Creatures of habit

| December 12, 2008

Henderson, N.C.-based Edward Burt

Any successful business is a product of successful practices. An examination of respondents to the 2007 Overdrive Owner-Operator Market Behavior Report – and especially those whose net income ranks in the top 25 percent – reveals highlights on the road to success. The typical high-earning owner-operator is a little more than 50 years old and has been in business as an owner-operator since he was 30. He makes more than $70,000 a year after expenses and is three times as likely to be leased as independent. The carrier he’s leased to typically subsidizes his fuel costs with surcharges. If he’s independent, he sets – and receives – his own surcharge.

As with any linkage of income and other factors, a given practice – say, computing cost per mile or performing oil analysis – might not produce several thousand dollars of extra income year after year. But those behaviors do save money, and often are indicative of a broader business-oriented mind-set that pays off in the long run.

On the surface, the high-earning owner-operator isn’t much different from average and below-average earners. Look closer, though, and you’ll see a combination of characteristics that many owner-operators don’t have. The following seven practices, based on this year’s Behavior Report, should provide a few ideas to help boost your income.

  1. WORK FOR A PERCENTAGE OF GROSS
    O.J. Luster of Macon, Ga., leased to Cross Country Express of Sparks, Nev., pulls a company reefer with his aerodynamic Kenworth T2000. He prefers getting paid a percentage of gross revenue because it allows him more control. “I have much more latitude as far as what I’m doing, where I’m going, and how much I make,” says the 15-year owner-operator.

    Overdrive research bears him out. While the average income for percentage operators is only about $2,000 higher than the average for per-mile pay, a significantly greater share of high-earning owner-operators are paid this way.

    Crucial is your ability to find expensive freight because those on percentage pay often must find their own backhauls, Luster says. A produce hauler, he specializes in East Coast regional delivery, often to cities where many truckers don’t want to go, including New York City. “I’m not afraid of that,” he says. “I’ll do all five boroughs.”

    If you can minimize empty miles, says Chris Brady of Commercial Motor Vehicle Consulting, author of the Behavior Report, “You’re probably going to have higher income because your rate per mile is higher. If you’re not successful in keeping down your empty miles, you’re not getting paid for those miles, which somebody on a per-mile basis might be.”

    Better managers, particularly those booking their own loads, will rise to the top under percentage pay, Brady says, as will independent owner-operators who deal directly with shippers.

    “If you’re negotiating directly with the shipper, you’re not sharing any revenue with the carrier obtaining the load for you,” Brady says. “The key to that is you’ve got to have loads all the time.”

    With high returns, however, come high risks. Consider an operator hauling exclusively on a dedicated run from the same plant. “The downside to working directly is if they close down that plant,” Brady says.

  2. BUY YOUR OWN TRAILER
    A little less than half of Behavior Report respondents own the primary trailer they pull. That same half makes at least $6,000 more yearly than owner-operators leasing trailers or pulling a carrier-provided trailer.

    “If you provide your own equipment, they’ll generally pay you a better rate,” Brady says.

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