The Iowa-based carrier passes along to owner-operators all of its fuel discounts and pays fuel surcharges on all miles, loaded or not. It also offers geographical pay differences, with higher pay in the Northeast, for instance.
Another attraction for Barr-Nunn’s estimated 80 owner-operators is appreciation bonuses – $387.50 for every 30,000 miles during the first 120,000 paid miles and $562.50 every 30,000 miles thereafter. “And there are no safety qualifiers on them,” Blank says. “Our owner-operators are consistently receiving additional pay.”
Owner-operator Joe Haumann says his previous carrier’s per-mile program had no additional pay for waiting time, layover and multiple stops. Now he earns compensation for all of those at Barr-Nunn, plus pay for all miles, computed as practical miles. “Per mile with the fuel surcharge, I’m averaging about $1.11 per mile,” says Haumann, who runs about 130,000 miles annually. “It varies somewhat, depending on the length of haul. It adds up to about $80 a week more.”
Other perks reduce Haumann’s costs. Since he drives a 2005 Freightliner Columbia, he receives a company-arranged discount on parts and repairs at Freightliner dealers. He gets a fuel discount in the Barr-Nunn network of about 20 cents a gallon.
Rod Horton, another owner-operator leased to Barr-Nunn, likes the simplicity of a mileage plan versus percentage pay, plus the additional pay perks. His trips are short, ranging between 100 and 800 miles. He averaged about 2,250 weekly miles in 2009, similar to what he drove in 2008. “The average per mile comes out higher than previous plans,” says the Granger, Iowa, resident, who’s been with the carrier for two years. “Sometimes I don’t get all the miles I want, but it comes out better in the end.”
Blank says the pay plan is a big reason the company is attracting a higher caliber of owner-operator. “With failures at other companies, we’ve had owner-operators look at us and see what we offer,” he says. “More and more of them are looking for stability.”
VARIABLE PAY PLAN
In mid-2008, Knight Transportation changed a 15-year-old pay program by instituting a variable pay scale that tracks with market rates.
Each quarter, the company analyzes its average rate per loaded mile. If the rate is, say, 5 percent higher than the rate it charges customers, rates paid the company’s owner-operators increase 5 percent above a base rate the next quarter. If rates decline by 5 percent, independents stay at the base rate. During 2009, “it’s been at the bottom per-mile rate because freight rates are down,” says Sarah Romanek, manager of Knight’s owner-operator group. “In 2008 in the last two quarters, the rates were up.”
Knight pays $1.20 a mile for loads running up to 275 miles, $1 a mile for loads between 276 and 550 miles and 90 cents a mile for trips beyond 550 miles. All hauls pay a fuel surcharge.
Blaine Callister, Knight’s director of used equipment sales and the owner-operator group, says the quarterly rate adjustment is part of the company’s strategy to attract more independent contractors. He hopes that by 2011 the owner-operator roster will increase to 500 from the current 330.
“Owner-operators are a stable and strong way for us to recruit,” Callister says. “It gets us out of having to own more equipment, and they have access to more freight and to our bulk buying power for shop charges and fuel.”
Romanek says the contractor pay program has drawn owner-operators with staying power. “I think they expect a lot more than owner-operators in the past,” she says. “They’re more business-oriented and know what they’re doing. In the past an owner-operator could just own a truck and because there was good freight, they could do well.”