Who Drove Off Wit All The Loot?
by Dennis Shipman
(New Castle, DE)
Often during my travels, I have the misfortune to hear drivers complaining about an industry I love; an industry that is critical to the health of the American economy; and, one that has enabled many hardworking folks entry into the middle class.
A seasoned owner operator “leased” to a company ought to have a net annual income of $50,000 on billings averaging $100,000 per year. If you are an “owner operator” with your own authority, you should be doing roughly double that number.
If you’re not in this ball park, you need to seriously sit down with your bookkeeper, accountant, business partner, and re-evaluate your business structure paying particularly close attention to costs, because they are probably excessive, and cutting into your profit margin.
Most of the large carriers have broker authority to handle overflow. The benefit of “contracting” as opposed to “leasing” with Schneider National is that you can now access Schneider’s bulk purchase program, which can reduce operating costs by as much as 25%.
The downside is the loads are probably garbage ones their owner operators do not want. Business success is driven by relationships, though. That does not mean you have to swallow the poison pill every load out, but the fuel, tire, and maintenance discounts that significantly reduce your operating costs have to be factored into that one “bad” load per month model.
One guy was telling me about his “friend” without providing any specificity about how “illegals” have driven down wages, which is not absolutely true. Profit margins have become slimmer as trucking companies have consolidated to the point of becoming almost monopolistic driving up costs for shippers while increasing their own profitability often at the expense of the very drivers generating these profits. But there is a resurgent of a dearth of drivers that is forcing companies to increase wages.
The most complaints I hear, though, are from so-called owner-operators. Many disenchanted owner operators have legitimate gripes about the industry – especially with fuel costs that border on gorging by the large oil companies.
How is diesel fuel, which undergoes less refining than gasoline, significantly more expensive then it? So, fuel costs are a legitimate grievance. But if you are a company driver working for a large carrier expect to be treated as such. If you work for a union carrier expect to be treated differently.
If you are an owner operator leased to a company, expect to be treated like an employee in a network dispatch model, not a full-fledged sub-contractor who runs when and where s/he wants.
Old school drivers with no formal education, business training, research skill sets, and a drive-by-the-seat-of-your-pants mentality, who wonder where all the money went, will soon become a thing of the past as college educated drivers replace them, recognizing low startup costs and potential profit margins make trucking an attractive business opportunity.
Consequently, you are just a glorified company driver if you do not have your own base plates, auto liability/cargo insurance, and MC# (operating authority).
Just the other day, I had to walk away from an obviously bad deal where the guy wanted me to "come in and fill out an application" with a straight face. I politely declined. B2B relationships are contractual. No self-respecting businessperson should be filling out an employment application. If you do, there is no rational basis upon which to complain because doing so tells you exactly how the relationship with the carrier is going to be structured; “forced dispatch” with the dispatcher treating you like an employee instead of respecting you as an independent business partner, and “settlements” maybe 10% or 15% above what a senior company driver earns without any of your headaches or, more importantly, overhead.
I hear farmers, perhaps one of the most heavily subsidized businesses in the United States, complain often about their operating expenses; the need for loans to carry them through one planting season to the next, but the funny thing is that the vast majority of farmers are bona fide millionaires.
Prior to wrong-headed deregulation starting during the Carter administration, most independent truckers then known as “gypsy truckers,” earned substantially more than independent truckers today. I once worked for a guy in the very early 80s with a brand new extended cab Pete, 425 Cat, 13 speed, and all the bells and whistles who bragged about earning $300k the year prior. That was in 1980.
There are still lucrative niches out there. O/o’s have to become more technologically savvy and sophisticated in finding them, though.