mile x 3000 miles a week is $300 and I'm hoping to make a lot more than 10 cents more a mile compared to what they make pulling reefer/dry van.

It winds up to be the same in the end. The independent is going to spend $2500 for base plates, the leased doesn't pay a dime. The independent has to spent $9000 a year for insurance, the leased doesn't, they spend about $3500. The independent doesn't get detention pay, the leased does. The independent doesn't get paid for deadhead miles, the leased does. The independent has to pay for a trailer and maintaining the trailer, the leased doesn't, they use the carrier's. The independent has to pay full price at the pump for fuel, the leased saves at least 12 to 6 cents a gallon. The independent has to pay for tolls and doesn't get reimbursed, the leased gets reimbursed or has Pre-Pass Plus. The independent has to pay full price for tires when needed, the leased doesn't, gets discount with National Tire Account. The independent has to pay out of pocket for a lumper, doesn't get reimbursed, the leased pays with a Comchek but does get reimbursed. The independent has to chase after the brokers to get paid, hopefully they don't close up shop in the middle of the night and run off with your $$$, the leased gets paid weekly. The independent has to look for a load, the leased doesn't, usually has a pre-plan before being unloaded or a few hours after they are empty. The independent has to wait to be live load/unload, most of the time the leased is drop and hook. I'm sure there are other comparisons, that I will add later.

How do I know all this you ask?

I've been on both sides of the coin, I am not saying one is better than the other, I am just making a point that it all equals out in the end IMO.

It all comes down to how much, and what kind of B/S you want to tolerate.

Since we do not live in a perfect world your situation may not compare to my examples or apply to you. I am not saying these are the gold standards of being a O/Op, just my opinion of what I have experienced.

Now when I say leased, I am referring to my situation of a paid off truck leased to a carrier, not a lease purchase plan, so my gross and net might be different than someone else's.

Now we are going to get a bunch of posters that are going to pick this post apart, piece my piece, but do I care?

No, Why should I?

What ever path I chose works for me, may not work for you, but that's why we are individuals.

Drive safe.

what does?

That's probably the average numbers, but everybody deal's with his particular situation.
You could do better than that, or worse, believe, what you want to believe, but at the end of the year, you'll look at your odometer, and bank account....
Moment of truth! :wink:

it doesnt matter how many extra expenses you list, anyone doing a lease program has zero chance to make 100K NET a year, but running your own authority you have more then a good chance to make 100K+ NET after expenses, with a lease you have to thank god if you NET 50K a year, run your authority part time and make more


NEVER COMPARE LEASE TO AUTHORITY

And what do you know about it, mister?
Is that from what you heard on CB?
Or you didn't have one yet? :P

I could compare anything, to anything, just don't want to waste my time, cause you seems to made up your mind already! :roll:

you wanna lay any money on those statements?

so now the one with all the questions is giving all the answers? in such definte terms..... :?

Good post...very lucid, detailed, and candid ( atleast it appears that way to me ). So, what do you do Bone...are you leased to a carrier ? Do you like it that way ?

100k a year with just one truck ???? Did I hear you right ? Or were you referring to a fleet of 2 or more trucks ?

Where to start?? I don't know where you got your figures or anything about your experience, but your figures are WAAAAYYYY off.

I have been a company driver, owner operator leased to a carrier and run my authority. The cost of base plates will vary from one state to another. I pay just over $1,400 per truck in my home state. Some may pay as little as $1,100. If you pay $2,500 for base plates, I would move. Some owner operators pay for their base plates, others do not. It depends on the carrier to whom they are leased.

Insurance rates can vary widely when it comes to running your own authority. A number of factors come into play when determining rates. They will look at your experience, MVR, credit history, etc., I pay less than $4,000 per truck. Most will pay between $6-8,000 with experience. I don't recall ever spending $3,500/yr. for insurance when I leased to a carrier. A carrier will usually require their owner operators to carry bobtail or unladen liability insurance. Rates seem to vary from about $30-60/month. That comes to $360-720/yr. Collision or comprehensive insurance is only required if there is a lien on the truck. Rates vary from 2 1/2-4% of the stated value, with most companies. This is something that is required whether you are independent or an owner operator.

I rarely take toll roads, but tolls, lumpers, etc., are reimbursed with some carriers and not with others. Each company has their own policies. I have my own fuel card and do get some fuel discounts with some stops. When I leased to a carrier, I found that I can usually do about as well on my own by buying at different fuel stops. One thing most owner operators may not realize is that the carrier usually keeps part of the fuel discounts when you use their fuel card. They make money off of each gallon of fuel you purchase if you use their card.

I can buy on national tire account and I won't pay a carrier a processing fee for the privilege. I have access to 2 national tire discount programs of which Bridgestone is one. I also have my own sources for tire discounts and can usually do better with them rather than relying on a national tire discount.

I don't chase after brokers. I check them out before doing business with them. If they have questionable credit, I don't do business with them. I don't always have to wait a week to receive money. My funds come in all the time. Just because you lease to a carrier doesn't mean that you won't need to find your own loads. Landstar and some of the other agent based carriers are set up where the owner operator can find his own loads. Not all carriers do drop and hook.

If you can't make more money as an owner operator as you could driving a company truck, you need to go back to being a company driver. Unless you can make more money running your own authority than leasing to a carrier or a company driver, then by all means go back to being a company driver or owner operator where you lease to a carrier.

Being independent isn't for everyone. Many will fail, just as many will not make it as an owner operator. People jump into these aspects of the industry without any business sense or experience and have no idea of what they are getting themselves into. Some will defy the odds and make it. Others will not. Some who fail will become bitter and blame an industry for their failure to plan and do the leg work to become successful.

You are giving a very skewed view of this industry. And your numbers are off. While your statements may be true for some, it is not necessarily the norm.

Yes! But i wouldn't live home w/o it! :shock: :D

That is a personal decision each of us must make, Solo. I don't have collision on one of my trucks. I save about $1,200/year by not having it. Based upon my past driving record and experience, it is unlikely that I will have an at fault accident and total my truck. I am comfortable saving the money and taking a chance that I will continue being a safe driver. Some feel the need to insure their truck whether it is paid for or not. That is a decision we each must make. I have known owners who are on both sides of the issue. If I went out and paid $50,000 cash for a truck I might think differently.

My truck was stolen and recovered, over 20 grand in damages.
Another guy i know, had a fire, only had enough time to grab a laptop... :shock: :wink:

[quote="GMAN"]
Where to start?? I don't know where you got your figures or anything about your experience, but your figures are WAAAAYYYY off.

I have been a company driver, owner operator leased to a carrier and run my authority. The cost of base plates will vary from one state to another. I pay just over $1,400 per truck in my home state. Some may pay as little as $1,100. If you pay $2,500 for base plates, I would move. Some owner operators pay for their base plates, others do not. It depends on the carrier to whom they are leased.

Insurance rates can vary widely when it comes to running your own authority. A number of factors come into play when determining rates. They will look at your experience, MVR, credit history, etc., I pay less than $4,000 per truck. Most will pay between $6-8,000 with experience. I don't recall ever spending $3,500/yr. for insurance when I leased to a carrier. A carrier will usually require their owner operators to carry bobtail or unladen liability insurance. Rates seem to vary from about $30-60/month. That comes to $360-720/yr. Collision or comprehensive insurance is only required if there is a lien on the truck. Rates vary from 2 1/2-4% of the stated value, with most companies. This is something that is required whether you are independent or an owner operator.

I rarely take toll roads, but tolls, lumpers, etc., are reimbursed with some carriers and not with others. Each company has their own policies. I have my own fuel card and do get some fuel discounts with some stops. When I leased to a carrier, I found that I can usually do about as well on my own by buying at different fuel stops. One thing most owner operators may not realize is that the carrier usually keeps part of the fuel discounts when you use their fuel card. They make money off of each gallon of fuel you purchase if you use their card.

I can buy on national tire account and I won't pay a carrier a processing fee for the privilege. I have access to 2 national tire discount programs of which Bridgestone is one. I also have my own sources for tire discounts and can usually do better with them rather than relying on a national tire discount.

I don't chase after brokers. I check them out before doing business with them. If they have questionable credit, I don't do business with them. I don't always have to wait a week to receive money. My funds come in all the time. Just because you lease to a carrier doesn't mean that you won't need to find your own loads. Landstar and some of the other agent based carriers are set up where the owner operator can find his own loads. Not all carriers do drop and hook.

If you can't make more money as an owner operator as you could driving a company truck, you need to go back to being a company driver. Unless you can make more money running your own authority than leasing to a carrier or a company driver, then by all means go back to being a company driver or owner operator where you lease to a carrier.

Being independent isn't for everyone. Many will fail, just as many will not make it as an owner operator. People jump into these aspects of the industry without any business sense or experience and have no idea of what they are getting themselves into. Some will defy the odds and make it. Others will not. Some who fail will become bitter and blame an industry for their failure to plan and do the leg work to become successful.

You are giving a very skewed view of this industry. And your numbers are off. While your statements may be true for some, it is not necessarily the norm.[/quote

What part of these are not the Gold Standards for all O/OP's did you not read?

I said everyone's situation might be different, I didn't quote that these were the rules. There are exceptions to every rule and rules to every exception.

When I use to live in California, apportioned base plates were $2300-$2500 a year which was what I paid 6 years ago. Insurance was $8000 the first year and jumped up to $9000 the second year, and that is with a perfect driving record, which I still have today. So my figures are not off. I am not going to turn this into a debate.

As a matter of fact I do only pay about $60 a month for insurance being leased to a carrier, $3500 might have been a little high but I wasn't comparing any ones particular record. I was just making a comparison, that insurance is cheaper being leased to a carrier. So even if we change the leased to $720 a year vs. Independent which pays $4500 to $9000. It is still cheaper being leased to a carrier.

Like I said, and I will say it one more time , Everyone situation is different and you can pick my post apart all you want, as long as you are happy doing what you are doing, whatever you do, and where ever your at, and whoever you are working for, isn't that's all that matters?

As for being wayyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy yyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy

off, I think not. The facts are the facts, and I tell it like it is.

Drive safe.

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! :D
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! :D
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.