Possibly going 100% Independent....

While I have not done the math on Mercer, I have done it on many different companies compared to what I am doing. My savings is between $120 and $150 a week. So my break even is between 120 miles and 270 miles a week. After that I am making more money than with any of the companies I evaluated.

One way to look at it is let's say I offered to pay you a $1,000 per week if to find my loads, fill out packets for new brokers, send invoices and keep my filing straight. Less than 10 hours a week and likely much less. Who would do it?

Because this is what we are talking about what it takes to be independent. Oh, yeah. And that is with 30% less miles.

 

Some people don't want to deal with the paperwork and compliance issues. Mercer assigns each owner operator a dispatcher. It is different that the way Landstar and a few others are set up. If you are a good manager and negotiator, you can do better running your own authority than leasing to another carrier. But, all is not rosy. There are a number of costs involved running your own authority. Most major carriers offer fuel cards with discounts you probably won't be able to get on your own. You will also pay $500-600/month or more in cargo and liability insurance. Major carriers also offer discounts on tires and some have their own service centers where you can get your truck serviced or worked on at discounted rates. The carrier handles all billing, dispatching and finding loads, fuel discounts, IFTA reporting, some offer base plates or will advance the funds and take the money out of your weekly settlements at about $75/week rather than having to pay the entire amount up front, discounts on tires, parts and service work. A carrier may also loan you money to make a major repair once you have been with them for a while. Some carriers have worked out discounts on equipment that they pass along to owner operators who lease to them.

I prefer running my own authority for a variety of reasons. But, I would not make out the carrier who leases on owner operators as the bad guys. I have known some owner operators who do better money wise by leasing to a carrier than running their own authority. Running your own authority isn't for everyone. It works for me and others, but I would never belittle anyone for leasing to a carrier rather than getting their own authority. Not everyone fits the same mold. When you add up the benefits of what many carriers offer their owner operators, you receive value for giving up 25%. For instance, some don't charge for using their trailers. Most of the van operations do a lot of drop and hook which keeps owner operators from having to waste time loading and unloading. For those with limited resources and poor credit or who don't want to deal with all the paperwork, it is a good way to go. I have had a couple of friends who ran a number of trucks who have sold them and leased to another carrier. There must be a reason. Getting your own authority doesn't necessarily mean that you will automatically make more money. You could make less. There are those who do better being part of a larger company rather than running their own show.

 

I think this is one of three options for not running under you own authority on a permanent basis. The not being a good business manager. The rest can be hired out or done easily.

Sad part is that most major carriers do not pass on all the fuel savings to O/O. This is taught as one of the ways to increase revenue to the company. I have not seen a company offering a fuel discount that is better than what I can get. I have access to some carriers cards that give me a better discount than what they provide their O/O's.

That is more than I pay monthly for all my insurance. And I would still not get rid of my GL.

Ok, again, I have not seen a discount better on anything that I can't get from OOIDA, LS or any one of a handfull of other sources.

And did you type that second part with a straight face? While not something I focus on I have never heard anyone going on and on about how great the service center is at a company. Most you hear is "if you have to use one, avoid xxx at all costs."

I can hire out most of that for less than $200 a week. Base plates work out to less than a penny a mile. If someone can't afford to make the repairs needed while leasing onto a carrier I would say that this is the biggest statement of all about how the profit of the business.

I would not say that the carriers are bad people. I would say that it is not as good a deal as is some think. For some reason in this industry we hear a lot of negativity. And that draws and grows negative and angry people. These people should not be O/O's but if they are then need to be running for someone.

Anything I have posted is not belittling anyone. Just discussing and countering the negative postions people take on how hard being independent is. And provide real numbers between the differences of running for someone and being independent.

From what I have seen and heard, far to many who run for someone have a false impression that being independent is harder than it is and that they are getting all these great benefits that they would loose being independent.

Yes they do. They all do. May not be on the settlement as a line item but cost of purchasing and maintaining a trailer is 1-2%. So your 20-35% covers the cost.

This just supports the miles, miles, miles rat race drivers are in. Would you trade getting paid $150/hr for loading or take a drop and hook? TThis is a business and in business it is about making money. If you are a rat on a wheel then drop and hook is a great deal. Gets you an extra 100 miles that day.

My issue in all of this is not the running for someone. It is all those drivers that don't understand the differences and can't point to "real" numbers or a reason why it is better for them. I don't want someone to listen to you or me on this. If they did that they would think insurance is going to cost them $600 more per month or that they could make $1000 more per week. Get insurance quotes, find out what it would cost you to buy a trailer, compare OOIDA tire discounts to what you get from your carrier. But when I have a rational conversation with some about this, 1 out of 5 can give me a solid reason why leasing on works for them at that time.

 

I ran my own authority for many years and am now leased to a carrier. For me it makes more sense to be leased.

What I don't think some of you understand about the 25% carriers like Landstar and Mercer charge is this; they charge 25% of the gross revenue billed to the customer. If you were to haul those same loads they are taking a percentage from you as well. I happen to know for a fact that Landstar takes 20% from every load they broker. Most brokers are the same. So you are only gaining 5%. If you use fast pay, you gain less than that.

@BIGBADBILL: When I was running my authority, I paid $670 a month for insurance. I have good credit and a good driving record, and have never had a cargo claim. When I started out it was more than that.

I would never discourage anyone from getting their own authority. It is a great feeling to be completely independent but no matter what anyone says, it is more work. It can also be very stressful if you have a major breakdown or have problems collecting from a broker who doesn't pay.

I can say with certainty that I make more money and work less where I am now.

 

Be sure to post all your "perks" over the next 16 years,see if they equal what you pay in.

Im an ex member of 16 years as of 2 yrs ago

 

Before i bought a trailer, i did the power only. I did not have to pay to use there trailer. I used there fuel card.

 

It makes more sense FOR YOU to be leased. And it sounds like based on whatever factors played into that you can say that. As stated in my other post, you would be one of the few that could point to why it doesn’t work for you.

First, LS takes more from the driver than 25%. And because I haul many loads for them I have had the chance to talk with LS drivers on what they are making compared to what I am making. From what I can tell, at this stage LS is taking 15% before it gets to me. Plus I get 100% of FSC.

And while on an academic level what you say is true, it is a bit more complicated than that.

A big difference in being independent is that I am not stuck with loads from the carrier. So while I am talking to dozens of brokers, if I was with LS I would be stuck with their board. I can tell you now that of the couple dozen loads within 50 miles of me that LS has that I would be interested in, none are paying more than $1.90 to me. But I am hauling a load for CHR that is paying $2.89.

Another way that you over simplify how the rates work, when most carriers are assigning or allowing a driver to pick loads there is very little if no negotiation. Carriers once they feel they can not get it covered internally will start looking to broker the load. And the closer it gets to being needed to be picked up, the more they will pay. Anyone that has been independent for more than a month and understands how to negotiate will tell you they get the best rates the afternoon before or day of pu. It is not unheard of to double a rate in 24-hours.

Now, I have talked to guys that went to running for someone because they said they could not stomach not having a reload set 24-hours before they get MT. Others that I can tell just by talking to them do not have the personality to negotiate.

I pay $480 per month, including $1 million GL with Great West. And I am not cheaping out on the insurance.

Again, you are one of the few doing this that can say from experience or running the real numbers that it works better for you. My whole point is that so many people do the O/O thing and go one direction or the other and don’t understand this business from all sides.
I would hammer a guy who has no safety net to fall back on for going independent.

 

I feel it is necessary to point this out. Researching my authority I called and received an insurance quote from Great West.

Auto Liability : $1million
General Liability : $1million All deductibles $1000
Cargo :$100k
Physical Damage and bobtail

They also included something ( I cannot remember the name of it ) that will add $97 dollars annually and it does two things.

1) a Vanishing deductible 25% per year up to $1000, unless I make changes to the policy which will start this over. 4 years with no claims then means I pay zero on my deductible.

2) towing coverage on mechanical breakdowns, deductible of $250. Towing to the closest shop that can do the repairs, but still a hundred bucks extra a year for that little bit of peace of mind. I'll pay it.

Now they quoted me $7337 ( or something real close to it ) annually. $1048 at start up / getting authority active, then 732 per month and the last month at $731. These numbers are real close anyway and will change once papers get signed, but this gives you an idea.

Now the billing cycle is not a 12 month cycle. I will pay on this for 9-10 months (I'm guessing 10 ) and have two months with no insurance bill.

I'm not picking on ya Bill or anyone else for that matter, but every insurance company and carrier will do things differently and every O/O, L/O, or Independent will have slight differences to the policies which in turn makes the numbers being tossed around here a moot point without having all the details.

 

I have the same policy. My qoute was $6,000. The amount of down and how payments are structured is based on agent for most part.

I agree, same policy, different location, value of equipment, experience, what you haul, .... all plays into rates. My over all point on rates came back to someone saying they could save $500-$600 per month on insurance.

So first, unless you have bad record and carrier is not ratting you but doing pool insurance then this is a bit high.

And you bring up a good point on this. Carrier insurance compared to what you and I have are very different products. Many large carriers are self insured. And the ones that are not have enough clout to have policies tailored to them to get rates down. So it is kinda like saying you are saving money by buying a Sentra compared to your C class. But they really aren't the same thing, are they?

 

That's the crux of it right there, too many guys out here "playing trucks" and not running a business.