Rev.Vassago
February 7th, 2006, 16:32
The following is taken from a very informative article by Tim Brady. It can be found here:
http://driversmag.com/cover/dollarsandsense/negotiate_truck_company_owner_operator_driver_inde pendent_050505/
As we start on this drive to find a trucking company to lease to, keep in mind these important points:
1. You are a businessperson; you’re not looking for a job, you are looking to establish a business relationship with another company.
2. Remember, you are the one responsible for paying for either all or the majority of expenses related to owning and operating your truck.
3. Always be prepared to politely say no and walk away during negotiations. It’s much simpler and less financially painful to walk before you’ve signed on the dotted line.
4. Keep in mind you have skill and talent they need. You’re the one in the driver’s seat.
5. If it is said, make sure you get it in writing on the contract with the recruiter’s initials and your initials next to it.
6. The most important question you will ask needs to be the first question: Will the trucking company recruiter FAX or MAIL you a copy of the entire lease agreement and all other documentation you will be asked to sign if you decide to go with them?
7. Have a transportation attorney review the agreement and contract before you enter into negotiations. Unless you have a law degree, don’t trust your ability to read ‘legalese’ plus you want to be sure it conforms with all DOT regulations and state and local law. Be sure you get a list of suggested changes and concerns the attorney has. Remember the attorney will have your best interest in mind.
8. When you finally sit down with the trucking company recruiter, have the concerns list from your attorney and a written list of questions similar to the following. This will keep you focused and in control of the negotiations.
9. Don’t sign anything until your attorney has reviewed it and lets you know the drawbacks and the pluses. Not having an attorney review the contract can be compared to driving down a snow- and ice-covered mountain pass in the fog with fading brakes and no chains. Having your attorney review the contract and advise you before you sign equals driving through West Texas on I-10 on a clear spring day. Remember, the trucking company had attorneys put the contract together to protect their interests- you need one to protect yours!
Important questions to ask:
Suggestions for Key Questions:
1. Will you fax me a copy of your lease?
2. What’s the average annual gross revenue your current lease/operators are receiving? (Divide the annual gross revenue by 365 to determine their drivers’ daily gross revenue.)
3. How many actual (not dispatched) miles are their lease/operators traveling in a year? (Divide the annual gross revenue from Question 2 to determine the revenue per mile their drivers are getting.)
4. Do you have forced dispatch?
5. What will happen if I turn down a load?
6. What is the company’s fuel surcharge policy? (Should be 100% to the purchasing party.)
7. Does their agreement/contract contain a “Non-Compete Clause?” (This can spell real trouble if you decide to leave a company with a clause of this nature: it can prohibit you from going to work for a competitor, or starting your own trucking company with your own authority.)
8. What is the company’s annual driver turnover percentage?
And finally, the full list of questions you should be asking:
1. What are lease/operators paid:
A. Percentage of gross revenue? What is the percentage?
B. Per Mile? How is mileage calculated?
2. Will the lease/operator be provided with the gross revenue on each load hauled as billed to the shipper?
3. What does the company pay for?
A. Insurance/Liability/Cargo/Workers Comp/Other
B. Base Plate/Permits
C. Taxes/Fuel/Ton-Mile
D. Scale Tickets/Tolls
E. Drug Testing
F. Satellite Communications
G. Other
4. What percentage of the fuel surcharge goes to the lease operator?
A. Do all loads receive a fuel surcharge?
B. If not, why?
5. Do lease/operators receive compensation for:
A. Layovers? Rate:
B. Detention time? Rate:
C. Canceled Loads? Rate:
D. Multiple Picks/Drops? Rate:
E. Anything else?
6. How often are lease/operators paid?
A. In what form is the compensation check sent?
B. How often are statements sent?
C. What is the company’s load advance policy?
Check___ Card ___ Fees___
7. Are there any holdback, escrow, security deposit, performance bond or other lease/operators’ funds held back by the trucking company?
A. Is any interest paid on the account?
B. What is the return policy?
8. Is the lease/operator required to purchase insurance or other goods and services from the trucking company? (Note: Federal leasing regs prohibit a company from requiring a lease/operator from purchasing insurance from or through the trucking company as a condition of a lease. You may choose to so, but if you do, you are entitled to a copy of the policy with your name listed as an insured or additional insured.)
9. What insurance is required by the lease agreement?
A. Can the lease/operator purchase an occupational accident policy instead of a Workers Compensation Policy? (Workers Compensation is more expensive.)
10. What is the company’s cargo insurance and cargo damage claim policy?
A. What is the cargo insurance limit?
B. Is the lease/operator responsible for any amount if there is a cargo damage claim?
C. Does the company have an unattended trailer policy? (For example you need to drop the trailer to go do laundry, or take the tractor to the house.)
11. For a company provided trailer, are there any expenses borne by the lease/operator?
12. Is a lease/operator required to do any loading/unloading, load securing, inventory, shipment item count, pad wrap, inside delivery, or other activities not associated with the driving of the truck?
A. How is the lease/operator compensated for these activities?
If a lumper(s) is required, what is the company’s lumper policy?
A. Who is responsible for paying the lumper(s)?
B. How is the lease/operator either compensated or reimbursed for lumper fees?
13. What is the normal amount of time a lease/operator remains out before returning home?
14. What is the policy on getting home, and while at home?
15. How often is a lease/operator required to make check-in calls?
16. What are the average miles a lease/operator runs in a week?
17. What are the average hours on-duty-driving a lease/operator logs in a week?
18. What are the average hours on-duty both driving and not driving a lease/operator logs in a week?
19. What are the average miles a lease/operator driving for the company logs in a week? In an entire year? (Compare these answers with the answers you received on your Key Questions.)
20. When does dispatch start planning the lease/operator’s next load?
A. How many trips are planned in advanced?
B. What is the compensation for deadheading?
C. Does the lease/operator work directly with brokers?
D. What is the company’s trip-lease policy?
21. Are there any company discounts on products and services for the lease/operator?
22. How many company trucks does the company own?
A. Are they loaded before a lease/operator?
23. Is the lease/operator required to attend orientation or other driver meetings?
A. How is the lease/operator compensated?
24. Does the company offer a sign-on bonus?
A. How is the sign on bonus paid?
25. If I lease or buy a truck from the company, what happens if I decide to leave the company?
26. Is there a complaint mediation program for disagreements between the lease/operator and the company?
27. Does the company offer any accounting/business information and education workshops or courses?
28. Have the trucking company provide you with a representative list of 20 trips with: origin, destination, number of days involved in the load, paid miles, revenue paid, (to include: percentage of line haul, fuel surcharge or paid miles, rate per mile, fuel surcharge, and any other revenue paid to the lease operator), any shipment specific expenses, (like tolls, labor, special permits, etc.) Compare the company’s per load revenue against the lease/operator’s actual expenses. Note: The information derived from these calculations can provide the lease/operator with more answers than any other question on this list.
http://driversmag.com/cover/dollarsandsense/negotiate_truck_company_owner_operator_driver_inde pendent_050505/
As we start on this drive to find a trucking company to lease to, keep in mind these important points:
1. You are a businessperson; you’re not looking for a job, you are looking to establish a business relationship with another company.
2. Remember, you are the one responsible for paying for either all or the majority of expenses related to owning and operating your truck.
3. Always be prepared to politely say no and walk away during negotiations. It’s much simpler and less financially painful to walk before you’ve signed on the dotted line.
4. Keep in mind you have skill and talent they need. You’re the one in the driver’s seat.
5. If it is said, make sure you get it in writing on the contract with the recruiter’s initials and your initials next to it.
6. The most important question you will ask needs to be the first question: Will the trucking company recruiter FAX or MAIL you a copy of the entire lease agreement and all other documentation you will be asked to sign if you decide to go with them?
7. Have a transportation attorney review the agreement and contract before you enter into negotiations. Unless you have a law degree, don’t trust your ability to read ‘legalese’ plus you want to be sure it conforms with all DOT regulations and state and local law. Be sure you get a list of suggested changes and concerns the attorney has. Remember the attorney will have your best interest in mind.
8. When you finally sit down with the trucking company recruiter, have the concerns list from your attorney and a written list of questions similar to the following. This will keep you focused and in control of the negotiations.
9. Don’t sign anything until your attorney has reviewed it and lets you know the drawbacks and the pluses. Not having an attorney review the contract can be compared to driving down a snow- and ice-covered mountain pass in the fog with fading brakes and no chains. Having your attorney review the contract and advise you before you sign equals driving through West Texas on I-10 on a clear spring day. Remember, the trucking company had attorneys put the contract together to protect their interests- you need one to protect yours!
Important questions to ask:
Suggestions for Key Questions:
1. Will you fax me a copy of your lease?
2. What’s the average annual gross revenue your current lease/operators are receiving? (Divide the annual gross revenue by 365 to determine their drivers’ daily gross revenue.)
3. How many actual (not dispatched) miles are their lease/operators traveling in a year? (Divide the annual gross revenue from Question 2 to determine the revenue per mile their drivers are getting.)
4. Do you have forced dispatch?
5. What will happen if I turn down a load?
6. What is the company’s fuel surcharge policy? (Should be 100% to the purchasing party.)
7. Does their agreement/contract contain a “Non-Compete Clause?” (This can spell real trouble if you decide to leave a company with a clause of this nature: it can prohibit you from going to work for a competitor, or starting your own trucking company with your own authority.)
8. What is the company’s annual driver turnover percentage?
And finally, the full list of questions you should be asking:
1. What are lease/operators paid:
A. Percentage of gross revenue? What is the percentage?
B. Per Mile? How is mileage calculated?
2. Will the lease/operator be provided with the gross revenue on each load hauled as billed to the shipper?
3. What does the company pay for?
A. Insurance/Liability/Cargo/Workers Comp/Other
B. Base Plate/Permits
C. Taxes/Fuel/Ton-Mile
D. Scale Tickets/Tolls
E. Drug Testing
F. Satellite Communications
G. Other
4. What percentage of the fuel surcharge goes to the lease operator?
A. Do all loads receive a fuel surcharge?
B. If not, why?
5. Do lease/operators receive compensation for:
A. Layovers? Rate:
B. Detention time? Rate:
C. Canceled Loads? Rate:
D. Multiple Picks/Drops? Rate:
E. Anything else?
6. How often are lease/operators paid?
A. In what form is the compensation check sent?
B. How often are statements sent?
C. What is the company’s load advance policy?
Check___ Card ___ Fees___
7. Are there any holdback, escrow, security deposit, performance bond or other lease/operators’ funds held back by the trucking company?
A. Is any interest paid on the account?
B. What is the return policy?
8. Is the lease/operator required to purchase insurance or other goods and services from the trucking company? (Note: Federal leasing regs prohibit a company from requiring a lease/operator from purchasing insurance from or through the trucking company as a condition of a lease. You may choose to so, but if you do, you are entitled to a copy of the policy with your name listed as an insured or additional insured.)
9. What insurance is required by the lease agreement?
A. Can the lease/operator purchase an occupational accident policy instead of a Workers Compensation Policy? (Workers Compensation is more expensive.)
10. What is the company’s cargo insurance and cargo damage claim policy?
A. What is the cargo insurance limit?
B. Is the lease/operator responsible for any amount if there is a cargo damage claim?
C. Does the company have an unattended trailer policy? (For example you need to drop the trailer to go do laundry, or take the tractor to the house.)
11. For a company provided trailer, are there any expenses borne by the lease/operator?
12. Is a lease/operator required to do any loading/unloading, load securing, inventory, shipment item count, pad wrap, inside delivery, or other activities not associated with the driving of the truck?
A. How is the lease/operator compensated for these activities?
If a lumper(s) is required, what is the company’s lumper policy?
A. Who is responsible for paying the lumper(s)?
B. How is the lease/operator either compensated or reimbursed for lumper fees?
13. What is the normal amount of time a lease/operator remains out before returning home?
14. What is the policy on getting home, and while at home?
15. How often is a lease/operator required to make check-in calls?
16. What are the average miles a lease/operator runs in a week?
17. What are the average hours on-duty-driving a lease/operator logs in a week?
18. What are the average hours on-duty both driving and not driving a lease/operator logs in a week?
19. What are the average miles a lease/operator driving for the company logs in a week? In an entire year? (Compare these answers with the answers you received on your Key Questions.)
20. When does dispatch start planning the lease/operator’s next load?
A. How many trips are planned in advanced?
B. What is the compensation for deadheading?
C. Does the lease/operator work directly with brokers?
D. What is the company’s trip-lease policy?
21. Are there any company discounts on products and services for the lease/operator?
22. How many company trucks does the company own?
A. Are they loaded before a lease/operator?
23. Is the lease/operator required to attend orientation or other driver meetings?
A. How is the lease/operator compensated?
24. Does the company offer a sign-on bonus?
A. How is the sign on bonus paid?
25. If I lease or buy a truck from the company, what happens if I decide to leave the company?
26. Is there a complaint mediation program for disagreements between the lease/operator and the company?
27. Does the company offer any accounting/business information and education workshops or courses?
28. Have the trucking company provide you with a representative list of 20 trips with: origin, destination, number of days involved in the load, paid miles, revenue paid, (to include: percentage of line haul, fuel surcharge or paid miles, rate per mile, fuel surcharge, and any other revenue paid to the lease operator), any shipment specific expenses, (like tolls, labor, special permits, etc.) Compare the company’s per load revenue against the lease/operator’s actual expenses. Note: The information derived from these calculations can provide the lease/operator with more answers than any other question on this list.