Custom pay

Max Kvidera | February 01, 2010

Custom-payBryant Coll believes he’s finally achieving his goals in trucking. Over the last 13 months, Coll’s been participating in Schneider National’s percentage pay-based program for leased owner-operators. “You have a feeling of truly being an owner-operator running your business,” says Indianapolis-based Coll. “You can pick and choose loads and control your own destiny a lot better.”

Owner-operator Joe Haumann, after running independent from 2005 on, last July leased to Barr-Nunn Transportation. Haumann is quite content to take what dispatch gives him and get paid by the mile, along with earning additional compensation. “To be a dispatcher, driver and mechanic combined is too many responsibilities that I’m not willing to put in the time for,” he says.

Coll and Haumann are enjoying the benefits of pay package changes that have been spreading through the industry. While a simple mileage-based pay remains the standard, a growing number of companies are either experimenting with different mileage plans or switching to revenue-share programs. Some carriers are adjusting mileage pay rates to emphasize regional or shorter hauls or adding perks such as pay for unloading, layovers and multiple-stop runs.

The growth of such pay plan variations has been rapid, says Gordon Klemp, principal of National Transportation Institute, publisher of the National Survey of Driver Wages. “Usually, we see changes for owner-operators occur fairly slowly. But the evolution of some of these has been more rapid than in the 15 years we’ve been around.”

Most carriers trying new plans either are seeking to expand their owner-operator lineup in a depressed market or positioning themselves for a market rebound. Another motivation is retaining strong contractors.

“We can increase our fleet size a little bit by adding more owner-operators and not have to take on more new equipment,” says Jeff Blank, Barr-Nunn’s director of recruiting. “And we can provide more capacity to our customers as well.”

Klemp says one national carrier has about 300 different pay plans for leased owner-operators that adjust according to routes and length of haul. (That carrier did not respond to requests for an interview.)

More carriers are offering percentage-pay plans. J.B. Hunt, for example, offers a 65 percent or 62 percent revenue share, depending on the operator’s availability for loads, according to its website. A few carriers offer 75 percent or more if the contractor provides a trailer, Klemp says.

Once the economy rebounds, the move to percentage pay plans may lose steam because it’s less advantageous for the carrier. In a strengthening market, “a carrier is giving a pay increase for every load,” Klemp says. “Carriers went to percentage pay because freight that’s marginal has weak margins. Carriers and owner-operators have been sharing in a weak freight market.”

Percentage-pay programs offered in earlier years confused some owner-operators, who were accustomed to simple per-mile plans, says Todd Amen, president of owner-operator business services provider ATBS. The confusion hampered recruiting efforts, and some fleets reverted to mileage pay.

Despite these missteps, at least five “significant carriers have asked us who does it and how it works,” Amen says. “They’re thinking long-term. They want it (percentage pay) now because their rates from shippers have dropped and they’re still having to pay drivers the same amount (per mile), which has hurt their margin. They’d rather have everything variable, so the driver made less.”

Other carriers, however, have been forced to cut pay as business slowed. Amen says he’s hearing of carriers “tweaking their packages – maybe taking a penny or two away from base-mile pay. They’re going from a 5.5 mpg fuel surcharge average to 6.5 mpg, or they’re not paying for base plates and licenses like they used to.

While OverdriveOnline.com strives to maintain an open forum for reader opinions, it does not welcome comments reflecting racism, vulgarity or spam. Violations of this policy can be grounds for removal of a comment or banning a user from the comments system.