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Thinking about becoming an owner-operator? This a is great piece about two drivers jumping in and starting down a short road to the welfare office. You have to do your homework, understand your lease and beware of the scams. This is the way not to get started. Story is from August 23, 2010 and thanks to Hedon and Stace of the Highway Hags blog.com A link to their blog is provided below:
Well! So!
Ok… so it’s not the greatest story ever told, but boy do I have a lot to say about it. Unfortunately, I wasn’t able to talk about all the crap that’s been going on until now.
Some of you may remember how we signed on as leased owner-operators with a tiny little company based in Tulsa, OK. This was way back in the early spring when we first bought the truck, but I wasn’t able to go out on the road at the time. Nothing lasts forever, thankfully, and I was finally well enough to go back out so we headed out for our first load with them in the middle of June.
I still wasn’t in too great of a condition so we weren’t able to run many miles at first. Which turned out to be a good thing the way things went down. At first we thought maybe they were just aggressively incompetent … then things started to look more sinister.
When we first talked to them they said their loads were averaging $1.70 to $1.75 per mile. We agreed that Stace and I would receive 80% of the load. Not too bad. We had run the numbers and figured out that we could make a decent living on that deal. Not that we were going to get rich or anything but it was going to work out ok.
Then they decided we needed to pay for part of the cargo insurance. They asked for $3 per hundred of our part of the load. Well it isn’t that unusual for smaller carriers to ask their owner-operators to chip in on the insurance so we agreed when we signed the lease that we would pay it. Since it was only to be on our 80% of the load it would work out that we would now make 77.6% of the load. Sigh. Not great but still possible.
By the time we actually headed out on the road they had changed their insurance cut to 5% and they had decided it should be held out of the gross of the load not out of our 80%. So then we were down to making a flat 75% of the load. Sigh again. Ok, starting to get fairly grumpy, but still thinking we could make it work for a year or so until we felt ready to head out entirely on our own.
So we headed out to run our first load and got another surprise. The lease had specified that they would hold back one weeks’ settlements then we would be paid every Friday. No problem. But after we delivered our first load he said they had changed their payment method. They were now going to pay their owner-operators after every load but hold back 10% of the gross in “escrow” because their factor held back 10% of the load from them. So the deal was when they got paid the 10% by their factor they would pay us. Seriously big sigh. Not thrilled, but on the other hand it was kinda nice to get paid after every load and not have to wait two weeks for our first check. Ok, maybe we could live with it.
So if you’re following along with the math we had now dropped from 80% to 65% of the load. Really not thrilled at all by that point, but were still sure that we could squeak by on our 65% cut of loads that averaged $1.75 per mile. Besides, brokers typically pay in about 30 days so in a month we would have escrow checks coming in and bumping us back up a little. Maybe it would all work out.
And it might have worked out somehow… if there had been any $1.75 per mile loads that is. Weirdly, it seems like the only loads they could find for us were right at what we had informed them was our rock bottom minimum of $1.50 per mile. Hmmmm. We might never have caught on to the shenanigans that were going on if they had been slightly more capable as criminal masterminds. Our first clue that something was up was when the husband called and offered us a load for $1,100 which we accepted. Then later that day his wife, who ended up becoming the office-manager-dispatcher, called to give us more information about the load but she said it grossed $1,300. Hmmmm. So… the husband says the load grosses $1,100 and three hours later the wife says it grosses $1,300. Seriously, hmmmm.
Didn’t just happen once. Happened twice. Two different times they gave us different amounts for the gross. Based on those instances, it seemed pretty obvious to us that they were skimming off the top. But we weren’t 100% positive. And of course we would never accuse anyone without proof. Which we had no way of getting. We had the right to demand to see their actual confirmations on each load, but those are easily doctored so what good would that do us?
Things just went from bad to worse when the wife took over dispatching us a few days after we first went out. As I’m sure you can readily understand, we have no problem at all with women in trucking (for obvious reasons) but she had no experience whatsoever with the trucking industry. She didn’t understand that there are places where you simply don’t want to go because they have no freight worth anything heading back out. Places like Florida and southern Texas and California. Everyone knows this. Everyone except her. So we tried to explain to her that we would only go to those places if she looked ahead and had a good load lined up for us to drive back out at a decent rate. She never understood what we were trying to say. At least that’s what we thought at the time. We ended up sitting several times because she couldn’t find us a load that paid crap.
It may come as no big surprise that it only took a couple of weeks for Stace and I to decide that it just wasn’t going to work out being leased on with them. There was no way we were going to be able to make ends meet and beyond that we felt fairly sure they were robbing us blind. Obviously we weren’t going to stand for that. We started investigating getting our own authority and going completely independent. We had always heard how expensive the insurance was if you formed your own authority, but when we checked into it we were shocked to find out that we would pay less than we had been paying signed on to the guys in Tulsa. We set the wheels in motion.
It takes about a month for a new carrier’s authority to be granted, so it’s been a waiting game for quite a while now. But finally this week we went active. Woo Hoo! The big thing was that we couldn’t get onto any load boards until our authority was active. So we could not check going rates for loads. What we were most worried about was what if the loads she had been getting for us really were as good as it got? We had figured the numbers very carefully and were sure that we could make it on $1.50/mile loads as long as we kept the whole thing not 65% of the load. Then we went active and I was able to finally get on load boards and check out the situation myself. Those filthy sons of bitches. I found all kinds of loads for $1.85/mile. Hell, I found loads for $2.35/mile. I even found a few for over $2.50 per mile.
On the one hand I was livid. I mean there were so many good loads out there that she would have had to of been a blithering idiot to only be able to find us loads for $1.45 to $1.50 per mile. It seems pretty certain they were skimming off of us on top of taking their 35% of what they said the load paid — which really pisses me off. On the other hand, boy was it a relief to see that there really are good loads to be had out there. We had figured our cpm before we made this move and had discovered we could get by just fine with $1.50/mile loads so even $1.85/mile loads will be great. $2.35/mile loads would just be awesome. Maybe we can finally start paying down some of the debt we have racked up while I was out of commission and while we were busy getting screwed by the guys in Tulsa. Hurrah!
We were not able to leave them until now because we are still trying to get paid for the last load we ran for them and thought keeping everything on the down-low might make it easier to get paid. But it’s been one excuse after another for why they haven’t been able to pay us. And get this… we have still never received a penny of the “escrow” money. Not even on the first load we ran which was over two months ago. Not sure what we are going to end up doing about that. Regardless, we are mailing our official letter informing them we are terminating the lease in the morning.
So… we still have a few loose ends to tie up, but we should be heading out this week with our own name on the truck door. Pretty damned exciting. And now that we will have finally been able to send off our letter of resignation to Tulsa, I can feel free to write here as much as I want about anything I want and not worry about them reading it.
Update, August 27,2010 On another note, when we finally called and officially told the Tulsa guys we were terminating our lease, the owner told me they were closing the doors to the company. I guess he is so down about the whole situation that he’s going to sell his truck and everything. I’m guessing we can kiss that escrow money goodbye. Not that I won’t keep trying but you can’t get blood out of a turnip or a stone or whatever the old saying is. I suppose we will survive, but it does piss me off to leave that money on the table like this. Sigh. Live and learn I guess.Ok… so it’s not the greatest story ever told, but boy do I have a lot to say about it. Unfortunately, I wasn’t able to talk about all the crap that’s been going on until now.
Some of you may remember how we signed on as leased owner-operators with a tiny little company based in Tulsa, OK. This was way back in the early spring when we first bought the truck, but I wasn’t able to go out on the road at the time. Nothing lasts forever, thankfully, and I was finally well enough to go back out so we headed out for our first load with them in the middle of June.
I still wasn’t in too great of a condition so we weren’t able to run many miles at first. Which turned out to be a good thing the way things went down. At first we thought maybe they were just aggressively incompetent … then things started to look more sinister.
When we first talked to them they said their loads were averaging $1.70 to $1.75 per mile. We agreed that Stace and I would receive 80% of the load. Not too bad. We had run the numbers and figured out that we could make a decent living on that deal. Not that we were going to get rich or anything but it was going to work out ok.
Then they decided we needed to pay for part of the cargo insurance. They asked for $3 per hundred of our part of the load. Well it isn’t that unusual for smaller carriers to ask their owner-operators to chip in on the insurance so we agreed when we signed the lease that we would pay it. Since it was only to be on our 80% of the load it would work out that we would now make 77.6% of the load. Sigh. Not great but still possible.
By the time we actually headed out on the road they had changed their insurance cut to 5% and they had decided it should be held out of the gross of the load not out of our 80%. So then we were down to making a flat 75% of the load. Sigh again. Ok, starting to get fairly grumpy, but still thinking we could make it work for a year or so until we felt ready to head out entirely on our own.
So we headed out to run our first load and got another surprise. The lease had specified that they would hold back one weeks’ settlements then we would be paid every Friday. No problem. But after we delivered our first load he said they had changed their payment method. They were now going to pay their owner-operators after every load but hold back 10% of the gross in “escrow” because their factor held back 10% of the load from them. So the deal was when they got paid the 10% by their factor they would pay us. Seriously big sigh. Not thrilled, but on the other hand it was kinda nice to get paid after every load and not have to wait two weeks for our first check. Ok, maybe we could live with it.
So if you’re following along with the math we had now dropped from 80% to 65% of the load. Really not thrilled at all by that point, but were still sure that we could squeak by on our 65% cut of loads that averaged $1.75 per mile. Besides, brokers typically pay in about 30 days so in a month we would have escrow checks coming in and bumping us back up a little. Maybe it would all work out.
And it might have worked out somehow… if there had been any $1.75 per mile loads that is. Weirdly, it seems like the only loads they could find for us were right at what we had informed them was our rock bottom minimum of $1.50 per mile. Hmmmm. We might never have caught on to the shenanigans that were going on if they had been slightly more capable as criminal masterminds. Our first clue that something was up was when the husband called and offered us a load for $1,100 which we accepted. Then later that day his wife, who ended up becoming the office-manager-dispatcher, called to give us more information about the load but she said it grossed $1,300. Hmmmm. So… the husband says the load grosses $1,100 and three hours later the wife says it grosses $1,300. Seriously, hmmmm.
Didn’t just happen once. Happened twice. Two different times they gave us different amounts for the gross. Based on those instances, it seemed pretty obvious to us that they were skimming off the top. But we weren’t 100% positive. And of course we would never accuse anyone without proof. Which we had no way of getting. We had the right to demand to see their actual confirmations on each load, but those are easily doctored so what good would that do us?
Things just went from bad to worse when the wife took over dispatching us a few days after we first went out. As I’m sure you can readily understand, we have no problem at all with women in trucking (for obvious reasons) but she had no experience whatsoever with the trucking industry. She didn’t understand that there are places where you simply don’t want to go because they have no freight worth anything heading back out. Places like Florida and southern Texas and California. Everyone knows this. Everyone except her. So we tried to explain to her that we would only go to those places if she looked ahead and had a good load lined up for us to drive back out at a decent rate. She never understood what we were trying to say. At least that’s what we thought at the time. We ended up sitting several times because she couldn’t find us a load that paid crap.
It may come as no big surprise that it only took a couple of weeks for Stace and I to decide that it just wasn’t going to work out being leased on with them. There was no way we were going to be able to make ends meet and beyond that we felt fairly sure they were robbing us blind. Obviously we weren’t going to stand for that. We started investigating getting our own authority and going completely independent. We had always heard how expensive the insurance was if you formed your own authority, but when we checked into it we were shocked to find out that we would pay less than we had been paying signed on to the guys in Tulsa. We set the wheels in motion.
It takes about a month for a new carrier’s authority to be granted, so it’s been a waiting game for quite a while now. But finally this week we went active. Woo Hoo! The big thing was that we couldn’t get onto any load boards until our authority was active. So we could not check going rates for loads. What we were most worried about was what if the loads she had been getting for us really were as good as it got? We had figured the numbers very carefully and were sure that we could make it on $1.50/mile loads as long as we kept the whole thing not 65% of the load. Then we went active and I was able to finally get on load boards and check out the situation myself. Those filthy sons of bitches. I found all kinds of loads for $1.85/mile. Hell, I found loads for $2.35/mile. I even found a few for over $2.50 per mile.
On the one hand I was livid. I mean there were so many good loads out there that she would have had to of been a blithering idiot to only be able to find us loads for $1.45 to $1.50 per mile. It seems pretty certain they were skimming off of us on top of taking their 35% of what they said the load paid — which really pisses me off. On the other hand, boy was it a relief to see that there really are good loads to be had out there. We had figured our cpm before we made this move and had discovered we could get by just fine with $1.50/mile loads so even $1.85/mile loads will be great. $2.35/mile loads would just be awesome. Maybe we can finally start paying down some of the debt we have racked up while I was out of commission and while we were busy getting screwed by the guys in Tulsa. Hurrah!
We were not able to leave them until now because we are still trying to get paid for the last load we ran for them and thought keeping everything on the down-low might make it easier to get paid. But it’s been one excuse after another for why they haven’t been able to pay us. And get this… we have still never received a penny of the “escrow” money. Not even on the first load we ran which was over two months ago. Not sure what we are going to end up doing about that. Regardless, we are mailing our official letter informing them we are terminating the lease in the morning.
So… we still have a few loose ends to tie up, but we should be heading out this week with our own name on the truck door. Pretty damned exciting. And now that we will have finally been able to send off our letter of resignation to Tulsa, I can feel free to write here as much as I want about anything I want and not worry about them reading it.
Link to highwayhags.com
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