WHY??

In the current state of the economy, it makes sense from the business owner's stand point. They don't have to pay for the maintenance on the trucks, pay the employment taxes (of which there is more that the employer pays than what comes out of a paycheck), and all the other expenses that go along with having employees.

Not saying it is right, but for the business owner to stay in business, they have to cut their expenses somehow.

 

Your right lilbit. I know a lady who has owner ops working for her. She will be quick to tell you she has her own customers in reality she has brokers doing all her load hunting,(ie CH Robbers ect). So lets say shes paying ......95cpm +fsc if the customer pays(you know how that goes) then she turns around and bills joe the broker $1.30+fsc(if the customer pays)on a 750 mile trip the owner op makes $712.00+ fsc(if the customer pays) thats to the truck. She in turn makes $263.00 for basically doing paperwork and answering the phone. Do that times say 12-16 trucks everyday and she makes a good living doing what I consider double brokering in a legal way of course.Just my two cents worth.

 

That about sums it up Bama.

 

Plus, in uncertain economic times, they can effectively maintain the same level of service (number of trucks), but dramtically reduce their overhead by shifting the financial risk (onto O/Os).

 

I assume that when the economy improves, companies that survived with their credit rating intact will take advantage of low interest rates and tax incentives to expand their company fleets like gang busters.

 

Let's not forget that they will drop the CPM to the O/O to further reduce cost and increase proffit.

 

That's right Lilbit. also usually the delivery statdards are better and higher with O/O. Also the co. doesn't have to worry about providing any benefits(ins, vacation, ect.) for O/O.

 

Typically, O/O companies lose a degree of control of their drivers because there is usually no forced dispatch with O/O. Right now, no O/O are turning down anything because it is so slow. So that problem is temporarily solved. Also, there is nowhere for the O/O to go because few companies are taking on new O/Os. Most times, it makes more financial sense for companies from 1-100 trucks to operate as pure O/O. After about 100 trucks, most companies have a combo O/O and company driver system or pure company drivers and fleece purchase.

With an all O/O setup, a company is never paying for tractors that are sitting idle. Just 1 or 2 grounded trucks can kill the bottom line for a 20-40 truck company. Also, work comp, employee bennies, etc. are other reasons for small companies to be pure O/O.

 

The companies have to deal with two major items. Cents per mile and dollars per hour. Cents per mile is what the company has to pay to run the truck. Dollars per hour is what the company has to pay the driver. It make sense in most applications that it would be cheaper to forgo both of those expenses and go with O/O. But with some companies it's still smarter to stay with their own drivers and their own trucks. Like the big gasoline companies which run local and some OTR. But they even figure how many miles the truck is driven each load before there is a lost with their own truck and a hired truck. With us back in the mid 90's that target was 160 miles. After 160 miles it was cheaper to hire the load out but below that is was cheaper for a company driver and a company truck.

There's alot of items a good compay will figure in their expense. As with our drivers they had to look at all the benefits the driver will get. Under 160 miles our company driver can turn more loads with fewer costly mistakes and the risk for the company is minimized. It cost a O/O alot of money to haul gasoline so I would say that type of industry is alot different than general freight. So the risk is lower being a company driver with the type of work you'd be doing. Also our trucks were sold at 5 years and since they were specially built they got top dollar on their return.

I've said many times that a smart way to go is to get specialized in what type of hauling you set your goals for. With the general OTR trucking the companies change throughout the years. Swift is big but years ago J B Hunt was huge and before that you saw CF every other truck. I would also say that hiring on with a company that generates their revenue from the truck is more risky that a company that hauls their own product.

As a driver, the best you can do is stay perfect with your record and learn all you can about all the different types of operations. With the job market being so close these days all you can do is stay on the top so you'll have the best opportunity to change companies if need be. I also believe that now is the time to learn all you can about O/O's (if you choose to go that way) and go out and secure a good contract and you might just do very good. Of course it won't be like it was 20 years ago but it's better than it was 10 years ago. I could be wrong since I left the general OTR some time ago and landed a great job as a company driver but I would look at every avenue you can to see what fits your needs the best.