Getting your own authority ( Pro's -Con's)

Not sure if you misunderstood me or if I'm misunderstanding what you are saying.

Right now, I own my truck but lease onto a carrier to run under their authority. All loads I pull have to go through them. If I "find" a customer, the order still has to go through the motor carrier, the motor carrier quotes the rate, and if the load happens to be assigned to me, I only get my percentage. However, if it is a new customer, they will pay a small "finders fee" to me no matter who within the company actually hauls the freight. With them, the only options available are to work as a company driver, or buy your own truck and lease on to run under their numbers. They do not regularly "broker" loads to outside carriers.

If I make a change to another motor carrier, it will be to a company where I have room to "grow" my business. I will start out doing precisely what I am doing now...running my own truck under their MC authority. Spend some time getting to know the freight lanes & revenues, as well as the people in the office...and when the time is right, start looking into getting my own MC authority. I would have the office staff to assist me, answering any questions I may have...just like the office staff where I'm at now was helpful in making the jump from company driver to O/O running under their numbers.

Once I have my own authority in place, I would be an independent motor carrier using them as my primary broker to keep my truck working doing exactly what I had been doing as an O/O running their numbers...except I'd have my own numbers and take a little bigger piece of the pie as a result since I would be assuming more of the "risk" as a result.

By having my own MC authority, but using the carrier as my primary broker, I would avoid running into the problem of being "too new" of a MC, because I'd have work for the truck to keep the wheels rolling and revenue coming in. Spend a year or so in this sort of arrangement and it would effectively "age" the MC authority without throwing up any red flags (such as inactivated insurance, zero trucks, etc...). There would also be the advantage of being able to find my own return freight if I got a load out someplace and there was no return freight through the primary broker I was using (the carrier I had been leased to)...or if they were slow and just didn't have anything for me to do. This "extra" work wouldn't have to be approved by anyone else, because I would be accepting the load as an independent MC to haul the load.

 

and what pretell will you do if there is an exclusive use clause in your contract?

 

...something like this is what I'd look for if/when I make any changes:

 

May be a different question but, which is better lease out to a company or run through a broker? Assuming you have your own equipment, one of the bigger companies will let you run their stuff as a O/O or you can just get a broker and run from them.
What are the good and bad of each?

 

Let the authority go and it shows as revoked. We will not(and many others)load anyone with their authority revoked in the last year.

 

I'm going under the "assumption" that right now - you own your own truck and are leased onto your current carrier.

So - are YOU finding your own loads and running them through them - or - do they "offer" you loads?

Under some O/O lease agreements (like a fast-growing carrier whose owner is a valued contributor here), you are responsible for finding your own loads - they are YOUR CUSTOMER - the office approves the load (since they are acting as your factor/collections arm), and you run under THIER NUMBERS.

In a scenario like this - the connections YOU make (not counting any non-compete/exclusivity clause - which would protect THEM from you "stealing THEIR EXISTING CUSTOMERS - and I have NOT seen the carrier I'm describings' contract, so I cannot tell anyone whether such a clause exists) are YOURS - and if/when you decide to run under YOUR OWN NUMBERS, you take your "book" with you.

I'm not sure the "legality" of having your own numbers active - at the same time you are leased onto another carrier and running under THEIR numbers.

Now - using your existing carrier as a "broker" - ASSUMES - they have a BROKERS AUTHORITY, otherwise, it would (technically) not be legal for THEM to "front" YOU LOADS, with YOU as the carrier (as most shippers contracts prohibit this). So "carrier A", can't accept a rate confirmation from "shipper A", then get "carrier b" to haul the load. If "shipper A" contracts with "carrier A" as both a carrier AND a broker - then it's kosher (similar to LandStar being BOTH a carrier AND a broker).

As far as "assuming risk" you are assuming more EXPENSE ALSO. You get to pay for EVERYTHING, and THEY only pay for a percentage of the haul. So, at THAT POINT - you would need to decide if the additional expense of running your own numbers - justifies the "piece of the pie" you're giving up in order to do so.

The only real benefit of this, is that you'd be able to get loads from ANYONE - and of course assume the "risk" of getting PAID for them (either by factoring or "chasing your $$", which can be time consuming and frustrating if you're trying to your 3,000 miles a week). Also - your "own loads" don't pay ALL MILES (as some lease-ons do), so you have to factor in your MT miles, and potential DH miles into whatever rate you're getting for the haul in the first place.

Can't have your cake and eat it too.

F2F's arrangement seems like the "best balance" between a straight O/O-Lease and "running your own numbers" - though I only know what is PUBLICLY KNOWN about this business model - having not asked Bill for "intimate details", and having not seen their contract.

Rick

 

Yup, harder to get loads with an authority that has been "revoked" in the past year than one that is only a month old. And I can even tell if another authority has been active at your number, address or name. But some how the FMCSA can't figure this out. Costs me very little every month.

 

Bigger deal is watching for recently changed addresses. Or mail only address.

 

I have a less than 6 month authority. I have had maybe just maybe 5-8 calls that I have made that wouldn't load me. 3 of them I believe was because the rate I wanted. Freight quote was one that won't load. Which doesn't matter cause they have cheap crap anyway. Hutt I think was another one. But dude didn't want to come up with the rate. So I think he used it as an excuse. When I get home I can get the list. Either way you won't see me calling these people once I have been around for a while. Screw them. Actually it should be illegal for them to discriminate against me. I mean. What makes their freight so special? Nothing. I have all of my paperwork in place to cover any claims and that is what they should be concerned with. I am licensed to do business as a commercial carrier. Bottom line.

 

You won't fool anyone worth fooling by having an inactive authority or running some scheme to age it. Either do it and jump in or don't.

Pedigreed Bulldog makes a great example that could work for some folks that might look to bridge a lease into running their own authority for the same carrier. Read what he said carefully. He's not doing anything wrong. They already know him and his capability. That will become reference number one and leverage for new business. His lease agreement will be terminated in favor of a carrier agreement. Based on my own limited experience, that scenario would be worth about a six month business development head start at least.

Additionally many small carriers, myself included, tend to run for a short list of customers. In my case, I had to get out there and build those relationships from scratch. This is no different than any other start-up business. Pasting on your new numbers and being able to send out insurance certificates doesn't tell a customer anything about your performance and business practice. You have to establish that one way or another no matter how you get going.

If you can't stomach the risk or don't want the compliance headache, there are some decent lease offers out there. You still have to be a people person and develop good business relationships under a lease. You have only one customer, but the ones that make it work best will develop that relationship and make themselves the first call when the cherry-pick loads are booked.