Being owner operators with our own MC and booking our own loads, I got to learn a lot about the business, developed relationships with brokers and shippers and it helped me make good amounts of money with very little stress. In this process I also got to meet many owner operators which are leased on to companies and paying 10-25% of the gross load, in exchange for dispatch and accounting services. Some companies also provide trailers, plate programs and permits filling. Talking to these people, I have heard horror stories from companies skimming of the top and giving fake rates, to giving priority to their own trucks and so on. Some of these O/O have gone through 4-6 companies in a couple years, which is just absurd. SO my question is this, theoretically, if I was to open my own company and take on owner operators, offer the following services listed below, would you switch to a company like mine from your current one? I am not trying to recruit here, I just want to get some feedback and see if this could be a possibility for me.
-first I wouldn't add my own trucks and drivers, that way O/O would have the highest priority and not have to worry about not getting our undivided attention.
-10% dispatch fee(I have paid this in my first year and I found it very fair, others charge 15% and up)
-Assigned dispatcher(so you dont have to explain yourself every time you call in)(more personal experience)
-Insurance and trailer(dry or reefer) programs, discounted but not included in the 10%
-Next day payment or weekly settlements
-Gas Card
-System where O/O can verify rates paid per load, to ensure that no skimming is being done
---The biggest thing that I would concentrate on is helping O/O grow with the company and through our connections with shippers, offer our O/O the opportunity to grow and add trucks to grow themselves, so ultimately they would become their own money making machine within our structure.
Like I said, I am not trying to recruit anyone here, I would just like to know if the things I said above would give you enough incentive to consider switching to a company like that and if not, what would make you switch and what other services should I offer. Thank you very much.
What would make you switch to a new company as a O/O?
Discussion in 'Ask An Owner Operator' started by SFLTRKBIZ, Mar 5, 2014.
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You need to figure out what type of operators you're looking for. Do you want to be searching for loads for someone who has no idea about rates and lanes yet expects you to pull off the near impossible all the time? Or do you want self motivated operators who can find their own freight? That's where your pre-hire screening is important. You need standards, lines in the sand, things that can cause a lease to get termed your safety scores depend on that. You don't take care of those and people will avoid loading your trucks unless they're in a crunch. Some companies won't even do it then. What you're offering seems like a pretty fair deal. It's would also be nice if you have access to and can load your operators trucks up with some good paying freight. Some guys look for that on every load from their company. Me, I'm happy with what they offer if it meets my needs, but am perfectly content to haul exclusively brokered freight. Don't hide rate confirmations. As far as accepting freight that's been brokered by a sister company, I do that a lot, but only when the rate is good. I have never hauled anything like that for cheap or anywhere near it. I'm sure this will cause criticisms and I don't know what some of that stuff pays, but I never know what any of the brokers make either, to me it's really beside the point. I'm not living day to day load to load I'm making profit here. If had a company and were looking for operators I'd be looking more for the self motivated types. You want people who can network and build your companies reputation. That will help your growth. You also want operators who control their own destiny. Happy operators are productive operators when they get with it.
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Your setup sounds like a logical next step for me. And is enough to get me thinking.....
I am not recruitable at this time however an open dialog may be beneficial.
Currently I am a L/O leased to a 300 or so tractor company. Pay is per mile and I have been doing o.k.
I would like to move to a Percentage based model with my own DOT number (6 Months to a year out).
I can do this with current carrier as they do have a brokerage side also. But options are nice.
It sounds as if you are open to mentoring O/Os is this true?
I know I can run the truck and run it clock and cost efficiently. I am not knowledgeable in the seasonality and price points of different lanes (heck even what the lanes are). So basically I am blind on what goes on before the dispatch part. Are you willing to coach a driver on this stuff? -
honestly, it all depends on what the o/o has to pay out. if you take 10 percent for just dispatch, and the o/o pays for all cargo ins. the liability ins., a factor fee for next day etc. and after trl charges, and more than likely ifta taxes, it is no different than leasing on to a carrier that takes 25 per cent.
it may look good when only the 10 per cent jumps at you but overall no different.
I think the outfit farm2fleet that rollin is with also changed their model a bit from close to the same percentage you are quoting.
I had a convo with BBB, cant remember if it was open forum here or by Pm where I told him it was harder to get o/o who could operate like that, instead of taking say 20 percent and the o/o not have all these separate deductions for this or that.
it basically all works out to the same thing actually, its just in how people perceive it. its getting paid one way or the other. I just found that at 10 per cent and me paying the liability that it just made it difficult. the 75 /25 or 80/20 model of leasing has come about for a reason. I own my trailer now, the usual 10 per cent of revenue for a trailer is the real kicker, I can own and maintain a trailer for much less than the 10 per cent.
if I were going to expand it would be with o/o, not company drivers. but honestly I think just a straight up deal whether it be 75 /25 or 80/20 is the way to go.
honestly to many folks are hung up on what the company or broker is getting, they cant see the forest for the trees. you have to know your costs and take loads that meet a minimum goal you have for revenue. get a price you are happy with and don't worry so much if the broker is taking too much.
and you have to learn lanes where it is simply best to not to go or if you do, get a load and go.
Laredo is a prime example, you make sure of a good rate in because you will invariably come out for less. if ya go to Laredo for 2.50 a mile on a 75 per cent deal, you more than likely will have to leave for 1.50 to 1.60 to the truck on a 75 per cent lease. you can sit there for a week hoping for 2.00 but it aint gonna happen unless is a load to a worse place than Laredo. some guys seem to have 2.00 a mile stuck in their head and seem to have no idea of what it costs to operate their truck, they just have the idea if they get 2 bucks it will all be fine.
so , answer this , what on avg would be a o/o total cost if you worked this model, besides the 10 per cent dispatch fee, what would he have to pay out of the 90 per cent? estimate that and lets see how far different that would be from a 75/25 split. -
Sounds like you are looking at a basic dispatch model. For this to work you have to have freight and good freight.
If you are talking about drivers under you authority I can speak from experience that 10% even with drivers covering all the expenses related to what it costs you that the number is not workable for you.
It is fine on the shorter term to get a couple good O/O's that are willing to work with you and figure out the kinks. But long term you need to get into the 80/20 range to make it work. And you need to build to over 10 trucks to make the better 3PL's to even look at you.
If I was still at 10 trucks we would be out of business. And you need to be able to make money because it isn't worth the money when you are talking about working 24/7 for a $30k a year job unless you are building to something better.
With our operation I have 10 full-time people and 2 part-timers. And we are under staffed.
The other factor that many don't understand is the difference in time it takes to find loads in a non-forced dispatch. One person can work all day looking for loads for a single driver. How do you make money doing that?
If I had to do it all over again I would have started the same way that I did and then once I got to 5 drivers I would have switched to a dispatch model and staffed to make it work. Few drivers are able to really book their own loads. The ones that prove they can do it you give them some additional freedom.RGRTim, nawarra1 and rollin coal Thank this. -
BigBadBill Thanks this.
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