Owner Operators v. Company Drivers

By: Joe Johnson


Which is Right for You?

There was an old saying, which is still true, "Never work for the truck, the truck should always work for you."

What this means as an Owner / Operator (O/O), after paying all of your overhead (including paying yourself a compensation and benefits package), the revenue your truck is generating that exceeds the above, that is your profit. Without profit, you are working for the truck instead of the truck working for you ... Before becoming an O/O, you need to know what you are worth as a company driver. That can vary from $30,000 a year as a rookie who's right out of trucking school to around $100,000 a year as a very experienced driver with endorsements and no tickets or preventable accidents. However, this might mean being gone over 330 days a year and stuck on a sleeper team with a teamster carrier.

Most of us have an idea of what we are worth, now take that number and add an additional 25% to 35% to it for a benefits package. Now, you have a number for your labor cost (if you become ill, lose your CDL, or if something else happens which prevents you from driving, you will still need to pay this to someone). Then, you need to estimate how many miles a year your truck is going to rack up. Once you have this information, you can divide your labor cost (let's say $90,000) by your mileage (let's say 150,000 miles) and that will give you your total labor expense (in this example, it works out to 60 cents a mile).

The next step is to crunch the numbers on your other expenses; such as, fuel, food, etc. Since I haven't been an O/O since 1984, I am not going to list them all; however, a rule of thumb used to be, "Two times your labor cost just to break even." Or, to use the above example, a minimum of $1.20 per hub mile would be your cost and anything above that would be your profit.

Another old saying that still is true is, "To be a successful O/O, you have got to have the contacts and the contracts." An example would be someone who has a relative which happens to be the shipping manager for a large corporation. The company only leases a few O/O's as they have a contract with each of them for X number of loads. When they need more transportation services, in order to move the remainder of their shipments, they call a common carrier to haul the excess. When business slows down, they have a commitment to their O/O's who keep running while the common carrier's trucks sit around waiting for work.

I will never forget the recessions I've been through. I remember being in truck stops (on both coasts) and seeing drivers actually physically fighting over loads! These loads barely paid the fuel cost, but these O/O's need that money to get home. The brokers just grinned as if they were feeding scraps to starving dogs. Take it from someone who has been there and done that; if you don't have the contacts or the contracts, forget about it. The last thing you want to be during a recession is an Owner / Operator.

Hopefully, now you see why many companies would prefer to have an O/O v. Company Drivers. With company drivers the companies are taking all of the risk; whereas, with O/O's the corporations can shift a large amount of their risk to others.

2007 Joe Johnson. All Rights Reserved.