How to Make it as an Owner-Operator

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Making your way in one of the most heavily regulated industries on earth can make you wonder if it’s worth it sometimes. And the increasingly expensive equipment required to be on the road may be sapping your revenue more than ever.

But there are drivers making a good living as owner-operators. How do they do it? One common thread among successful O-Os is their tendency to be business-minded tinkerers. They’re usually trying different approaches for being more efficient and cutting costs. They’re often studying up on the latest technology or on some new way to get better fuel economy. They talk to other O-Os to see how they’re dealing with challenges like detention time, new HOS rules, or getting good loads.

Know What It Costs You to Operate

Survival depends on bringing in more income than you spend. So the foundation for managing your business well is knowing what it costs you per mile to operate, including all your expenses and your salary. On the Owner-Operator Independent Driver Association’s (OOIDA) website, you can find a spreadsheet that helps you calculate that number. Once you have numbers to work with, it’s easier to evaluate a load, track your profitability after you’ve hauled it and apply what you’ve learned next time a similar opportunity arises. Over time, having accumulated that kind of data allows you to make better business decisions.

Once you know what it costs you to operate, see if there are ways to reduce that number without making yourself miserable or driving your family crazy.

Understand the Regulations and Figure Out How to Do the Best Job Within Those Bounds

Before he drove a truck, Henry Albert drove stock cars. (He tells the story in this video.) He didn’t go to college, but raced stock cars in his early 20s and says that was his college. “The parallels between trucking and stock car racing are pretty interesting,” he says. “The people that made the racing rules usually didn’t even own a race track or a race car. Many of them had never raced a day in their life.”

These people changed the rules every year. So once a year, all the racers received the new regulations they had to follow. Albert says, “First, you decided if you wanted to keep racing with the new rules in place. If you did – it was the same rules for everyone – so you had to spend your time figuring out how you were going to make those rules work better than anyone else.”

There were always those who complained about the new rules, but other racers focused on how they could be the fastest within those boundaries. Pointing out the cleaner air we have thanks to unleaded gas, Albert says regulations have their place. “We all have to deal with the same rules. If you want to make it as an owner-operator, put your mind to work on how you can do the best job and still obey the law.”

A good place to start is to avoid the fines and delays that come from being a flashing beacon for FMCSA enforcement personnel. Click here to read How to Avoid Six Common CSA Violations

Become a Fuel Efficient Machine

Carlos Cruz, a struggling lease-operator, was ready to turn in his keys after a few months on the road. But as a last-ditch effort, he decided that on this final trip to the terminal, he’d follow all the advice about fuel efficiency he’d been hearing from trucking business gurus and see if it allowed him to recoup expenses and increase his take-home pay.
The experiment was a success, so much so that he decided to give his business another month. After 30 days his fuel mileage went from the 6.2 to 7.8 miles per gallon, a 1.6 mpg improvement that more than quadrupled his net revenue.

That was three years ago. Today Carlos continues his lease deal and can afford to live well on his income.

Details of his story are in Jim Park’s column on TruckingInfo.com, but the three habits he says make the biggest difference are:

  • Slowing down from 65 to 55 mph
  • Never idling
  • Becoming a “progressive shifting machine.”

More good info sources for boosting your fuel economy:

How to Avoid 6 Common CSA Violations

LTL CSA violations l-tread-depth

This guest blog post comes from Daren Hansen, Senior Editor – Transportation Safety for J.J. Keller & Associates. Contact him at transporteditors@jjkeller.com.  It was first published in Heavy Duty Trucking.  

“A good decision is based on knowledge and not on numbers,” the Greek philosopher Plato once said.

Too bad he wasn’t around when the government was coming up with CSA.

Now four years old, the safety enforcement program known as Compliance, Safety, Accountability relies on almost nothing but numbers. And as numerous studies keep telling us — and as many trucking professionals already know — those numbers are not always reliable.

At the top of the list are your CSA scores, perhaps flawed but visible to the world and used to decide if the DOT needs to pay you a visit, or at least send you a letter.

Pull the curtain on those scores and you can find a mass of interesting and (arguably) more reliable data: the raw numbers coming in from enforcement personnel on the front lines.

Besides giving insight into your CSA scores, the enforcement data can reveal important clues about your drivers and overall safety management. It can tell you where to focus your compliance efforts.

Let’s examine the top three CSA violations for both vehicles and drivers across the industry and discuss practices that can help bring the numbers down.

The Truck

Violation: Lighting

Ironically, broken lights are among the most “visible” of all violations. Maybe that’s why a whopping 28% of all roadside vehicle violations last year, out of 2.4 million inspections, dealt with lights or reflective materials.

A broken or missing light, reflector, or reflective tape is like an “Inspect Me!” sign and can result in a loss of six severity points in CSA for each violation (Three points for reflective tape).

Prevention: Drivers and maintenance personnel need to be aware that every light and reflector listed in Sections 393.11 and 571.108, even the license-plate lamp, needs to be operational at all times. The only way to verify compliance is to inspect the vehicle on a regular basis.

By conducting adequate pre-trip and post-trip inspections and reporting what they find, drivers should be able to spot violations — and get them fixed — before an inspector does. Carrying spare fuses is required, and spare bulbs can help too. Non-required lights do not have to be working, but any broken lamp can draw attention.

Violation: Brakes

One-fourth of all vehicle violations are for brakes, with over 1 million brake violations last year, each with four CSA points.

As with lights, brakes need to be inspected before and after every trip, but drivers need to be fully trained and qualified before doing any brake adjustment.

Prevention: Training is key. Make sure drivers know what to look for and when to get assistance with their brakes. The only way to find a brake adjustment problem is to carefully measure the stroke, and adjusting a brake that has an automatic adjuster won’t fix the problem (and may make it worse).

Violation: Tires

As with lights, bad tires are a sure-fire way to be stopped and inspected. The biggest culprit: tread depth. Overall, 11% of vehicle violations are for tires (half for tread depth), with a CSA severity of eight points.

Steer tires must have 4/32 inch of tread depth; other tires must have 2/32 inch.

Prevention: A comprehensive maintenance program that includes regular tire inspections is a must, including pre-trip and post-trip inspections. Drivers need to know how and when to check inflation (with a gauge!) and when it’s time for a replacement.

Drivers

Violation: Logs

So-called “form & manner” and “log not current” violations make up one-fourth of all driver violations at the roadside, far and above any other violation. A form/manner violation carries just one CSA point, but a log that isn’t current is worth five.

These violations are often frustratingly obvious and easily correctable.

Drivers need to fill out all required information on their logs and keep them current to the last time their duty-status changed.

Prevention: First, make sure your drivers know what’s required and what’s not required on their logs (see Sec. 395.8), and when it has to be filled in. When a driver is stopped for an inspection, the log must be current up to the time at which the driver got behind the wheel.

Make sure your policies reinforce these requirements. Review your CSA data to find the worst offenders and re-educate them on the rules.

Finally, investigate two things that can help eliminate many of these violations: pre-printing of common log entries (address, etc.), and electronic logs (which will be mandatory soon enough).

Violation: Medical Issues

One in eight driver violations is related to medical issues, often a failure to have a valid medical certificate. These carry a low CSA point value of one or two, although driving while physically ill is a 10-point violation.

Prevention: Track the expiration of your drivers’ medical cards and make sure they get updated, placed in drivers’ files, carried in the vehicle and turned in to the state licensing agency. Make sure drivers know exactly what’s required of them, and have consequences in place for those who fail to comply.

Some of these violations may go away once we have the National Registry of Medical Examiners, and once interstate CDL drivers no longer have to carry their medical cards (in Feb. 2015).

Violation: English Ability

This violation has been surging in recent years, currently at 9% of all driver violations and carrying four CSA points.

Compliance is complicated because there is no yes/no standard. Key for a roadside inspection is being able to fill out paperwork, speak with officers and answer their questions, all in English.

Prevention: Your hiring practices should filter out drivers who simply cannot meet the standard. Use training and practice to help drivers know how to respond to typical questions about their logs, their trips and cargo, their insurance, registration, license and their vehicle.

Even if you don’t pull the curtain on your CSA scores, a little training on these common violations may go a long way in improving them.

Are You Cut Out to Be an Owner-Operator?

semi in the front yard

Google “How to become an owner-operator,” and there’s plenty to discourage you from considering the question for long. 

Brett Aquilla, a former company driver, says “you have to be crazy” to take on buying your own truck and becoming a business owner. He advocates the employee route and letting your employer hassle with the financial strain, licensing, permits, breakdowns, insurance, etc.

“Kick back, earn $55K, and make a killer living viewing the sites across North America in your company’s dream machine,” he says. “And if you get tired of trucking – quit. A company driver can always just quit and return later at any time.”

Some drivers, though, have been down the employee road and haven’t found it to be the walk in the park Aquilla describes. Company drivers have their own hassles including company politics, power-tripping dispatchers, and having to haul loads and run lanes that don’t suit them.

And some are just more interested in having their independence and the sense of satisfaction that comes from succeeding on their own guts, wits and hard work.

If you’re thinking about it, here are some sources for the tough questions you’ll need to ask yourself.

Make Sure You’re Doing it for the Right Reasons

Small fleet owner and radio show host Kevin Rutherford says most people considering the move to being an owner-operator will list three reasons they want to do it: First, usually is “to make more money. Then it’s more ‘freedom’, ‘less hassle’, ‘fewer rules’. If your answers sound like these,” he says, “think again before you proceed,” because you’re likely to be disappointed.

According to Rutherford there are better reasons for taking on the additional work and away-from-home hours. Drivers who transition successfully to owner-operators are usually those who do so because they want the additional responsibility and challenges of being a business owner, and want to build a business that will support better lives for them and their families. Read the list of questions Rutherford suggests you ask yourself to further test your assumptions about being an owner-operator.

It’s a Whole Lot More than “Steering and Gearing”

Truckie D is an owner-operator with 1 million+ consecutive safe over-the-road miles who blogs at TruckieD.wordpress.com. His advice, if you haven’t driven a truck before, is first to slow the heck down and get hired somewhere first, drive for a year and then see if you’re still in love with the idea of being an owner-operator.

“But”, he says, “do NOT get sucked into getting trained and buying/leasing a truck immediately. That’s a recipe for going broke quickly. Trucking as an owner-operator is a whole lot more than just ‘steering and gearing.’ The important point to remember is, you’re not buying a truck — you’re buying a business. You need experience in the trucking business, and some general business experience if you want to be successful at it.” Being able to understand a profit and loss statement and understanding how to do a cost benefit analysis of say, adding an APU to your truck, are just a couple of the business skills you’ll need to master.

See his blog post, “So, You Want to Be an Owner Operator,” for more some more sobering reality checks about owning your own truck driving business.

If You’re Still Not Scared Off…

Samuel Barradas readers through 6 steps to becoming an owner-operator on The Trucker’s Report blog. First, is a personal assessment – how much time you need at home, health considerations, career goals, etc. Next is a list of financial considerations to mull: the risks of personal debt, establishing an emergency fund and whether your credit score is going to help or hurt you. He also addresses the questions of whether to go independent or lease to a company, what types of equipment to shop and run, and what legal and accounting structures you should have in place.

Increase Your Odds of Succeeding

According to the National Assoc. of Small Trucking Cos (NASTC), the failure rate of small, start-up trucking companies is about 85%. Only 15% make it to the second year of operation. The organization offers training to help aspiring fleet owners beat the odds. On their website you can find more info about their training.

On that page you can also find a list of 20 new authority concerns, just the tip of the iceberg as far as the kind of business planning you’ll need to do: How do you plan to find freight? Where do you plan to run? How will you find insurance? How are you going to keep the books? How are you going to do log audits, fuel taxes, and driver qualification files? How are you going to manage and interpret data and information?

Lots to think about, but looking at it all before you leap will save you a lot of stress, debt and disappointment.

The Good, the Bad and The Ugly of EOBRs

truck at weigh stationA professional trucker for 30 years, Dick Pingel usually hauls sausage and cheese out of his home state of Wisconsin. He’s covered three and a half million miles in his career and never had a chargeable accident – and he’s pretty unhappy about the EOBR mandate.

Quoted in The Atlantic magazine’s article, Haulin’ Data: How Trucking Became the Frontier of Work Surveillance, he says, “They’re forcing me to put something in that’s not gonna help me any. And they keep saying, ‘Well, it saves you time…’ You know, I can do a lot. I can write up a log book in the same amount of time that it takes me to program what I’m doing into the EOBR.”

Pingel’s not alone. The move toward mandating EOBRs (a.k.a. electronic logging devices or ELDs) ranks high in the top five problems of both owner/operators and fleet-owners, according to polls by Overdrive Magazine and the American Transportation Research Institute.

The problems revolve mostly around their use being required by law and less around the devices themselves, which record driving time, manage HOS log data, and support driver log inspections.

The Bright Side of EOBRs

But unhitch the devices from the aggravation around the mandate, and it’s possible they could be a force for good, improving fuel efficiency, productivity and making logging a little easier. In the same Atlantic article, another thirty-year veteran of trucking makes the case for EOBRs. Cliff Downing claims that the device has benefitted him financially.

“My gross revenues have been up year over year, each year since using electronic logs,” he says. “Now is it due to electronic logs? Not the machine itself, it’s the efficiency that’s been forced onto us by the machine.”

Detention Time Leverage for Drivers?

Acknowledging his own resistance to the EOBR mandate lemons, owner-operator Henry Albert thinks drivers could make lemonade from the rule.

He believes that the FMCSA envisioned the fourteen-hour rule as a way to combat the detention issues that drivers face at the dock. The agency has no authority over shippers and realizes that detention time is a major fatigue issue. Albert guesses that FMCSA’s thinking is that if drivers had more limited ability to make up for delays caused by shippers and consignees, the practice of detaining drivers would be eliminated.

So far that hasn’t panned out, but Albert thinks EOBRs will further force drivers to watch their time – under penalty of law – which may finally force shippers and dispatchers to better respect drivers’ time.

Imagining a world where EOBRs are in virtually every truck, he says, “shippers would be calling dispatch wondering where their shipments are. Dispatchers would be calling drivers and asking, ‘Why didn’t you make it to your destination?’ Here’s the beauty…the driver would simply respond to dispatch saying ‘I was out of hours.’”

Who Does the EOBR Mandate Affect?

Drivers who must file a record of duty status (RODS) are subject to the rule as it currently stands. That totals  3.4-million drivers, including 1.7-million owner-operators according to this article on FleetOwner.com.

Where the Legislation Stands

There’s been no mandate finalized, but the FMCSA is expected to re-publish the rule in early 2014, after taking input on how to protect drivers from pressure to work in violation of safety regulations. Industry insiders anticipate a one- or two-year grace period before enforcement begins.

EOBR Options for Drivers and Fleets that Want to Get Ahead of the Mandate

By combining wireless technology and cloud computing software (software that’s accessed via the Internet instead of being installed on your computer), companies are now able to develop products that are much less expensive. On-board computers are no longer necessary, and special hardware can be replaced by a driver’s smartphone or tablet.

Versus the two to three hours installation used to take, it’s now done in five minutes. Christian Schenk, VP of market development and product marketing for XRS Corp predicts that when the new rule hits, there won’t be enough qualified techs to install the number of traditional onboard computers needed to handle all the demand. A brief install will be a nice advantage.

After the initial software purchase (which for example is $600 for the Turnpike product from Xata), monthly fees can be as low as $30. Qualcomm and XRS Corp also offer logs that can be used on smart phones and tablets.

Pitfalls to Look Out For

Certification – With the law mandating a device for such a large industry, the number of companies competing for the business will likely skyrocket – and a few years is a short time to have EOBR solutions ready to supply that will be truly compliant and meet massive demand.

How many of those companies will be able to manufacture a device that actually serves drivers and fleet owners in following the law remains to be seen. Whether or not the government gets into the business of certifying these devices, companies will need to do their homework on a vendor. “The key component is the company behind the device. The software is the easy part; the hard part is staying up on the regulations and changing rules.”

Data Transfer – How will electronically-logged data be transferred to law enforcement during an inspection? Transferring via a wireless connection is one option, or handing the device to the officer and letting him read it off the screen. Some suppliers are considering a USB stick, or sending info via the telematics provider, where the data would be transmitted to the provider’s server and then transferred to the enforcement agency’s system and then back down to the patrol car.   But all this is dependent on what’s compatible with law enforcement systems.

Steve Keppler, executive director of the Commercial Vehicle Safety Alliance: “Agencies don’t have a lot of money around to buy the newest technologies…The rule needs to be able to account for the differing levels of technology in the field.”

 

What are Carriers Seeing on Your PSP Report?

When Martin Jez started exploring his options for leasing to a carrier, he was in for a surprise. A recruiter told him his CSA score was about 300 and that he’d been denied a lease because of it.

Jez’s business partner, also his wife, tracked down his Pre-Employment Screening Program (PSP) report which showed only four inspections and no crashes. Their company, Jez Trucking, had only one out-of-service incident, and its carrier profile in the CSA Safety Measurement System showed no percentile ranking (or “score”) in any of the five public Behavioral Analysis and Safety Improvement Categories (BASICs).

Altogether, on the surface, there was nothing to explain the high CSA score.

As the Jezes attempted to find the source of the discrepancy, Martin was making progress on arrangements with a potential lessor, one that takes a different view of the PSP.

“That carrier, Texas-based RoadMasters Transport, Jez felt was more suited to the reality that an incoming driver’s prior violations don’t contribute to the new carrier’s CSA score,” according to this article on OverdriveOnline.com.

The article also explains that the root of the problem appears to be a matter of how FMCSA weights more recent violations. In any case, Jez’s knowledge of the problem made it possible for him to better explain his situation to prospective carriers.

It’s a cautionary tale for any driver exploring new opportunities: know your record and be able to defend any anomalies.

How to Check Your PSP Record

Every commercial driver has a PSP record. If you check yours and find information that’s inaccurate, you can contest the data by visiting FMCSA’s DataQs online system.

Also, if a carrier cites your PSP record as the reason you’re not being hired, under the Fair Credit Reporting Act, you have the right to a free copy from that carrier.

There are two ways to get your record:

1. For $10 through FMCSA’s DataQs system

2. Through a DOT Privacy Act request. This is free, but more of a hassle:

Send a written request via fax (202) 385-2335, email at foia@fmcsa.dot.gov, or snail mail: Federal Motor Carrier Safety Administration, Office of Information Management, MC-RIS, 1200 New Jersey Avenue SE, Washington, D. C. 20590.

Include your name, address and telephone number and specify you are looking for FMCSA Pre-Employment Screening Program data that is linked to your CDL, and include the number and licensing state.

Make explicit you are requesting the information under the Freedom of Information Act/Privacy Act.

Also, be aware that carriers access info about your record via a variety of data aggregators. You can see that list and where to appeal mistakes here.

Tips for Maintaining Your PSP Record

A big part of Jez’s problem came from having recent and heavily-weighted violations. Be smart by focusing your efforts to avoid violations that red flag your carrier and prompt a visit from the DOT, the ones that fall under “Unsafe Driving” and “Fatigued Driving.” These are two of the seven BASICs, the Behavior Analysis and Safety Improvement Categories.

The other categories are driver fitness, alcohol and drugs, vehicle maintenance, cargo securement, and crash history. When you receive an inspection, the officer evaluates you based on these categories. Each one generates a separate score and these are combined as your CSA score.

In this article, TeamRunSmart.com gives you the whole rundown on the BASICs and the six different kinds of inspections you need to be ready for.

The Kind of DOT Attention You Don’t Want

Small things like a flapping tarp or broken light are the kind of minor infractions that catch the eye of officers. Take a close look at your rig every day to make sure you don’t give inspectors an excuse to call you over.

On Roadtrucker forum, Enid Neel of BigSemiTrucks.com says he “knows an officer who would pull guys in if their dash was cluttered. He figured if you were throwing junk on the dash, you might be careless in other areas too.”

Update Your Motor Carrier Form MCS-150

Part of how your CSA score is calculated depends on how many trucks you have and how many miles you run, information collected by the MCS-150. Info on this form also allows the FMCSA to connect you with your record in its databases, so another reason to submit this is to make sure they have your current e-mail and snail mail addresses.

The Seat Belt Gotcha

One of the most easily avoidable violations is failing to wear your seat belt. Don’t unbuckle it until the officer has arrived at your window and has asked for your paperwork. It’s a 7-point violation if you remove your belt before the officer sees that you were in fact wearing it, especially if your engine is still running.

Protect Your CSA Score

Wayne Schooling on TenFourMagazine.com recommends some homework for truckers who want to protect their CSA score: First, get a pocket version of the DOT regulations. Also, understand how the FMCSA assesses points under CSA.

And since every inspection affects your score, keep copies of all your inspection reports. Finally, join an association. “Every driver should have someone to turn to,” he says, “such as the NTA, to get the help they need.”

Inform Yourself About CSA Scores and the PSP

JJ Keller’s FAQs about the CSA. Find dozens of detailed answers to questions about violations and scoring, how FMCSA uses your data, who’s affected by the legislation and how, what triggers an intervention, etc.

What Truckers Need to Know about CSA and Insurance. An interview with trucking insurance experts Rusty Vollmer and Charles Clowers.

Owner-Operators Independent Drivers Association (OOIDA) explains how to enroll in the PSP.

This article, “Inconsistent Enforcement: CSA’s Heat Index”,  includes a map of the states that are the toughest and weakest on truck and driver inspections. It’s part of a year-long series Overdrive published on the CSA and includes a dozen articles about the law and what drivers and carriers should look out for.

Commercial Carrier Journal and Overdrive Magazine published an in-depth series on the DOT’s CSA program that analyzes two full years’ worth of data. You can access that info here: http://www.ccjdigital.com/csa-data-trail

New HOS: Savings Lives? Or Just Making Life Harder?

iStock_000004045744XSmallWhere do you stand on the new HOS?

If you’re reading this blog, odds are you don’t look kindly on the increased regulation that’s being enforced as of July 1. While the Federal Motor Carrier Safety Administration claims the changes will save 19 lives and prevent 560 injuries each year, those claims are disputed by many in the industry. Some predict losses in productivity and a pay cut for truckers.

The changes are stirring up plenty of controversy. If you want to get your blood pressure up, check out some of these stories:

  • Transport Times features an editorial showing that data gathered by the American Transportation Research Institute (ATRI) disputes FMCSA’s estimates of industry impact. While the FMCSA projects savings of $133 million, ATRI’s projections have the new HOS regulations costing the trucking industry $189 million.
  • Fleetowner.com reports the findings of an analyst who predicts new HOS will make it harder to hire truckers and create a 2% to 10% productivity decrease in the industry.
  • Supply Chain Digest’s website offers a report about the American Trucking Associations’ claim that the FMCSA bent its evidence to support its own agenda.
  • The story’s been covered by national news outlets, and you can see Commercial Carrier Journal’s website for links to stories in the Wall Street Journal, on NBC and NPR.

Others in the industry are looking at the issue more pragmatically. You can find articles about exactly what the changes are and how best to work within the new law on these websites:

What do you think about the new HOS? Will they change how you work?