TORONTO, Ont. - Contracts can be tricky to negotiate for owner/operators. That is, if you've got one. According to Joanne Ritchie, executive director of the Owner-Operators' Business Association of Ca...
TORONTO, Ont. – Contracts can be tricky to negotiate for owner/operators. That is, if you’ve got one. According to Joanne Ritchie, executive director of the Owner-Operators’ Business Association of Canada (OBAC), “Owner/operator contracts (or lack of them), is a huge concern. Quebec, for example, recently completed a study showing that 60% of the owner/operators in the province work with oral contracts.”
The same is often true in remote, one-industry towns. While researching this story I talked to a couple who owned several logging trucks in a community in Northern B.C., a couple of hours from Prince George. Here’s what Kate (not her real name) told me.
“We haul on a sort of tenure basis, mostly with verbal agreements. The mill hires the harvest contractors, and the harvest contractors hire the truckers. If we work for Joe Blow contractor we automatically get called back to work, but we never get to negotiate. Sometimes we don’t even know the rate until the cheque arrives in the mail. But if you want to work, you don’t rock the boat.”
Luckily, most reputable carriers don’t work that way. Mainstream transport companies like Highland, Arnold Bros., Yanke, Bison and Challenger, to name a few, supply fairly standard contracts to their owner/ops. But there’s not much room for negotiation. The only leeway they might be able to offer is a dedicated lane that appeals to you. The recruiter might say, “If you come work for us, I can offer you such and such a run, at so many trips and miles per week.”
On the whole, carriers keep a close eye on each other and are mindful of what their competitors are paying. And they know it’s not always just the base mileage rate that attracts every truck owner. Paid layovers, border crossings delays, P&D moves, benefits, health plan, family ride-along insurance, workers comp premiums, safety bonuses and pension plans can all be factors. As well, sign-on bonuses are not uncommon across the board.
The contract should operate as a tool that benefits both the carrier and the owner/operator. Make sure you have a thorough understanding of what you’re getting into before signing on the bottom line.
Know your cost
This is key to the process. It’s no use shopping for a carrier unless you know how much you’re spending to run your rig. Contracts can be complicated animals and it’s essential to know your expenses in order to find the bottom line. Don’t forget to factor in maintenance, tires, truck washes, etc.
Did you read it?
Read the contract twice – all of it. If you can’t understand the wording you should get some help interpreting it. If leasing equipment is involved you might be better advised to have a lawyer look at the contract. It’s not unheard of for lease operators to get stung with residual or ancillary fees long after a business relationship has ended.
Talk to people
A recruiter can promise you the world, but the best way to find out about a potential carrier is to ask the people who work there.
Try to find a couple of different operators and get their opinion on the company. They might even open up their books for you.
You might inquire, are the dispatchers fair and truthful? Is there nepotism or favouritism? What are the negative issues and areas of concern? A little research can save you months, or even years, of frustration.
Do the math
Are you being paid hub miles or trip miles? If it’s the latter, what kind of software are they using?
A carrier that pays slightly less per mile might be a better deal than a carrier that pays more but uses a trip program that consistently comes up miles short of the actual route.
Fuel rebates are pretty standard, but the way they are calculated can vary greatly. Some carriers use a fleet averaging formula that does little for the economical owner trying to stretch every last drop of diesel.
Strength in numbers
Signing a contract with a carrier can be a lonely experience, so it’s good to have a support group behind you.
Joining an organization like OBAC not only gives you political clout, but also provides resources that can help you develop a business plan.
No paint job necessary
A truck painted in company colours doesn’t make any more money than one that’s not. Carriers prefer a uniform paint scheme, but most have dropped the condition from their contract, unless it’s a lease or some other arrangement.
According to OBAC’s Ritchie “transparency” is a continuing issue facing owner/operators, i.e., the way in which fuel rebates and freight rate percentages are derived and paid out.
“Many of them are starting to pay closer attention to contracts, feeling more comfortable about questioning clauses they might not agree with.”
Time it well
You may find you get a better deal when you sign on with a new carrier when the going is good and business is booming. When freight rates are high and capacity is tight, you can negotiate from a position of strength.