Pay Choice

Todd Dills | December 01, 2011

He’d gone to Landstar in 2003 for a year and liked that company’s system, especially its self-dispatch. “I spoiled myself when I first went over there,” he says. Rather than being sent to the Northeast, as he was before, “When I was first able to dispatch myself, I’d stay on [Interstates]10 and 20 going east and west.”

Mobley left Landstar when rates were falling. But back at Schneider, he didn’t hesitate to participate in the pilot test for the new percentage program, which pays 65 percent of the linehaul with fuel surcharge and other accessorials.

As Schneider was testing its percentage program, many in Hunt’s owner-operator fleet (launched in 2000 with straight mileage pay) became interested in percentage as rates began rising in 2005-06, says Mahaffey. Owner-operators “wanted to be able to take advantage of those increases.”

Hunt offers 65 percent of the gross base in the Performance Percentage Plan, a traditional dispatching operation (all compensation packages include 100 percent fuel surcharge pass-through). Its basic Percentage Plan, similar to Schneider’s, though, combines 62 percent of the gross pay with freedom for owner-operators to choose their own loads – some on its Load Visibility program and self-dispatched from an in-house load board.

“It’s very easy to use,” says Dennis Buffington, owner-operator of a 2006 Freightliner Century leased to Hunt. The board gives “your pickup and delivery times and how many miles it is. You’ll shoot [office personnel] a number on the computer and ask for a rate on it. They’ll break it down for you and send the rate back.”

Buffington returned to Hunt in 2008 and opted for the Percentage Plan during the recession, a move he describes as a “hope on a wing and a prayer.” As rates have come up with the economy, “I stuck it out and I’ve seen things improve a lot today.” Buffington shoots for $5,000 to $6,000 in revenue weekly on an average 3,000 miles. Based near Atlanta, he sticks to a few lanes when he can.

Try mileage plan first

Steven South learned how to maximize his income under a percentage pay plan by wisely choosing freight. Ultimately, he doubled both revenue and take-home from what he was paid per-mile.

“One of the difficulties of the Percentage Plan,” says Mahaffey, “is it’s really for more experienced operators who understand the market,” when and where to take an outbound, high-revenue haul so that getting back home at a lower rate can still result in profit, for instance. Those who excel are those “who can actively manage their business,” Mahaffey adds. “For inexperienced contractors, we recommend starting on the mileage-pay program.”

Mobley has given similar advice to operators weighing mileage/percentage plans at Schneider. “Unless they’ve been with Schneider for a while, I’ve told some guys that it wouldn’t be a bad thing to consider the mileage program for six months,” he says. “Get a feel for their freight lanes, how the company operates.”

Bethea says Schneider’s seeing the most interest in percentage pay from newly contracting owner-operators. The reason? Without paying for their own commercial auto liability insurance and buying their own trailer, “it’s close as you can get to being independent,” he says.

The company’s online system for freight booking takes self-dispatch to a new level. “We worked our way out of doing it by phone to a beautiful load board that is pure and simple,” says Mobley. Looking at potential loads, the system “tells me the date they pick up, the time, city, the date they deliver, city they deliver in, plus the total revenue to the truck and what the rate per loaded mile” and fuel surcharge are. The system “will give you your deadhead miles exactly.”

Carriers utilizing pay package options for owner-operators are looking for ways to help contractors stay profitable. In 2006 at Hunt, says Mahaffey, “When we implemented percentage pay, 60 to 70 percent of our owner-operators got on the percentage program,” he says. “But today, with the collapse of a lot of freight in 2008 and certainly 2009, recovering a little last year [and continuing], 60 to 70 percent are now on mileage.”

As the economy improves, it’s likely that ratio will shift back again.

Mileage vs. Percentage Pay

  • guest

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