Big Truck Question for semi owners...

[Tennesseahawk]

How can you explain a 30/70 split for drivers, if you're paying fuel, and a 55/45 if the driver is? Additionally, how can you explain a 30/70 split in a t/t, when straight truck drivers traditionally get a 40/60 split? Let us do the math, shall we?

$1.20 x 40% = .48/mi, which is what the avg straight truck driver would get.

$1.65 x 30% = .495/mi, semi driver's avg pay.

We can even go to 35%, and a semi driver would make .5775/mi. Still too low for the task of "sit and wait, then hurry your arse up." 40% is about right, IMO, at .66/mi.

I'd rather you just be honest with your greed, and tell us we'd get .45/mi, like the big trucking companies do. But then, you'd have to answer questions like "How can you justify that rate for a 1099 contractor?"

I think we can all agree that a semi takes a lot more skill to drive than a straight. You have less flexibility in maneuvering, parking, and where you can drive legally. You have more to inspect, more that can go wrong, and more the popo will ding you for. You have more weight, more freight, and basically, just more of a headache. Why then, should semi drivers not get the same percentage cut as straights, since everyone in expediting seems hell bent on using that 40/60 60/40 formula? That is until it doesn't serve the owner.

 

[Stormhunter]

i wouldnt touch anything less than 60/40, i think they try to justify wear and tear but how at 30/70 could they find good professional motivated drivers?

 

[crich]

thats kinda a cheap rate though I would say 30% of $2.00 =.60 per mile x 3,500 miles= $2100 per week
then I would say if you can not make that in expedite then you need to run with landstar or someone in truckload that does pay that and stop playing the waiting game for cheap freight.

 

[Tennesseahawk]

thats kinda a cheap rate though I would say 30% of $2.00 =.60 per mile x 3,500 miles= $2100 per week
then I would say if you can not make that in expedite then you need to run with landstar or someone in truckload that does pay that and stop playing the waiting game for cheap freight.

That's the thing, tho. 3500 mi are hard to come by for a solo, unless you run for .45/ mi. I'm sure there are a few tho.

.60/ mi is about right to pay taxes with, but a little more would cover some life and medical ins.

The owner has either trailer repair costs, or lease costs, plus ins. So I would put the cost of running a t/t just barely above a straight, with more return. You would think, that with there being a large need for E drivers, that there would be a higher compensation, as in truckload. Maybe that'll change.

Expedite rates, however, need to go up. It's not that hard to book a truckload load for over $2/ mi. Expedite has added value, as in JIT, specialty, etc. You can sit for days, w no recourse. J Elliott has started the layover money, which is $75/ day for straights. I don't know what it is for t/ts. But he's putting what he can into the problem of too much downtime. Kudos to him for that. As a company driver, I get $90/ day for layover/breakdown. So $1.65+fsc is kinda anemic, when comparing expedite to truckload.

 

[Tennesseahawk]

i wouldnt touch anything less than 60/40, i think they try to justify wear and tear but how at 30/70 could they find good professional motivated drivers?

That hit the nail on the head, IMO. Wear and tear is on all expedite trucks, w t/ts being no different. I think they try to justify the trailer being a huge cost. I believe they try to get driver's rates closer to t/t company driver's rates. IOW, they don't want to pay for the benefits. They want contractor status at company driver pay. Only a fool would give them prime rib for ground chuck price.

 

[crich]

This is just a what if.

What if I was a motor Carrier and to justify that 30% I simply said as a motor Carrier my tractors gross $1k per day don't matter so your pay is $300 per day paid same day .does not matter if you run 1 mile or 700 your pay 30% or $300 per day stay out 21 days at a time. 6300 per month that comes out to what around 75k a year for being a driver plus you get 80 days a year. Do you not feel that would be enough to get you at 30%

 

[Tennesseahawk]

This goes back to rate being more important than miles. I need a respectable rate, not 100 hours at $8/hr.

 

[rollincoal]

20-30% is a going rate for TT employees on percentage. If they have benefits with that 20-30% they are way ahead of anyone expediting in a van for a straight 40% cut. At a good company with solid rates I'd take 20-30% over 40% of typical van/sprinter rates any day of the week. You'll work a lot harder in a cargo van for 40% of a $1 a mile rate than a guy getting 25% of $2 a mile rate for the same paychecks at the end of a week.

 

[Tennesseahawk]

20-30% is a going rate for TT employees on percentage. If they have benefits with that 20-30% they are way ahead of anyone expediting in a van for a straight 40% cut. At a good company with solid rates I'd take 20-30% over 40% of typical van/sprinter rates any day of the week. You'll work a lot harder in a cargo van for 40% of a $1 a mile rate than a guy getting 25% of $2 a mile rate for the same paychecks at the end of a week.

I was talking straight trucks, not vans.

You said 20-30% is normal. Is that for t/l or expedite? What rate are we talking? Is that all in, or split, w the fsc being separate? I'm talking Panther, which is $1.65+fsc. They're usually the standard, when it comes to rates to base driver pay off of. They're pretty much at the high end of the middle of the road.

I broke it down in my first post. T/t drivers at 30% don't make much more than straight truck drivers.

 

[rollincoal]

Truck load. The thing is you don't see many truck load drivers paid on percentage. Seems like it is more common with open deck or specialized haul but your typical door slammer is paid by the mile. The only reason I can think of why that is so is because the rates for 53' van freight are so pathetic across the board anyways.

 

[blizzard2014]

I was just watching your business with JJ Ramburg and they were discussing the difference between independent contractors and employees. If you're not allowed to accept work from other firms or companies, and you're spending the majority of your working day doing work for just one company, you're no longer an independent contractor. You're not a real independent contractor if you're leased on to just one carrier, because you don't have the ability to accept multiple contracts from multiple companies. You're decaled up with your carriers decals and you are almost an employee. You can't take 6 months off, and you're required to do random drug testing, and you are expected to remain available a certain number of days per month. I think the rates would go up if carriers had to pay payroll taxes for their drivers instead of shifting all of those additional expenses onto the owner operators. I don't see how some of these companies get away with it. That is why the rates are so low, because non-asset based carriers do not have to pay for equipment, social security benefits, health insurance, disability insurance, and various other payroll taxes.

As an owner operator you have to pay for your own health insurance which could be hundreds of dollars per month, you have to pay into your own social security, which your employer is usually mandated to pay 6 percent, and you pay the other six percent. You have to factor that all into the 60/40 split, or whatever other split you get as the owner of the truck. You have to carry a hazmat endorsement and other professional endorsements and you don't get paid any extra for that. You really have nothing. You even have to pay out of pocket to idle your truck for heat and air conditioning. Most companies say that they're non-forced dispatch, then they use acceptance ratings to determine who will get the next load. They will also skip over trucks just to punish them for not taking a bad load offer. The only companies that are some-what close to the independent contractor model are those companies that will allow you o book your own loads. But, even then, it isn't always cut and dry. I had a friend at Panther who tried to book his own load out of Wisconsin, and he was denied the ability to do so. They told him that they do not allow drivers to book backhauls out of good areas "areas where they have regular customers" but they could not get him a load.

As an independent contractor, 12 percent of your net pay will go into social security, another 4 percent or so will go into Medicare withholdings. Then you have to factor in 500 a month or more for health insurance for you and your wife, or kids if you have any. If you're in a cargo van and claim a loss every year, you can avoid most of these payroll taxes, but what happenes when you become disabled? You will not be able to file for disability insurance. You don't have any sort of safety net if you're not paying state and federal taxes. Then these carriers will push sprinter drivers to run heavy loads. Heck, it's not their truck being torn to pieces running overweight. This is an interesting topic to say the least. I hope I didn't ruffle too many feathers!

 

[davekc]

Can't say we have been denied brokering a load out of an area if they didn't have freight. With regards to Panther, it may have been the customer more than the load. They do have people they won't haul for because they slow pay, or don't pay at all.

With regards to independent contractor status, I think too many over think it and try to complicate the simple. If, and it would be a big if, if and when that model was challenged on a large scale, then it would just be a shift in the relationship. Nothing more unless it involves a large entity like the FedEx challenges.
If it were to bleed all the way down to the fleet owner or small carrier, a change or requirement would be for the operator to be incorporated. Few hundred bucks gets you there in most cases.
Mostly set up as a structured lease (leasing vehicle to operator) or franchise. Now, there is no independent contractor. No worries on "status" because there isn't any. It now becomes a business to business relationship and everyone goes on to live another day.
Mostly a cash grab by and for lawyers and not much else.

 

[Tennesseahawk]

Leasing a vehicle to an operator on paper doesn't necessarily put the driver in the independent status. I tried to wrap my head around this, while in my last independent driving gig. How can a driver be leasing a truck, yet the owner pay for fuel? tell which t/s chain to use? where to get the truck fixed? not have a lease contract, stating what the fee is? not get a separate tax statement for said lease? and, above all, demand that the driver take certain loads?

IMO, too many owners want their cake and eat it too, when it comes to the almighty 1099. In my experience, they like the business side of it, but not the independence of it.

With regards to leasing the truck to a business (driver), way too many deals in the big truck world put the driver at a subservient role. Many of the questions I pointed out above, are there in the lease contract. OOIDA has made it a point to take down many of these leases.

 

[davekc]

Leasing a vehicle to an operator on paper doesn't necessarily put the driver in the independent status. I tried to wrap my head around this, while in my last independent driving gig. How can a driver be leasing a truck, yet the owner pay for fuel? tell which t/s chain to use? where to get the truck fixed? not have a lease contract, stating what the fee is? not get a separate tax statement for said lease? and, above all, demand that the driver take certain loads?

IMO, too many owners want their cake and eat it too, when it comes to the almighty 1099. In my experience, they like the business side of it, but not the independence of it.

With regards to leasing the truck to a business (driver), way too many deals in the big truck world put the driver at a subservient role. Many of the questions I pointed out above, are there in the lease contract. OOIDA has made it a point to take down many of these leases.

Well for one, the actual truck owner wouldn't be paying for fuel. You would obtain your own fuel discounts or obtain them from a carrier as a business. If you have a driver incorporate, they become a actual business. There is no contractor. A lease would provide for the maintenance just like you were a non trucking business and leased a truck from say Penske.
There can be no demand for loads. Your business sinks or swims on your own decisions. Advice can be provided, but not mandated. Wouldn't be any different than basically a McDonalds franchise. Easy peazy.
Instead of a 1099 to a individual, a fleet owner would be doing one to another business.
No need to over think it. Pretty basic actually.

 

[Tennesseahawk]

Well for one, the actual truck owner wouldn't be paying for fuel. You would obtain your own fuel discounts or obtain them from a carrier as a business. If you have a driver incorporate, they become a actual business. There is no contractor. A lease would provide for the maintenance just like you were a non trucking business and leased a truck from say Penske.
There can be no demand for loads. Your business sinks or swims on your own decisions. Advice can be provided, but not mandated. Wouldn't be any different than basically a McDonalds franchise. Easy peazy.
Instead of a 1099 to a individual, a fleet owner would be doing one to another business.
No need to over think it. Pretty basic actually.

Just giving my experience. What you're saying would have to be done by one squared away owner. Haven't met many of them.

 

[blizzard2014]

The rates should be high enough that all parties involved should be able to make enough money to cover their expenses and have a good income left over to save for retirement and provide health insurance for their families. The pricing in the industry it all wrong. One benefit of an independent contractor becoming incorporated would to be able to take advantage of the 20 percent corporate tax instead of paying payroll taxes. You can claim your yearly earnings as dividends from the corporation. You can also claim a small percentage of your yearly income as salary and pay social security withholdings on it so that you have some sort of safety net for your future. The only thing that breaks the deal is that you're not allowed to work for other companies. A true independent contractor can take as many jobs as they want from as many companies as they want. When you lease your truck to one carrier, you are not allowed to work for other carriers. Also, since your carrier is paying for your cargo and liability insurance, you are not an independent contractor. You are operating exclusively under their operating authority! I don't think anyone is ever going to challenge this in the courts, but independent contractors in the trucking industry need to be re-classified.

 

[Greg]

The rates should be high enough that all parties involved should be able to make enough money to cover their expenses and have a good income left over to save for retirement and provide health insurance for their families. The pricing in the industry it all wrong. One benefit of an independent contractor becoming incorporated would to be able to take advantage of the 20 percent corporate tax instead of paying payroll taxes. You can claim your yearly earnings as dividends from the corporation. You can also claim a small percentage of your yearly income as salary and pay social security withholdings on it so that you have some sort of safety net for your future. The only thing that breaks the deal is that you're not allowed to work for other companies. A true independent contractor can take as many jobs as they want from as many companies as they want. When you lease your truck to one carrier, you are not allowed to work for other carriers. Also, since your carrier is paying for your cargo and liability insurance, you are not an independent contractor. You are operating exclusively under their operating authority! I don't think anyone is ever going to challenge this in the courts, but independent contractors in the trucking industry need to be re-classified.

When you lease your truck to a company, and your truck is covered by their insurance, your truck may not be able to run for another company, but you can , in a different truck leased to a different company.

 

[davekc]

Couple things. You wouldn't have to insure with the carrier. I don't now but must maintain certain limits. That wouldn't skew a business relationship. There are many variables depending on whether certain laws or statutes change.
The easiest way to look at it is as a franchise. McDonalds tells franchisees what to sell and at what price. You can't have a McDonalds franchise and sell Whoppers for example. They take a percentage of the sales for their franchise fee. They are very strict in many regards. A model with some or many of those principals is what would be used depending on whether there are movements or changes in the state or federal labor laws.
The biggest difference is it moves the relationship from a individual proprietor to a business. We have not made a move to this, but have taken the steps over several years to have everything in place to make that kind of move should it be warranted.

With regards to insurance. Insurance can be coupled with a lease just like you lease a truck from a leasing company. If a carrier had requirements that exceeded that amount, the company (operator) that leased the vehicle can purchase elsewhere or purchase directly from the carrier. That is a business to business arrangement. Nothing to do with contractor status.

 

[TruckingSurv]

Independent Contractor (Self-Employed) or Employee?

I have seen quite a few driver positions that probably should be W2 and not 1099, the IRS takes a dim view if you get it wrong.

 

[TruckingSurv]

One benefit of an independent contractor becoming incorporated would to be able to take advantage of the 20 percent corporate tax instead of paying payroll taxes. You can claim your yearly earnings as dividends from the corporation. You can also claim a small percentage of your yearly income as salary and pay social security withholdings on it so that you have some sort of safety net for your future.

You need to be aware that if you show more than 50% income from dividends that it can be a red flag for audit. I have had my business set up as a S-Corp for years, my CPA advises to take no more than the 50-50 split to keep the IRS at bay. Sure you may get by with it, but why wave a red flag?