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Owner-Operators Are Making a Big Comeback

As fleets try to find new ways of addressing the fallout from the employment squeeze, they are increasingly turning to today’s business-savvy independent truckers. As owner-operators continue to recover from the sharp blow dealt to them in the great recession, fleets are going all out to recruit and retain them.

The job of today’s owner-operator is as lucrative as it’s ever been. Truck drivers are in high demand and the pool of available talent is small. Even so, it’s growing. Some numbers show contract trucking has grown by as much as 15% in the last two years.

The rebound in contract trucking is directly related to the pay increases that companies are offering. Long overdue rate increases are luring truck drivers back into the financially welcoming arms of fleets across the country.

The Shift to Owner-Operators

One large, Missouri-based carrier recently overhauled its owner-operator program and brought on an additional 320 independent contractors. The cost associated with buying new equipment also drives fleets to seek out the services of people who own their own truck.

Economic fluctuations show that diversified assets provide a safer return. When there’s plant adjustments or slowdowns, carriers don’t want to suddenly have 100 trucks sitting idle. A pool of owner-operators to draw from helps mitigate that risk.

Indeed, large motor carriers are beginning to realize that the owner-operator of today holds a technological edge. As the economy has grown, new companies are providing business and financial services to independent truck drivers. These services streamline operational efficiency and allow owner-operators to take on more work.

Today’s independent truck drivers are able to select loads with more precision and keep track of expenses in a much quicker and far more accurate manner than they could even a decade ago. They’re also less focused on raw horsepower and bells and whistles than they are on high fuel efficiency and meeting the bottom line.

Not every fleet has a place for owner-operators, however. In some cases companies are more focused on a consistent image of the fleet and efficiency of operations. Some fleets have systems that aren’t able to accommodate independent truck drivers picking which loads they want.

Even as owner-operators make their comeback, the appetite for them is greater than they can satisfy. These days, with the high price of trucks and a tighter credit environment, it’s harder than ever for someone to simply break into the business.

Lease Owner-Operator Programs

Independent truck drivers are hard to come by and everyone is competing for them. As a result, many fleets are beginning to once again look into growing their own. In this arrangement the company goes through a lease-purchasing program to get a potential operator into a truck.

There has been reluctance to embrace this method, however. In the early 2000s a proliferation of notoriously bad fleet lease-purchase programs left a bad taste in the mouth of today’s independent contractors.

In some of these programs income streams were promised that couldn’t be realized. Lease owner-operators would then be unable to make their payments. The company could then reclaim the truck and lease it back out to another truck driver, marked up even, in some cases. The failure of these programs became glaringly obvious when the recession hit and commerce nearly ground to a halt.

As leased owner-operator programs make a return, fleets are embracing the need to be able to demonstrate that partnering with them offers a sure path to success. As a safeguard against potential failures or in-house missteps that lead to lawsuits, fleets are also turning to third-party companies in an effort to handle lease agreements and ensure compliance.

The increasing regulatory environment is also putting a spotlight on “employee misclassification,” which is when a truck driver is an independent contractor, but is being treated like an employee. Fleets increasingly recognize that these are truly small business owners. Many are even putting together independent contracting teams to help navigate federal and state laws.

The necessity to ensure competitive programs are bringing in new owner-operators has never been greater. Although it may be a tough environment for those wanting to become an independent truck driver, the need necessitates success to those who try.

How a Freight Broker is Different than a Freight Forwarder?

The terms freight forwarder and freight broker are sometimes used interchangeably, but their jobs are actually quite different. They perform some of the same functions, but a broker acts as an intermediary between the carrier and the shipper, while a forwarder’s job is to facilitate the shipping process.

Who are Freight Brokers?

Either a company or an individual may be a freight broker. The broker is a liaison between a company or individual that has items that need to be shipped and a motor carrier that it authorized by the Federal Motor Carrier Safety Administration to haul freight. The broker’s job is to determine the needs of the shipper and connect them with a carrier that has agreed to ship the items at an agreed upon price.
A freight broker must have a license from the Federal Motor Carrier Safety Administration to operate legally. Many states require brokers to carry surety bonds and brokers are also expected to carry adequate insurance to protect their customers and business clients from loss.
Freight Brokers provide a valuable service to both motor carriers and shippers. They connect shippers with reliable carriers that they may not come across on their own. They also assist carriers in finding loads to move so they make money. Brokers are usually paid on commission.

Using technological resources and knowledge of the shipping industry, freight brokers help both carriers and shippers meet their business goals. Some companies find the services of a broker so invaluable that they hire a broker to coordinate all of their company’s shipping needs.

Many new freight brokers work for a carrier or shipper to gain industry knowledge and experience. They also gain business contacts that help propel them forward in their new career. Some new brokers take a training course to learn the business, but they often find that the course doesn’t give them the experience they need to be successful.

New freight brokers are usually more successful if they begin their career an agent for an established broker and learn the business firsthand. These agents act as representatives of the broker. They are usually assigned to a certain geographical area and generally work from home using their telephone, fax machine and computer.

Who are Freight Forwarders?

A freight forwarder is an individual who facilitates the process of shipping non-perishable or perishable items for a third party. The freight forwarder may handle everything from small shipments of personal goods for individuals to shipping containers for large industrial firms. A freight forwarder may arrange for the shipment of goods internationally, domestically or both. Some
freight forwarders work as independent contractors, while others work for shipping companies.
There are several reasons that a company or individual may use the services of a freight forwarder instead of taking care of the shipping process personally. The biggest reason that people hire a forwarder is that they usually have contacts in the shipping industry and may have the ability to negotiate a lower rate for shipping services. They may also be aware of shipping options that aren’t available to the public, such as vessels that have enough room available to ship certain items at a reduced rate.
When they are initially contacted regarding items to be shipped, the freight forwarder starts by gathering information about the shipment. One of the most important things the shipper needs to know is whether the merchandise is perishable and whether the merchandise will have to cross international borders. The weight and size of the shipment are also considered, as well as when the shipper expects the items to reach their destination.
After they have gathered the necessary information, the freight forwarder looks at all of the shipping options available for that merchandise. Shipping options may include truck transportation, water, air or rail. The forwarder tries to keep goods that are going to the same geographical area together because shippers often pay less when their items are shipped on the same vehicle as other items.
Exceptional record keeping skills are required to be a successful forwarder. They must track rates, shipping information, damaged goods incidences and other information on many companies. The forwarder must also prepare legal papers and customs documents if the shipments require their use.
Being a freight forwarder doesn’t require a college degree, but excellent analytical and negotiating skills are necessary. A freight forwarder’s success is dependent on having repeat customers, so integrity and customer service are a big part of the job.

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