In this trucker’s opinion, there really isn’t a driver shortage—it’s a misunderstanding by companies of what truckers want and need.

The dream of many drivers is to achieve the independence of owning and operating their very own truck and bringing the American dream home by having their own business. What has happened is many trucking companies are taking advantage of the dream. They are offering their company drivers and new recruits the “opportunity” to go into business for themselves. And they make it easy: just sign on the bottom line, with no money down and you’ll find yourself in your ‘own’ truck. A truck with its title still in the name of the trucking company or its leasing arm; a truck that, if you decide this company isn’t a match for you, stays with the company; a truck that, when you make your final payment requires you to finance a balance that is greater than the current value of the truck.

Granted, not all trucking companies do this, but there are an ever-increasing number that do. The most important things to remember are, if it seems too easy and too good to be true, it most likely is. In addition, if you’ve never been in business for yourself before—do you have the business and accounting knowledge to make it work? Being an owner-operator takes a lot more skill than just being able to maneuver that rig. If it’s a dream, gain the necessary skills, so it won’t become a nightmare.

Be careful of the trap.

The earning figures many major trucking companies provide to potential lessees are not an “apples to apples” comparison. Yes, owner-operators with these companies are getting $105,000 to $115,000 annually. But these amounts reflect gross revenue-- not the owner-operator’s net take-home pay. On those gross revenue amounts, a well-disciplined owner-operator would take home between $34,999 and $38,333-- about the same as an inexperienced company driver. From my 23 years’ experience as an owner-operator and as several other experienced O/Os who are excellent money managers, we concur a trucker who watches his dollars will take home approximately 1/3 of what he grosses in a year.

As I see it, the only reason for a company to hire leased owner-operator is because it benefits the company. The company no longer has to pay its half of FICA tax, and benefits like heath insurance and 401(k) go out the window. It no longer has to pay for tractors or their upkeep. In a majority of cases, the trucking company or one of its subsidiaries, leases the tractor to the owner-operator at a staggering rate; in some cases, as high as $800 per week.

Between what a company saves by turning a company driver into a lease driver and the non-freight revenue, what the company earns from the same now-leased driver is staggering. With just a few hundred drivers going lease with these companies, they generate revenue in the tens of millions of dollars. Tens of millions that improve the bottom line of the trucking company, but doesn’t auger well for the trucker. Note that there is nothing illegal in doing business this way, but I’ll leave the ethics and morality of this practice to the reader.

An owner-operator earning $1.161 per mile (a major trucking company’s national average, including all extras, from their web site) on a 3,800-mile trip covering 6 days will gross $4411.80 for the week with $655 a week truck payment. After all expenses are paid: fuel, cell phone, amortized base plate, FHUT, tires, maintenance, and repairs, etc. (except self-employment tax, income tax withholding, retirement contribution and health insurance costs), the lease driver will net $1016.84, or $169.77 per day, or $0.27 per mile. That’s $0.08 less than a company driver at the same company. (If he gets paid the actual hours he spent on the job including dock time, waiting time, paperwork, driving, and truck inspections, figuring 110 hours for the week, he earned a whopping $9.244 per hour.) But the bottom line is, this driver is slowly driving himself to financial failure.

Why would any driver in his right mind make the change from being an employee to “going lease”? It’s the dream! When presented with the idea of fulfilling a dream, a dream many drivers have had since childhood, and seemingly having it handed to them on a silver platter, the inclination is to jump at the chance. The initial euphoria when that driver drives off the lot with his first leased tractor is not unlike having just won the lottery. Then reality sets in—suddenly there’s not enough money to pay the bills at the house, bills that just a few weeks ago, while employed by the same trucking company, weren’t a problem. Next comes the IRS self-employment tax bill of 15.3% of his take-home earnings, and the driver has no idea of what his take-home pay is--because he hasn’t seen a check to the house in weeks. He complains to the trucking company, and Operations accuses him of not managing his money correctly; they’re giving him all the miles they can; he just needs to suck it up, cinch his belt tighter. In short order that dream has turned into a nightmare.

The word here is “Driver Beware of Companies Bearing Gifts!” As much as we would like to believe that trucking companies all have drivers’ best interests at heart, the truth is, they are answering to stockholders who demand a certain per share price and dividends. This tends to put a company’s most valuable asset on the back burner: the lease drivers.

With driver turn-over rates for truckload carriers exceeding 100% annually, it is obvious the problem is still not being addressed. Calling the problem a “Driver Shortage” is the first mistake: it’s a “Qualified CDL Holder’s Exodus!” Drivers are leaving the industry, not because they want to-- it’s a matter of financial survival. The solution is not lowering the qualifying bar for drivers; it will only be addressed by raising both the quality and earning levels for drivers. This can only be accomplished by re-examining all aspects of how drivers are paid. Regardless of the fact that drivers are excluded by the Fair Labor Act of 1937 (truck drivers under the act are excluded from the minimum wage, overtime, and other provisions of the legislation), companies need to pay them for all the work they do. Whether driving, loading, waiting; if they are responsible for the care, custody, and control, of a tractor-trailer and its freight, they need to be compensated at an amount that is representative of the responsibility.

Remember, it’s your company, your truck.

Timothy D. Brady is a 20 + year trucking veteran, AMSA’s 2002 Super Van Operator HHG, co-author of “Driven 4 Profits,” developer of Load Profit Analysis Software, is the principle consultant for The Trucker’s Consultant Phone Service (866-890-8996).

Catch him on Sirius Trucker’s Network’s “Open Road Café’s” “Trucker’s Business Advisor.” He is also available for speaking engagements. His trucking business books and software can be found at www.truckersbookstore.com You may contact him at tbrady@writeuptheroad.com or (731) 749-8567.

For those who entered our contest last month: Thank you for the tremendous response. We didn’t receive any correct answers last month “Load Profit Analysis Software 30/30 Special Edition.” Here are the correct answers to February’s questions

1. What is the newest technology on the market that will eventually replace Wi-Fi?
   Wireless Broadband

2. What is the best activity you can do today to prepare for the technology of tomorrow?
   Not all technology is good or necessary, but the right technology is invaluable. To know what is going to be invaluable tomorrow requires keeping up with what’s on the horizon today.

Contest: The first person to answer correctly, by email, the questions listed below using this article to info@truckersbookstore.com will receive a copy of Load Profit Analysis Software 30/30 Special Edition.

1. What percentage of his annual gross revenue can an owner/operator expect to send home as his paycheck?
2. What are some of the provisions of the Fair Labor Act of 1937 from which truckers are exempt?