5 Steps to Becoming an Owner Operator in the Trucking Industry

Many commercial drivers dream of the day they become an owner operator instead of simply making money for someone else. If becoming an owner operator is a goal of yours, then you probably also anticipate being able to make your own schedule as well.

The journey toward actually reaching this goal may seem too complicated for many to achieve but with a little bit of focus and hard work, the benefits of being an owner operator could be yours sooner than you would think. The process is easiest for drivers who have already had a few years of experience behind the wheel. While driving truck for someone else, you are gaining a more complete understanding about each part of the trucking industry, and this understanding is what is sure to help you succeed in your goal.

One Step at a Time

Though the process may seem daunting, drivers who are willing to take one step at a time and realize that each step is imperative to the end goal become owner operators sooner than most would have thought possible. Following are five steps that can lead you to your goal of ownership.

  1. Important Numbers – The first step you need to take is to get a registered with the Federal Motor Carrier Safety Administration (FMCSA) and get a USDOT number. This number will be used to identify and collect information about your safety information. This information includes any compliance reviews, inspections, data collected in audits and crash investigations. Once you have a USDOT number, You will need to request an Interstate Operating Authority (MC number). The kind of operating authority you need will depend on the type of cargo your plan to haul. There is a one-time fee to get a MC number from the FMCSA.
  2. Understanding Authority – By registering through the Unified Registration System (URS), you will be able to get our trucking authority in 20-25 business days. You will need to have your insurance company provide proof to the FMCSA that you have liability coverage.
  3. Insurance – You may think, while looking at insurance for your truck, that it is just in case of vehicle accidents. Understanding owner operator insurance requirements is something that you need to fully understand before moving forward in the process. Truck insurance is very different than simple auto insurance as it protects not only the owner, but also covers any loss of load or other assets. Certain kinds of insurance coverage are required by the FMCSA depending on what you plan to haul. Some types of freight, such as hazmat loads will require very different insurance than standard loads. The average insurance cost for an owner operator with one truck varies from an average of $8,000 – $12,000 per year.
  4. Lease or Own – One of the most difficult decisions, when considering becoming an owner operator. One of the biggest reasons that you might want to consider leasing a truck is that commercial trucks cost a lot! A decent used truck can cost anywhere from $60,000 to $100,000. Some leasing companies, however, do provide the option of leasing to own. This means that each lease payment gets you a step closer to ownership without having to pay the whole cost up front. If you decide that this is the right option, you may be required to haul for the leasing company, as well as find your own loads.
  5. Understanding Load Boards – Finding loads is one part of owning that many drivers do not get much experience with until they become owner operators. Thankfully, technology has made this process much easier than in the days when owners had to make phone calls looking for loads. The internet has many websites called load boards which are dedicated to helping owner operators find loads. Some of these boards are free, while others require a monthly membership fee for brokers and carriers. Even more convenient is the fact that many of these job boards have easy-to-use apps that can make grabbing the next load on your smartphone or tablet a breeze.

What You Need to Know About Truck Liability Insurance

Crunch the Numbers and Take the Leap

Taking a look at each step in this process before actually making the step can help you understand the costs of setting up as an owner operator. Make sure you factor in other costs that you will be faced with as the truck owner, so you will have a realistic view of how much money you can actually make. These costs, known as average operating costs are often calculated and called the cost per mile. You should include anticipated costs for fuel, vehicle repairs and necessary services, fees, taxes and a savings account that will help with any unexpected occurrences.

Though the process could take you several months, you will realize who worthwhile the work has been once you begin seeing the earning potential that is available to truck owners. Stop dreaming about being your own boss and take the leap as you change your life, your family life and your career for the better.

Prepare Your Fleet for Winter Driving

Though each season of the year will task a fleet in different ways, winter is the one that sends owners scurrying to make sure each truck is ready to ride out the storms. Even semi’s that spend the majority of their miles in warmer states can be unpleasantly surprised by weather that is not common. For instance, in Atlanta, Georgia, a January storm in 2014 turned roads into sheets of ice, causing thousands of people to be stranded at work, on the roads and even at school.

Prepare for the Unexpected

The rule of thumb, when you are responsible for the safety of your drivers, the delivery of goods and the overall expenses of the fleet is to prepare for the unexpected. This means getting those vehicles ready for the winter truck driving before they are caught in the cold. Failing to do so means leaving your entire fleet vulnerable during the most damaging weather season. Taking time to make sure each vehicle in the fleet is winterized can make all the difference to your drivers, customers and especially to your bottom line.

Fleet Winterizing Checklist

Keeping a winterizing checklist on hand is a great way to make sure you do not miss any steps when making sure your vehicles are prepared for whatever winter might bring. Here are 7 checklist Items that should be performed on every fleet vehicle.

  1. Winter fuel – Diesel fuel and cold are typically not mentioned in the same sentence without some frustration. This is because diesel fuel is known to gel in very cold weather due to the hydrocarbon, Paraffin, found in the fuel. Educating drivers about the need to use a winter-blend fuel and having them add anti-gel additives when they are fueling can go a long way to ensuring the semi truck winter start, even in the cold winter weather.
  2. Battery testing–Because batteries drain more quickly in cold weather, each vehicle in the fleet should be tested to make sure the battery is strong. This should not be a one-time test, but should be done periodically throughout the winter to ensure that the battery is still able to maintain its charge level. Any battery that is more than 3 years old should be tested more frequently or replaced.
  3. Don’t forget the coolant – A truck’s cooling system is not just for the summer months. This system, containing coolant, controls the boiling and freezing points as well as offering some protection from corrosion. Checking the inhibitor levels and coolant concentration is a must before cold weather sets in. Older style coolants were known to drop in level pretty quickly, but there are newer coolants available today that can stay in the truck’s system for up to 600,000 miles.
  4. Check the engine heater – Weather the vehicles in your fleet use external, internal or coolant engine heaters, they should be checked as part of a winterization routine as well. This type of heater makes starting a diesel engine in the winter much easier, as they preheat either the coolant or the engine block. Easier starting saves wear on the engine, lowers emissions, and can even increase fuel economy, not to mention the fact that some also provide heat to your driver more quickly.
  5. What about the trailer – Drivers know that winter is as hard on the trailer as it is on the tractor. One frequent trailer problem is frozen brakes that simply refuse to release. Making sure to properly lubricate moving parts during the winter is one of the ways to make sure those brakes work properly when needed. Another way is to make sure all of the air is released from the brakes before stopping for an extended period of time.
  6. Check the electrical system for corrosion – Both tractors and trailers have a 7-terminal receptacle for the electrical trailer cable plug. These are standard throughout North America. This plug is critical as it controls all the lights, signals and antilock devices on the trailer. As such, keeping them clean is always important. It may take a bit more time and effort in the winter, as many chemicals such as magnesium chloride and salt are coming off the road. Prolonged exposure to such chemicals can corrode the contacts and cause the loss of lights, ABS equipment and power. Even more unsettling is the fact that any moisture that makes it into a plug or socket can slowly make its way into the wiring system causing expensive problems later on.
  7. Protect your drivers – Every fleet owner knows that trucks only make money when paired with good drivers. Making sure your valuable drivers have all the equipment they need for winter trucking safety. Such items include emergency flares, a tool kit, bottled water and non-perishable emergency food, waterproof gloves and a working cell phone.

Taking time to properly inspect and prepare each vehicle in your fleet can help to ensure that the wheels keep turning, no matter what mother nature surprises you with.

New Data from ATRI on the Operational Costs of Trucking

In a recent analysis by The American Transportation Research Institute (ATRI), motor carriers’ operational costs of trucking were quantified and documented, providing critical data so they could work to provide correct information to policymakers about how new funding strategies could negatively impact the freight movement. Because this study has been completed for 9 years now, the metrics continue to become more precise, resulting in an invaluable look at how the costs of the trucking industry have changed over time.

Marginal Cost of Operation Influencers

Many types of data were collected in 2016 in order to calculate the marginal cost of operation. These included:

  • Fuel – Fuel costs have represented between 30-40 percent of overall cost per mile during each year the study has taken place. However, prices declined steadily in 2015 and 2016 making the percentage lower for the second year in a row.
  • Equipment – Overall operating costs can be affected by age and type of equipment as well as the turnover rate. In this year’s study, owners of both truck tractors and straight trucks reported longer use before replacement. This trend explains the increased maintenance and repair costs that are predicted to increase.
  • Driver Pay – For the 4th year in a row, driver benefits and pay are both reported to have grown. This is most likely due to a shortage of qualified drivers. According to the American Trucking Association, the currently estimated shortage of 50,000 drivers is predicted to grow to an alarming increase of 175,000 drivers in 2025. In addition to the current and predicted driver shortages, another demographic is predicted to negatively affect the industry as well. This is the fact that over 50% of the qualified workforce is over the age of 45 while less than 5% are between the ages of 20-24. Shortages such as this will continue to push driver wages and benefits higher, further impacting the overall cost of ownership.

A Closer Look at Line Item Costs

Looking at costs with an eye to the long-view helps to give historical perspective to compiled data. For instance, the knowledge that diesel prices were the highest in 2008, topping the pumps near $4.80 per gallon and stabilizing between $3.75 and $4.15 per gallon between 2011 and 2014 gives an understanding of just how relatively low diesel prices dipped in February of 2016 when they reached $1.98 per gallon.

Another cost that the study looked at historically was that of leasing or purchasing equipment. A reported increase in such payments in 2016 brought the current average to 25.5 cents per mile. This increase certainly factors into the higher Cost Per Mile.

Repair and maintenance (R&M Costs) were determined with several factors in mind. These included the age of trucks and trailers, vehicle configurations and technologies used. The average costs in this survey grew by 1 cent, making this the highest recorded year since the data was first collected 9 years ago. This is mainly be attributed to a shortage of diesel technicians.

Commercial truck insurance premiums also rose one percent this year, bringing the total to 7.5 cents per mile. Specialized carriers reported a much higher increase of 9.0 cents per mile. Compiled data verified that carriers with less than 100 power units experienced the highest rise in insurance premiums while the largest fleet operators reported a much smaller increase.

Other line-item expenses that were factored into this year’s study included permits and special licenses, tires and tolls.

Making Sense of the Data

Making sense of all of the data means making calculations that result in understandable bits of information. One such calculation resulted in an average Cost Per Mile (CPM) in 2016. This year’s average was $1.592, up just one percent from last year. Seemingly, the increase in driver wages and benefits was offset by the decrease in fuel prices bringing the averages relatively close together.

In addition, data was compiled to attain the average cost per mile by region. These findings showed the least expensive region to be the Midwest ($1.540) while the most expensive was the Northeast ($1.655).

By documenting and compiling this data, the ATRI has, once again, provided invaluable information which can be used for benchmarking. Such information is frequently used by carriers working to see if costs are in line with a nationwide average.