Thoughts On Commercial Tractor Trailer Leasing
Posted: Wednesday, February 20, 2008
by E. S. Lorence
Thought Search Articles
Driver leasing has become a very popular and lucrative segment of the trucking industry. Leasing is sold to the potential driver as a fast-track to starting a business and making a fortune. Many times referred to as "profit sharing" or "partnerships" the reality usually is very different.
As an "Independent" or "Owner Operator" you really do "own" the truck and your business. As a lease operator, the company owns the truck and calls the shots. Items such as governor speed and horse power pertaining to the tractor will be at the discretion of the leasing company or "owner" of the equipment.
While there are many drivers who have prospered by leasing, many more have not. Being driven into bankruptcy and tax troubles, many of these drivers failed to do the research involved in starting any business.
Owner Operators enjoy a certain freedom and control over their work. They choose the loads they run for the most part, set their own home time, and most important the rates at which they run. Fuel being the most important concern in trucking today, independents can ill afford to run "cheap" freight.
Some trucking companies take advantage of lease operators by having them run the heaviest and least profitable loads. When you lease, the biggest costs such as fuel, tires, maintenance, and depreciation become your costs. It is easy to see why these companies push leases so hard. Often resorting to common telemarketing tactics and email spam.
As a lessor, the rate of pay stays at one level. While independents can choose loads according to profitability, lease operators cannot. The loads usually being heavier or tougher such as NY city loads. Most truck owners will be paid a premium for tougher loads, lessors will not . These are the most profitable loads for any trucking company, and having a lessor run them is just more gravy.
Most often the truck will be older or near the end of it's warranty. Usually this equipment has already been paid off by the company and paid for itself many times over before you ever get in to it. Companies that run student or "rookie" drivers for the most part will have the most abused equipment. It is often necessary to have an independent mechanic do a through inspection before signing anything. Be wary of companies that do not allow this.
Remember, as long as you have a company dispatcher controlling your income and picking your loads for you, you are NOT an "Owner Operator" you are just a driver paying to drive someone else truck. Realizing this may save you a lot of headaches in the long haul! Hope this has helped, have a great ride!
About the Author...
Eric Lorence was a "long haul" truck driver for twelve years before leaving the industry to start various internet businesses and engage in other pursuits.
Visit his Home Page at http://www.zentrucking.com/
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Top-level comments on this article: (2 total)my name is mike m. I to have been a driver for about twelve years. My question is this. With pour credit and little money what would be your answer to this problem?Thank You for your comment, I do not mean to Imply that every lease program in trucking is a ripoff or a scam, however, many of these such programs tend to weigh heavily in favor of the company and not the driver. I do advocate that one should be critical of any company lease recruiter's income claims, and realize that this is a small business the same as any other with all of the pitfalls associated with launching a small business. Trucking is a tough industry with usually razor thin profit margins. With fuel costs being as they are today and the economy in general, It will take a strong business sense and plenty of research to find success in this or any type of business program. Many lease operators have made a good living through these programs, and many have failed. Do the research and be sure to question the recruiter's claims. if they sound unrealistic or they become defensive, take that as a warning, and find a lease program elsewhere. Best of success, E. S. Lorence
Sounds like a "glass half empty, half full response" thats the problem with the world today..especially the trucking industry. People ask a question and they get a 50/50 answer which really keeps the person a square 1. Half tell me theres no money in hauling containers, half say if it wasnt any money in it then why would so many be hauling them, then they say its because there is money to be made. So once again 50/50 answers.Thank you for your reply, Ultimately, only you can decide what is best for yourself and your family. If your looking for someone to "tell' you what to do, there are many in this world who will be happy to. Only you can do the research and make an informed decision. As a small business operator, you will be confronted with such decisions on a daily basis. Many of them will be wrong, but that is the nature of entrepreneurship. Best of luck, E. S. Lorence
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