Why obtain your own authority?

The carrier revenues are your revenues or a percentage of them. If you run 100,000 miles per year and your company books you on $2.00 per mile freight (which isnt hard to do) it would equal $200,000 - 80% = $40,000. Essentially you then gave them $40,000 to pay your
( estimated ) $6000 per year cost in liability and cargo insurance. For argument sake we will say it cost them another $4,000 for you IRP, IFTA, etc....

So they made $30,000 while putting freight on your truck and running up miles on your truck. The point is that in O/O situation they are almost guaranteed a profit while you are faced with unknowns ( breakdowns, freight rates, etc... ) The same can be said if you have your own authority but if you take those assumptions you are at least ahead by $30,000.

Not saying one is right or wrong its just a preference on way of doing business.

 

And carrier revenue comes from ....?

I completely get and understand the need for some to hire someone to do certain tasks. I do it all the time in my business. But if you just go along your merry way not looking at what the true value that your carrier is providing you may be leaving more on the table and not even realize your carrier is not being competitive.

Our industry would be in much better shape if O/O's started acting like business owners and did an annual revue of the business they are in. In the end this may not change anything but at least people would be making an educated decision.


A rising tide raises all boats.

 

Why would I even care about their revenues? I don't pay their expenses and they don't pay mine. We have an agreement that I get X amount of the gross revenue and they get X of the gross revenue. It is that simple. We both see the freight bill and as long as we both get our agreed to split, I could care less.
It's an old business model, that works well. No different than the HVAC contractor needing to know what the General contractor bid the job for.

 

Clearing you have gotten a little lost on this.

 

Leasing to a trucking company is the same as franchising to a burger chain. There are benefits to both parties.

 

I am gonna go with get your own authority. I haul a lot of freight for a company that deals with leased on o/o's. trust me when I say this. They get the brunt of junk. Coming home they only get 80%. Well do the math on a 1k load. I get an extra 200 per trip. So that's 400 a week. More than a leased on driver. And the best part is they have to pick up freight when they are told to. I on the other hand don't usually have to deal with that crap as their name is not on my door.

 

Off course it comes out of your revenue. You think they give it to you for free. If you paid for your own insurance you would get more revenue paid to you. So in the end it might not come right out of your bank account/pocket direct but you are paying for it in the end.

 

There is a cost to doing business, whether you lease to a carrier or run your own authority. Running your authority you have the opportunity to earn more revenue based upon your drive and negotiating skills. Leasing to a carrier relieves you of having to deal with paperwork, such as filing fees and some help finding loads by assigning a dispatcher. Running your authority means that you are totally on your own. If something happens to your truck, load, etc., you are completely on your own. Leasing may enable you to have a support team to find another truck or the carrier could assist in getting needed repairs performed on your truck.

There is no easy answer to your question without knowing you and your propensity for risk. There is more risk to running your authority, but the rewards are also potentially greater. There are many more of those leasing to a carrier than run their authority. You can earn a good living, either way. Some will actually earn more leasing to a carrier then if they ran their authority. There are also those who do better with their authority than leasing to a carrier. I have done well on both sides. There are a number of reasons why I choose to run my own authority, but I could do well leasing to a carrier. Many who formerly ran their authority have given it up to lease to a good carrier and are doing very well. Some people simply don't want to deal with the additional paperwork and take on the responsibility of billing, finding loads, etc.,

 

That is what is nice about Landstar...Yeah they take their cut, but I have to be proactive to find freight to haul that makes me money. Landstar does the billing, collects the revenue and each week I receive a check. Landstar is probably as close as you can get to having your own authority and yet still be leased to a carrier.

 

You get to poop when you wanna poop and walk when you wanna walk