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Lease Operator or Independent?
There probably aren’t many truckers who at some point in their driving careers haven’t asked, “Should I get my own hauling authority? Should I venture out beyond the constraints of being either a company driver or leased to a carrier?”
What is the thought process a trucker goes through? What questions does he or she ask? In this article are two individuals who have gone through the decision-making process of whether to go it alone or stick with driving for someone else. One made the decision to stay driving for a carrier, and the other went into the world of owner-operatordom with his own authority.
DRIVER: Michael Binion
My dad came from a rather large family of farmers (10 brothers and sisters, he being the oldest). I was the oldest of 19 grandchildren and would drive the small Ford tractor through the fields pulling a wagon as the men loaded it with spiked tobacco, baled hay and straw, sacked grains and I headed on to the barn.
In 1982, my dad and one of his friends bought a Kenworth COE tractor, leased onto Tennessee Temperature Control (TTC) and put me behind the wheel. Having never seen the inside of a road tractor before, it was necessary to take a few ‘crash courses’ on Tennessee back roads. My first run, I deadheaded to Atlanta, Ga., picked up a load of Brach’s candy and headed to Los Angeles. I had found my calling.
DRIVER: Michael Anderson
I started driving a tractor-trailer while working on a farm. I then spent many years working for a major manufacturing company in Illinois that had its own fleet of trucks. I held several positions in dispatch, management, purchasing, inventory control, scheduling and accounting. After the company eliminated its private fleet and moved the manufacturing division to another state, I chose to start my own company. I manufactured oil and water separators for industrial use. A few years later, I received a call from a prior contact who was now manager of a large trucking company. He wanted to start an expedited freight division in his company.
What resources did you use to make your decision?
Anderson: I became a company driver to learn more about the industry. As a company driver, I worked with a dispatcher who I liked real well. He worked for three different Minnesota companies, and I followed him to each one. I also searched load boards, trucking magazines, business articles related to trucking or affected by trucking, seminars, webinars and anything related to the industry.
Binion: I contacted the Landstar recruiter in Rockford, Ill. She sent me their packet and enclosed in it was that day’s four-page list of Landstar’s available loads within a 100-mile radius of Nashville. This was my first glimpse at retail freight rates. I did the math: Wow! Immediately after regaining consciousness, the wheels in my head began turning: How do I find my own customers who will load my equipment with this premium freight, while eliminating the middleman? I completed David G. Dwinell’s (www.loadschool.com) Master Broker Certification course in October 2008. I’m constantly on the lookout for articles, seminars, books and courses. Anything that can help increase my knowledge.
What are some of the skills beyond being a company or lease operator necessary to becoming a motor carrier owner?
Anderson: My past experience in the transportation industry and various management positions in the trucking industry, plus the time I spent running my own industrial filter business. The toughest part is understanding the numbers, so my experience in inventory control, scheduling and accounting is very useful.
Binion: Advanced computer skills. You’ll be a one-man band wearing multiple hats to control costs — hiring no one for a while that doesn’t generate revenue. Your truck should be a rolling office with laptop and internet access.
Add hands-on experience in everything from accounting to dispatching to how to find loads. Books and courses are great, but nothing beats real-world experience. I spent three days learning not just freight brokering, but how to find customers and how to market myself and my operation. Matching this with what I learned at Landstar has proven invaluable. And this is important: I feel that what I?learned at Landstar had proven invaluable and I wouldn’t recommend skipping the true independent contractor model.
What concerned you the most about going out on your own?
Anderson: Number one was the unstable future in trucking. The freight volume was starting to slow down, and rates were starting a downward trend. Many manufacturing companies were closing and/or moving out of the country.
Binion: Lacking a background in mechanics, I was concerned about buying a lemon and breaking down on the road.
What is or was the most exciting part of owning your own trucking company?
Anderson: Having been there, done that, with the filter company, it was more exciting not having the financial responsibility and liability of owning a company. I felt my family’s needs and mine were better served by not taking on the financial liability of owning a trucking company in the current economy. Add to that my nearing retirement age, and I didn’t see there would be enough time to recoup start-up costs and begin to make a profit before I’d want to get out.
Binion: The possible opportunities, the challenge and the freedom.
After exploring all of your options, what was your final decision and why?
Anderson: My decision was to go with Lou Somerville of North East Iowa Freight Services of Wyoming, Iowa. I have known him for about 15 years, and he has a fleet that is well-maintained and less than three years old. We then leased the truck with Logistics Services, Inc. (LSI) of Eagan, Minn.
Why? I’ve known my dispatcher for years, and he knows me. LSI has the lanes I like to run and gets me the home time that I want.
Binion: I went with becoming both a motor carrier and a freight broker. Why? For the challenge, the freedom and the opportunities it presented. So I started Class 8 Motor Freight, LLC.
What was the biggest hurdle you had to overcome once you had chosen your career path?
Anderson: Once I had made the decision of not going with my own authority, it was finding the right owner to drive for and the right company to lease to.
Binion: Becoming debt free. I started on a shoestring with little capital and had to borrow (not a good business model).
What circumstances would have to occur for you to rethink or change your current status?
Anderson: I would not change my status unless the operation became unprofitable or had lane changes that would affect my home time.
Binion: Never say never. I’ll do whatever I have to do, including going back to being a company driver, but only long enough to reload.