Hill Brothers Transportation: Lease vs. Company

First off, it is a good sign that you're asking a lot of questions up front. I've always been amazed reading message boards to see posts with topics like "I just got hired by XYZ trucking company... can anyone tell me anything about them?"

I actually got into a discussion with the head of safety at HB a week or two ago about a related topic. Basically, would it be worth it to write a series of articles for the newsletter or do some kind of seminar series for drivers to help them (a) perform better, and (b) decide for themselves which route (company or lease) is the better option for their particular circumstance.

In my limited experience (coming up on the end of my 3rd year driving, with about half as a company driver and half under a lease) there are basically two kinds of truckers who undertake a lease:

The first kind are truck drivers who know how to drive, operate/manipulate a log book, want a fast truck with a big engine and cool chrome and paint. No one is going to tell them to slow down, stop idling or the like -- no sir! This type of trucker is a driver first and business owner second and in most cases I wouldn't expect many in this group to make good money consistently and be in any position to complete a lease. These are the operators who are begging their dispatchers each week (I kid you not) for advances over the weekly limit "just to get caught up." Any sustained downturn (truck in the shop for two weeks, a very weak quarter in terms of miles, etc.) and they are on the ropes or knocked out entirely, and off to a new company that "won't screw me over."

The second kind are business owners who happen to operate a truck as their business. They've done their homework, asked questions, watch their numbers like a hawk (income and especially expenses), don't care about breaking the sound barrier or what kind of chrome adorns their truck. When some numbers start moving the wrong direction -- weekly miles down, fuel cost moving up, etc. -- they adjust. Money is set aside in the good times to keep everything on an even keel in the bad times. Maintenance is not shortchanged.

Now, the above is a long-winded explanation to help you decide which type of driver you are: a driver who happens to own a business or a business owner who happens to be a driver. If you can't handle a lot of extra paperwork, aren't a "numbers guy" or just want a steady(ier) paycheck then by all means, stay as a company driver.

Only if you are doing everything right and the economy is in good shape and the company that you're working at is doing well and your truck is running well and you remain healthy and you don't mind having less time off can you do better over time under a lease purchase.

By way of comparison, in my first 12 months as a company driver at CFI I was paid (via W-2) just under $42,000. I also earned a week of vacation pay, worth just over $800, which I took as pay since I had plenty of time off saved up and wanted the money instead. For the last nine of these months I was covered by a very basic insurance policy that didn't cost much but also didn't have a very high limit (I believe it was $10,000). I drove just over 131,000 paid miles during that period.

In my first 12 months in my lease purchase at Hill Bros I was paid (via 1099 -- I'm an independent contractor now) a gross of just under $68,000 after all truck expenses. I had no vacation pay, my health insurance wasn't paid for and I did pay a bit more in taxes. I drove 133,303 paid miles during that year, or less than 2% more than I drove as a company driver in the same time period.

Did I do better as a company driver or as a lease operator? If you're looking strictly from the money angle, I did better in my lease. Even accounting for a paid week off (if I would have chosen to take one), equivalent health care and the difference in tax structure I estimate I came out about 15-17k better. Take away another 6k or so for the additional money I would have made as a company driver in my second year with a higher CPM rate and I figure over two years in each job would leave me about 23-25k better off leasing.

BUT.

Say I had some major repair bills (and include time spent at a shop instead of hauling freight, or renting a truck for a few weeks from Ryder). Say I had a major health issue, or even a minor one that kept me out of work for a month or more. Say my truck was a lemon or my dispatcher was a flake or freight was in the tank. All the risks are on you as a lessor; not so much as a company driver.

I'd start by first figuring out what kind of truck driver you are, according to the definitions above. Only if you are the second kind, and you are not risk averse, and your home situation is very stable and you could handle a major setback should everything not fall into place should you ever consider a lease program from any company.

Good luck,

Jim

 

Awesome answer Jim!!!

 

I lease there. The contract is easy to read. I have no disagreements at this time. I am part of Pro Fleet, a company that Hill Bros. bought out. They are good to me so far. If you have questions, take the contract to OOIDA. They will sort it out for you. Pete Hill brought his contract to them before they offered it to drivers. It works for me and I am happy and making money. Gee I wish I was the driver that Jim was....

 

You would have to look to Jim for the Omaha experience...I was a company driver for Profleet in Kansas City, and still work out of there. Since we were bought out, we shed all of the company drivers except for three teams, and we have only 13 trucks working now. I hear they do things differently in Omaha, and if I transfer my truck up there, I'd have to go through the same orientation that you would! I don't hear much complaining from the company drivers that I speak to down here at the KC yard. They seem to keep them moving.

By the way, if Jim didn't mention it, he has a wonderful blog, search Lease Purchase Journal....he's a great writer!

 

As far as I can see, pay and benefits excepted, the only real difference between company and owner/lease is that company drivers can't turn down loads. Oh, you can decide where to get service and PMs as an owner as well, but that is pretty much it.

Good luck,

Jim

 

Well there is one more thing, and it's why I leased in the first place. When you are a company driver, you are at the mercy of the owner of the equipment. If that person or entity maintains the equipment well, you are fine. If not, you are compromised not only with the DOT of every state you might pass through, but your life is risked as well....

And that's why I leased my truck. When I was denied a set of drive tires in September of 2008, the owner of the equipment (not Hill Bros) said they wanted to get another 50,000 miles out of them. He replaced two out of compliance tires with steer runouts. The whole set would be replaced in the middle of winter. We all know that a new set of drives takes about a month to rough in and when they are new, they are a slick as baldies...This was going to make my winter a living hell that I wasn't willing to experience...The irony was that when that truck was re-assigned, it had a new set of drive tires on it. Go figure!

I had enough. I called and went to pick my truck out off the lot the next week. I didn't do it for the money. There is a lot more unpaid work to do with accounting and record keeping. But I wanted self determination over the equipment that I operate. I take good care of my truck and it takes good care of me. That makes me a very happy camper at this time.