Why Do Carriers Offer Lease Contracts to Owner-Operators?

In most types of professionals, people prefer to be salaried or hourly workers. But did you know that in the trucking industry, the most lucrative opportunity is as an owner-operator?  When you own your own truck and work as an independent contractor with local carriers, there are five main advantages to consider.

1. Flexibility to Accommodate Surges in Freight Volume Requests

Some trucking companies utilize company owned fleets and hourly drivers. This business model works well for carriers during times of steady demand.  Where the trucking company can forecast and predict the volume of demand accurately.  And make sure there are enough drivers to meet that steady demand.

However, as our economy in America has become more globalized, we are also at greater risk of disruption in the supply chains.  For example, a trade war between China and the United States resulted in large tariffs on imported goods from APAC countries.  For 2018 and 2019 the trade war between the countries saw freight volumes drop.

From October of 2018 to October of 2019, there was a 19.1% drop in export volume.  The increased tariffs from China impacted 96.6% of all purchases of U.S. exports through the Port of Los Angeles.  It was a loss of $19.9 billion.  And because the tariffs from China increased the costs of all U.S. goods, the total drop in export cargo in the L.A. port system saw a drop of 28.8% of all export value in 2019.

Trade wars are just one example of how political and external factors (like the pandemic) can impact freight demand. Both drivers and carriers that use the fleet and hourly pay structure lose when adversity strikes the economy.  Experienced hourly truck drivers are laid off or fired.   And then, when freight volumes resume, carriers may not have enough trucks and drivers to meet the demand.

2. Owner-Operators Generally Have More Experience

When you are starting out in your career as a truck driver, the first place you may start is with an hourly position. Working with a fleet carrier, a new driver enjoys the stability of regular hours for short-haul driving.   And they gain valuable experience as a driver for years working as an hourly employee.

Many truckers use this time at the beginning of their career to also get certifications and additional training.  They clock the miles and learn how to manage different types of cargo.  From full container loads (FCLs) to less than container loads (LCLs), and crossdocking skills for palletized goods.

Some professional truck drivers already know that they want to be an owner-operator when they start fleet or hourly driving. But it takes time to save up for a down payment or to purchase a used Class 8 tractor and chassis.  Being an owner-operator also means shouldering the expenses of operating your truck.  And 100% of the fuel costs. 

During their time as a fleet driver, truckers learn a lot of valuable skills.  From fuel economization skills to fuel purchase routing.  Emergency procedures.  Mechanics and of course, road and highway safety.  Drivers also learn how to protect the integrity of their cargo from theft and damage.

By the time, a truck driver has successfully become an owner-operator, they are well seasoned.  They have traveled hundreds of thousands of miles.  Many truckers also gain valuable experience with interstate driving.  When they become a business owner (as an owner-operator) they bring tremendous safety and professional experience to the table.

3. Owner-Operators Can Make More Money With Leased Contracts

One of the big setbacks for professional truckers who work hourly, is a cap on their earning potential. True, they are not responsible for things like repair and maintenance of the truck they drive. Or fuel costs in most cases.  But their income potential is limited to the hours that they are provided.

Truckers are not paid salaries.  That means that even the best drivers may not be guaranteed hours.  If freight volumes drop, so does their income.  That’s not usually a problem under normal market conditions.  But trade wars (however infrequent) and our current Covid-19 health emergency are two examples of unforeseen circumstances that can impact driver earnings.

With leased contracts, an owner-operator can work for more than one carrier.  That provides some protection against loss of income. If one carrier doesn’t have enough cartage, another one may have growing demand and need additional qualified drivers.

By having leased contracts with more than one carrier, truckers can make more money.  Have a greater sense of job security and demand for their logistic services.  And in the rare but unfortunate circumstance where a carrier goes under or out of business, owner-operators are not at a loss for work.  They can simply pickup new contracts with other local carriers.

4. Flexibility with Scheduling and Hours of Service (HOS)

Truckers that work on an hourly basis, may prefer the 9 to 5 routine and schedule.  But being an hourly truck driver doesn’t mean you get to punch in and out on time.  Weather conditions, pier or transmodal delays and other issues can mean overtime.  And sometimes, that overtime does not come with extra pay.

When we talk about the flexibility of scheduling for owner-operators however, it is not based on a standard 40-hour work week, and eight hours per day. Truckers are legally limited to how many hours they log (and mandatory rest breaks).  The flexibility for many owner-operators is seasonal.

For example, an owner-operator who is also a parent, may choose to stay home during the summer holidays with their children.  And work only while the child or children are in school.  That accommodates things well for many families.  And if the owner-operator plans their schedule and optimizes their leased contracts throughout ten months of the year, they can take a couple months off.

Some drivers prefer to work long-haul and schedule breaks over the holidays for instance.  Others structure their driving to peak demand periods, and when freight volumes are a little slower (or weather is inclement) they may choose to drive part-time or stay home.  This lifestyle flexibility helps truckers balance work and family life.

Apply for Leased Contracts With Canal Cartage in Houston

While it takes time and investment to become an owner-operator, the business opportunity can be very rewarding and lucrative.  Truck drivers that maintain a clean safety abstract and a dedication to service can develop long-term relationships with carriers for contract work.  And essentially, access as much work as they want to, given the shortage of qualified drivers.

If you are an experienced owner-operator in Houston, Texas, apply with Canal Cartage.  We have leased contracts available year-round to serve our growing roster of commercial customers.  We provide logistics services (in conjunction with our partner owner-operators) within the state of Texas, and neighboring states like New Mexico, Arkansas, and Oklahoma.

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