Company Driver Or Owner/operator?

I was watching a video about this by a guy named TruckingExec.

He said the company knows what profit they have on a load, so if it goes to an LO or OO, they take their profit off the top, and then the LO or OO assumes all the costs, liability, etc., and the company sits back and collects the same profit. He said there are some who are good business people who make profit doing it, but most end up at the same money as a company driver, or fail completely.

Basically what most here say.

Here we go again, lol. This topic just keeping coming back. It takes someone who is very determined, foscused, and a bit crazy to be a O/O these days. That said.... I am one, leased to a large carrier for several reasons but I have been driving a little over 5 yrs and have run a business before so I undestand that side. I have a much different life circumstance than alot of folks driving a truck, which translates too I can take more risks than most folks without it ruining my life. I make decent money at it, but honestly when all is said and done this year I have averaged .67 cents a mile in profit to me. I have all the aggravation of running a business, and all the risks and costs associated with that. No one starting out needs that pressure....Old school is dead on in his assesment. One major breakdown can knock that small amont more I make way less for the year. Lease programs are designed to make the company money not the lessee. Some are better than others, but still not designed to make the lessee the benafactor. I hope this sheds a little light on the issue. Remember this little tid bit.... All that glitters is not gold....

Here we go again, lol. This topic just keeping coming back. It takes someone who is very determined, foscused, and a bit crazy to be a O/O these days. That said.... I am one, leased to a large carrier for several reasons but I have been driving a little over 5 yrs and have run a business before so I undestand that side. I have a much different life circumstance than alot of folks driving a truck, which translates too I can take more risks than most folks without it ruining my life. I make decent money at it, but honestly when all is said and done this year I have averaged .67 cents a mile in profit to me. I have all the aggravation of running a business, and all the risks and costs associated with that. No one starting out needs that pressure....Old school is dead on in his assesment. One major breakdown can knock that small amont more I make way less for the year. Lease programs are designed to make the company money not the lessee. Some are better than others, but still not designed to make the lessee the benafactor. I hope this sheds a little light on the issue. Remember this little tid bit.... All that glitters is not gold....

Well said.

I have averaged .67 cents a mile in profit to me. I have all the aggravation of running a business, and all the risks and costs associated with that. No one starting out needs that pressure....Old school is dead on in his assesment. One major breakdown can knock that small amont more I make way less for the year.

Basically PJ is reporting that he's making 12 cents more per mile than me right now. I don't know how he does his accounting but I just want to point out a few things for those of you who have might be taking hope from that number he shared with us.

He had to lay out a considerable amount of capital to do this. No one gave him that truck.

His initial investment is depreciating in value rather rapidly.

If he does this for five years he should have added another 600,000+ miles onto an already used truck he bought. How much of that capital investment will be returned to him when he sells it? Whatever that difference is in the value, will count against the "extra" he's been earning.

He started doing this while freight rates were really high. Has anyone noticed how all the well known publicly traded company stocks are taking a beating right now? Oil prices are down and investors know that means freight rates are going to take a beating soon. They are running from the Transportation business in droves right now. What will that mean for Owner/Operators?

I'm not picking at PJ. He's a friend of ours, and has been for a long time. I'm just scratching the surface here to hopefully cause some of you following this conversation to think beyond what's said. I didn't even mention how my company pays my health insurance, provides me three weeks paid vacation, deposits a considerable amount of money over and above my wages into my 401K account, pays me when I am broke down or delayed unreasonably, and provides me with a brand spanking new truck long before mine has lost it's usefulness. The list of benefits good solid company drivers have is lengthy and tangible.

PJ has a unique position with an additional retirement income over his trucking labors.

Personally, I'm pretty sure I can layout the math to prove his 67 cents per mile comes out less than many company drivers are making.

Thanks for all of the insights that everyone has given me. The financial aspect of being a company driver over an owner/operator definitely makes sense!

You hear or read things about independent drivers looking at company drivers differently and company drivers having to share trucks (there is a term for this that I can't remember) and you wonder what the truth really is.

I am seriously considering being an OTR driver one day. I am getting a lot of invaluable information from this website! Again, thanks for all the info.

Old School you are very correct. I have no beneifts other than what I pay for myself, I loose money everytime the truck sits. For anyone following this I use software from a site called lets truck, owned and operated by Kevin Rutherford. He has been around trucking a very long time. Yes I pay a monthly subscription for that too. I shared the current number only as a way to show folks that I make very very little more than the average experienced driver. I take on all the risks and aggravation. If I were driving as a sole source of income to support a family, no way in the world would I be doing this.

Paul what you are referring to as sharing trucks is called slip seating. Most companies don’t slip seat trucks as a general rule. AutoZone is an exception. If you go regional or OTR with most companies they will issue you a truck when you finish training and it will be yours.

Totally agree with G-Town and Old School. Sound wisdom. I'm a new, inexperienced driver and knew right from the beginning that being an owner/lease operator was fools gold. Being under the umbrella of a big company (Schneider) I feel protected like a baby in the womb. My company driver business leader is just a phone call away and will help me through any problem. I hope all the experienced O/L operators out there are making some money, but for me, no thanks.

Old School you are very correct. I have no beneifts other than what I pay for myself, I loose money everytime the truck sits. For anyone following this I use software from a site called lets truck, owned and operated by Kevin Rutherford. He has been around trucking a very long time. Yes I pay a monthly subscription for that too. I shared the current number only as a way to show folks that I make very very little more than the average experienced driver. I take on all the risks and aggravation. If I were driving as a sole source of income to support a family, no way in the world would I be doing this.

Paul what you are referring to as sharing trucks is called slip seating. Most companies don’t slip seat trucks as a general rule. AutoZone is an exception. If you go regional or OTR with most companies they will issue you a truck when you finish training and it will be yours.

Slip Seating - that's it! Thank you, that was bothering me :)

I shared the current number only as a way to show folks that I make very very little more than the average experienced driver.

You guys (lease drivers and owner operators) are always saying that, but even when a huge mountain of expenses are pointed out to you which you obviously are not including in your calculations, you still repeat the same mantra - I'm making a little more than a company driver. You guys have that hope drilled so deeply into your psyche that I don't think you even allow yourself to see the truth, nor share it honestly with others. You look at the numbers you want to see and leave out the rest.

That software you're using - did you enter the down payment for the truck and amortize that? What about the cost of benefits equal to what a top company driver is getting - how would that change that figure? What about the down payment and fees associated with the next truck - how has that been figured in? What are the projections if freight rates drop next year by 25%?

Once in a while we get a tiny glimpse of the truth but you really have to think about it to understand the significance:

If I were driving as a sole source of income to support a family, no way in the world would I be doing this.

Now how telling is that statement in the context of the other claims?

I agree with Old School - I love having PJ here. He's an awesome driver and gives amazing advice. But no matter who it is we're going to investigate any lease drivers or owner operators who claim to be making more than company drivers. Both Old School and I are long time business owners who know the business world, the trucking industry, and how to do the math. Neither one of us would ever consider buying or leasing a truck after doing the math for ourselves.

I, quite frankly, never believe the claims that lease drivers and owner operators are making more than company drivers because theoretically it doesn't make any sense nor have I ever seen one shred of evidence that it's true. Even the arguments presented are never even close to being complete. I've asked many times, "If you're making more than a company driver when most people clearly are not, what are you doing that's so different and so special to make that happen?" I've never gotten a solid answer to that question.

The harder you investigate the claims the less likely they'll appear to be true and the more people you're going to make angry. If you're considering buying or leasing a truck, dig hard into the numbers these guys present and push them to show you the profit number they're telling the Federal Government - "Earnings after all deductions" - see if they'll show you that number, but don't hold your breath. Remember, the real conversation doesn't begin until after they claim they're making more than a company driver. Trust me, that's nowhere near the end of the conversation. That's when you grab a shovel and start digging deeper.

Note: This in NOT directed at any one person!

The one thing that baffles me about L/O & O/O folks is that they're always quoting their gross numbers. You never here anyone say, "grossed $9000 last week but only took home $850." You don't here them talk about the 30 day, 90 day, 1 year or any other average operating cost per mile for a given time period.

Crack open the books and let's have a look. What's the truck payment? Is there a reserve built up to cover the payment if you have a bad week, month or 6 months? What's the balance of your maintenance fund? Have enough to cover something major like replacing a turbo? How much are you budgeting for maintenance? What's insurance costing? What are your fuel mileage numbers? 30/60/90/1 year averages? How about consumables? Oil, antifreeze and windshield washer fluid?

Don't give me the fluffy numbers! $9000 gross or $0.55/mile sounds all good but it doesn't give a clear picture.

/rant