“Our growth and future driver capacity is going to come from our academy, rather than from traditional owner-operator recruiting,” says Rob Newell, vice president of capacity development for FFE. Newell says that from late March to mid-July the company approved 39 drivers for the program.
Prime’s approach is to treat the truck lease more as a rental. Instead of traditional lease-purchase, the program offers the operator the option of buying the vehicle or walking away with a “completion bonus,” reasoning that most of the truck’s useful life has been used up during the lease.At the end of a typical three-year term, that bonus can range from a few thousand dollars to $30,000, Hancock says. “The more miles he runs, the more money he receives,” he says.
Barr-Nunn’s lease-purchase plan attracts about 70 percent new contractors, the rest existing owner-operators, with most of those from outside the company. “We’re getting a high experience level, with a majority with more than five years’ experience,” Blank says.
Richard Forney was one of the first at Barr-Nunn to move from company driver to owner-operator when the company launched its lease-purchase program. He paid off the lease early on his 2005 truck and is considering buying a new truck next spring.
Forney says he receives an additional 5 cents a mile in hazmat pay for all miles and extra pay of at least 3 cents a mile, depending on length of haul, under the carrier’s Band Pay program.
Klemp says that while some carrier lease-purchase programs have earned a black mark for conditions that heavily favor the company, in some cases leading to lawsuits, he sees the environment changing.
“Carriers are recognizing the value of owner-operators and are putting together mutually beneficial contracts for lease-purchase,” he says, listing as good examples Barr-Nunn and Anderson Trucking Service, which recently announced reduced weekly lease rates.
While Prime prefers paying a percentage of revenue, it reinforced that model by adding a compensation guarantee. The carrier retained its 72 percent share for contractors but raised its guarantee per mile to $1.02 for most, $1.15 for tank haulers. That is, if you drive 100,000 miles a year, you’ll receive at least $102,000 for all miles.
“I believe a percentage split of revenue is the best model,” Hancock says. “If the freight rate moves up, the operator receives the benefit of that movement. If the rate goes the opposite way, the contractor would probably not choose to haul it,” putting pressure on the shipper that wants to cut the price.
Kretsinger sees it differently. Percentage pay “adds a lot of complication,” he says. “We are known for good customer service and by paying every mile the same. The owner-operator is less likely to get choosy in turning down freight.”
Schneider and J.B. Hunt offer both, Klemp notes. The contractor is able to switch between per-mile and percentage.
Christenson’s higher pay for East Coast routes is an example of carrier regional pay plans. Klemp estimates the number of carriers offering regional pay has risen 48 percent in the last 12 months.