Trip Lease vs. Non-exclusive lease

Discussion in 'Ask An Owner Operator' started by BigBadBill, Aug 23, 2012.

  1. BigBadBill

    BigBadBill Bullishly Optimistic

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    Pros and cons of the different methods. Ton of freight but customers will only allow non-exclusive lease. No trip, no broker. Not going to argue it with them as they have been doing it this way for over a decade with no real issues. But when they all tried the trip lease method they got no better results than typical brokering.
     
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  3. BoyWander

    BoyWander Road Train Member

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    I'm sorry, but can you explain what exactly a Trip Lease and a No-Exclusive Lease are?

    Curious to learn some new trucking vocabulary.
     
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  4. Autocar

    Autocar Road Train Member

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    Trip lease is just that. You lease to a Carrier for one specified trip or load. That is what we did, before all this brokerage and own authority crap came into being.
    I've never heard of a non-exclusive lease in the 30+ years I've been out here.
     
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  5. BigBadBill

    BigBadBill Bullishly Optimistic

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    Autocar is correct on general description. And as with any contractual type relationship you will find 1,000's of different ways that it is being used.

    My issue with the traditional trip lease is that you need to make sure you get a statement of HOS each time and copies of logs. I know many companies don't bother with that but this is a PITA and less compliance/DOT issue and more CYA for legal action. And mostly because that has been the standard policy for so many years trying to eliminate this is a red flag in legal actions (basically what legal and insurance has told me).

    Non-exclusive leases are big in the expedite world. It started 6-8 years ago (from best I can figure) with several companies that could not keep all of their straight truck O/O's busy but these drivers didn't want to go to the bigger companies. And not being associated with at least a mid-size company you will have a hard time breaking into this world.

    So this was tried with good success and has grown. Now it is fairly common in the expedite world. But mostly with straight trucks.

    But the advantages to an independent O/O is that they would have access to freight that they would never be able to touch in the expedite world, direct freight bid boards, etc. All good high dollar freight that will never be brokered (legally). Plus you are protected by the laws that protect you in a lease vs. limited protections from brokerage or dispatch service.

    From our side it allows us to gain more access to better freight as we move more of it (volume has advantages for all on rates and access), don't have to deal with all the paperwork headaches of trip leases and we have a tighter, more defined relationship than just a traditional broker/carrier relationship.

    Most of the customers that we deal with that don't allow brokering encourage this because of the protections that the lease provides all parties. And other parties in the industry prefer this method over brokering because better than 60% of service failures come from loads brokered outside of the community (with less than 10% of loads being booked outside).

    I have talked with people within expedite, legal, insurance and carriers. But looking to gather information before we pull the trigger on doing this. I need to do something soon to cover excess freight but don't want to make a mistake.
     
  6. wichris

    wichris Road Train Member

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    A O/O with their own authority in a trip lease how is the D/A covered? Wouldn't it fall under the same rules as a "normal" lease? They are operating under the other carriers authority for that particular load. When trip leases were common there was not D/A testing. You always had to turn logs in to the carrier on a trip lease.
     
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  7. BigBadBill

    BigBadBill Bullishly Optimistic

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    The trip leases that I have reviewed have compliance statements. Placing all the compliance on the carrier that the truck is originally leased to. So D/A would be covered under that.

    Regardless of the method, someone on my side would look to verify all that. The background and monitoring of a carrier that is under a non-exclusive lease with us is going to be at a much higher level than what you would see from brokering. I am sure that is what makes this more successful in this industry. What carrier is going to jump through all the hoops required to enter into this type of relationship that is not serious about this working long-term.

    I know I am not going to do that level of work on my end unless I feel they are the type of driver/carrier that I would be interested in leasing to me exclusively.
     
  8. wichris

    wichris Road Train Member

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    On a trip lease the carrier would be operating under your authority(thus the log requirements)so wouldn't the D/A be the same? Brokered they are running under their own,trip lease they are on yours. I don't know about under 26k how it would work but the D/A regs state that an employee(which a lease operator is)of a motor carrier must have a pre-employment before working. It wasn't a big deal for a trip lease before testing.
    I guess you could always sign a trip lease and never put the signs on the truck,then it would be under their authority.
    I'd like to see the regs that okay any type of lease without a drug test.
     
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  9. BigBadBill

    BigBadBill Bullishly Optimistic

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    Good point. I have a call out to FMCSA to check on this. But did talk with attorney and a company that leases drivers.

    Attorney said that first when someone is trip leasing (this falls under that for all intent) they are not considered an "employee" as defined by the FMCSA. However, we as a carrier are required to make all reasonable effort to make sure that the contractor we hire is compliant. Now some will just have a statement signed (think when people have you sign a statement saying you are meeting workers comp regulations for you state). We will take this to a much higher standard.

    The company that is like the Kelly Girl of trucking says they are responsible for all the D/A stuff and actually provide documentation that they are doing this (not just a statement but the pre-employment test for the driver when they started with them and proof of enrollment).

    Both parties said basically the same thing. For purposes of how FMCSA defines things, and O/O is an "employee" when they are directly leased to you. But if they are leased to someone else and trip leased to you then they are a "contractor". And the employer is the party that is responsible for making sure the driver is qualified and stays qualified.

    Our responsibility when we have a contractor is to make sure they are running legal and to report any suspicions of D/A usage to the employer.

    Now, we will see what the FMCSA says but I imagine at a minimum the Kelly Girl company has a good handle on the legal aspect of this.

    But this is why I decided to check on this here. Interesting how I get different questions in the different areas that I do research.
     
  10. wichris

    wichris Road Train Member

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    May be so. Somewhat like the driver services people(can't think of the name right off). I would just be concerned mainly because of the log requirements and i would think that in the case of an accident that it (w)could be brought up.
     
  11. BigBadBill

    BigBadBill Bullishly Optimistic

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    Regardless of what the set-up is, broker, trip lease, what ever. I expect to be sued in an accident regardless of fault. That is why I pay for all the different insurances. Legal fees alone could sink a big company.

    Over a period of time then logs are going to be an issue. Single trip here and there then we need to document what hours they have available and that we made sure they are able to do the run legally.
     
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