John Willoughby leased to Knight two years ago after losing $6,000 to an unscrupulous broker on a couple of coast-to-coast hauls. “I concluded that, although I was getting $2 to $2.50 a mile, what it really came down to is not how much you’re getting or what your rate is, but how much you are taking home,” says the Fontana, Calif., owner-operator. “Miles is an old standard that was used when rates were good and trucking was healthy.”
Instead of running 150,000 miles a year, like he did before signing on with Knight, he runs about 110,000-120,000 miles. He says he pays about $200 a month for truck insurance, compared with $800 in the past. A fuel surcharge lowers his fuel cost to about $1.25 a gallon, and a 3 cents-a-gallon set-aside helps him save for maintenance. He also earns $32 to $42 a stop for loads with multiple stops. A good relationship with a dispatcher yields a broad choice of loads.
“I wouldn’t change this for the world,” he says. “I’ve made more money in the last two years than I’ve ever hoped to.”
PERCENTAGE OF REVENUE
Schneider National’s percentage of revenue operation began as a pilot program in 2006 and has been in full operation for two years, says Mike Bethea, director of operations for van contractors. Depending on the freight market, the company opens and closes the program to contractors to maintain a balance between demand and supply of trucks. The company reopened it in late 2009, Bethea says.
Owner-operators get 65 percent of the line-haul rate. They also get 100 percent of “accessorial charges,” including fuel surcharges and extra services such as unloading and multiple stops billed to the customer. “It varies by load, length of haul and by market,” Bethea says.
Unlike percentage programs in place before trucking deregulation in the 1970s, Schneider’s version allows contractors to choose the loads they want from the company’s load board. They can choose the type freight, revenue amount and haul specifics they want.
As the freight market improves, Schneider will open more regions to contractors. The strongest recent market was in the Midwest. “We have a nationwide market, although freight primarily runs east of the Rockies,” Bethea says. “If we lease guys onto it, they’re going to be better off if they’re domiciled in the Midwest.”
Owner-operator Bryant Coll, with 18 years’ experience behind the wheel, estimates he drove less than 100,000 miles for Schneider in 2009, while he logged 140,000 to 160,000 miles a year when leased to another big carrier.
Even with the big drop in miles, Coll’s been able to improve his compensation by improving his productivity.
He had to adjust from a focus on number of miles and per-mile rates. “Here I look at revenue to the truck versus how many miles,” says Coll, who loves to “crunch numbers” in the percentage-pay environment, even though he says it requires more attention to freight specifics and routing. “You can put yourself in trouble by ending up in a dead spot or slow freight area.” He estimates he’s reduced deadhead by 70 percent.
Bethea says the company requires a higher experience level from contractors who want the percentage-pay plan. “You have to be a more entrepreneurial, aggressive person with a good business mind,” he says. “To run an individual business, we don’t want to bring on people who aren’t going to be successful. We want to retain those [good business] people.”
Bethea says the percentage-pay model is “about as close to being a pure [independent owner-operator] without buying your own trailer and insurance.” In an improved economy, “it will explode.” n