Possibly going 100% Independent....

on another note got called an old man who " dont know what your're doing" by a TMC flatbed driver this past sunday. he looked to be 25 if he was lucky. i just had to laugh it off, and just reminded him i had been doing this for about 7 years before he could wipe his own rear, he is probably still trying to figure out the math

 

I'm not sure where the rumor got started that brokers only take 10% but I would like to squash that right now. Most brokers take a 20% minimum, more if they can get away with it.

If you are going to completely live from brokers you might as well lease to a carrier that pays a percentage, it is the same thing with less headache.

 

In today’s market, what do you think would be the best area to place effort. Building company around company trucks or O/O? Assume I know it is not easy.

No this is not easy. But if you are willing to work at it, are organized and have the personality to build relationships then the extra $1000 a week you can see from this business is attractive.

Because you use brokers as a source of business is like say Hostess is not an independent company because they don’t sell cup cakes from company stores. Reality is regardless of using a broker or direct you are DEPENDENT on someone else for freight.

I think you are probably the most balanced post on this I have seen. You advice caution and are not talking like the money from independent is no better or worse than running for someone else. When done right, the money is better and can be much better. But you are earning it doing other work other than holding a steering wheel.

And here is where some people who advocate not getting authority are missing one of the biggest opportunities of being independent. With Mercer you are taking the load and rate in the area that Mercer has. And being independent you can find better rates going into better areas. So you can’t just compare what was generated from a closed shop to an open shop.

Now the risk is that maybe Mercer has loads that the independent never sees at rates better than what is on the market. But experience will tell you what areas to take loads to and avoid. This is how many fail. Slow learners.

Your final point is right on. I have talked to LS guys that are averaging less than $1.30 LOADED miles. I have looked at the boards they see and it seems they really had to work at making that little. But they see what I am making on the same load and they think they can make it working multiple load boards, prospecting for direct business and keeping all the other stuff straight. For these people independent would be very hard.

 

You can’t run a decent size brokerage without taking less than 15%. It cracks me up guys screaming that brokers should be capped at 10%. It is a business service that they are providing to shippers with overhead like any other business. And I won’t get into the gouging here.
But regardless of what percentage you are talking about with brokers you can’t compare that to a 25% a company takes.
First, the company is a closed shop. You don’t get to get onto Landstars board and see if they have a better load.
Second, many of these companies are getting freight from brokers and when it is for an O/O they are less aggressive with rates. I have sat in brokers offices and they get daily emails from large carriers with trucks they are looking to get covered. These lists are separated out between O/O and company trucks. Was told that helps them not waste time on cheaper loads with the company trucks.

 

If you start pulling van freight you might as well pay Mercer of the 75% of 99% and stay put... you haven't seen cheap freight until you pull van freight... IMHO.

 

Redd,
Just go get you a reefer, get your authority, and give me a call my friend. You know I would hook you up and show you the ropes. You add the knowledge that you would learn from me and add a token to it, and you might be able to board a subway without getting killed or arrested.

 

bill, i would build a company with owner/ops, when i was running those mine and owner ops, i had a much easier time with the owner ops but they were compensated accordingly for example bennett motor would pay 1.65 to 1.70 for a load per mile , i paid 2.40 a mile and also put the lease ops into a motel every night if they wanted, thats right lease ops and i paid for a room. our rates were the same it was just that i didnt rearrange things so the o/o didnt get a cut, such as charging 200 dollars for a ga wide load permit that costs 32.50 with fax fees , it was a shell game to keep the owner op cut down, i just did it differently .

bill, we basically agree on every point. i just think it should be a very careful considerationin making the jump to independent status,

and my point about hauling directly, you know exactly what the entire rate is without any broker go between. you set the rate and are know whats up directly from the shipper with no go betweens.

also many dont realize that many agents for landstar, mason dixon etc would rather broker a load than give it to a truck leased as they get a bigger percentage of the profit than if it goes on a truck leased to them.

my entire point is make absolutely sure that you have everything in order before you make the jump, have some money put back to keep things going until money starts to flow, and commit to it fully.

 

I am leaning towards that. Couple false starts here with getting one story from guy and background is something else. But the math on company just does not work out. Much more risk for the same income but much lower return.
In my research on compensation I have been amazed at the games companies play to cut into O/O profit. Small outfit near me set his sister up as broker and started putting all direct loads thru her. They still ran the loads but after she kept 30%. And these guys know it is happening but have stayed.
For me it is about getting my rate and don't care what the broker is making. I push hard on getting direct business and that is going well.
On a selfish basis I hope the Landstars of the world keep it up. I get solid rates from what I pull for them. And have seen a couple $3+/mile loads, and that is in a van and not 100 mile loads.
I would say after having reserves for repairs and floating invoices what is needed most, and what many don't have, when going independent is a "this is a business first and the driving is a task of the business".

 

Just because someone operates under their own authority doesn't necessarily mean that they will get better rates than if they leased to a carrier. Some people are not good businessmen. The opportunity is there to make more money, but unless the owner is savvy about rates, freight lanes and his costs of operations and is a good negotiator, then he could be operating at the same or even lower rates than he could have gotten while being leased to another carrier. Over the years I have met some who think they are getting great rates when they are running at much less than I would have taken the same load. The rate for which they were so proud was comparable to what they could have gotten leased to another carrier.

This is not a complicated business. We do have complicated issues facing this industry. But, I would never attempt to push anyone into running their own authority. While you can contract your fuel taxes and other things out to contractors, you must still understand how this business operates and how to make a profit.

Nearly all carriers use brokers. If you think that all carriers only haul their own freight then you are very naive. There are also carriers who have their own brokerage companies and will run direct loads through the brokerage before giving the load to their owner operators. While this may not be illegal, it is certainly unethical. It is one reason some owner operators run for cheaper rates. It would likely surprise some owner operators if they actually saw the original rate from the shipper. It amazes me that there are still some who will run for $0.90/mile plus fsc. There are honest carriers. It is easy to blame others for you not getting the rate you want. For those of you who resent a carrier for taking a percentage of what they pay an owner operator, you don't understand what it takes to run a company. It costs money to recruit and put drivers through orientation. It costs money to support a safety department. It is the carrier who usually pays for liability and cargo insurance. That also costs money. Don't forget the cost of dispatch and/or a driver manager. The dispatcher is looking for loads while you drive the truck. Some will be responsible for managing 35-50 trucks. Many companies also have load planners, which are separate from dispatchers. If you think that you will increase your earnings by 25% or whatever the carrier to whom you are leased, then you don't have a clue as to what it costs to run a trucking business. There are a lot of things that cost money which the owner operator doesn't see. The carrier provides a service to the owner operator. They deserve to make a profit. Just as you want to make a profit as an owner operator, so does the carrier to whom you are leased.

If you are a single truck operation, you can do all of the things that the carrier currently provides for you. You can seek out your own loads, handle your own compliance issues and do all the things that your carrier is doing. You will need to handle these things yourself or hire someone to do them for you. So, even if you do get your authority, find your own loads, etc., you may not make as much more as you think. I find it interesting that some of you think that you are going to automatically make 25% more by getting your authority. You might, but most will not increase their earnings that much if you consider the additional costs of doing business as a carrier compared to an owner operator who leases to a carrier.

If you are considering getting your authority you should look at the entire picture. Check on insurance costs and subscribe to some of the load boards. Make a list of all the additional costs you will incur as a carrier. Sit down with the numbers and see if it makes sense for your operation. For some, it might make sense to get their authority. Others may find that when they look at the actual additional costs of running under their own authority, that the difference may not be worth it. I am not trying to sway people one way or another. I am suggesting that you look at the entire picture rather than concentrating on what your carrier is keeping from the rate. Getting your authority will not guarantee that you will get the same rate as your carrier. It will also not guarantee that you will earn more money. Whether you lease to a carrier or use brokers to find loads, don't worry about what they make. As long as you get the rate you want, that is all that is really important.