by Donna Ryun
In spite of skyrocketing fuel prices combined with low freight rates, not to mention the increasing difficulty of just finding a place to park for the night, adventuresome men and women are still becoming first-time truck owners. And lately, I've received quite a few questions from them.
I can tell by their inquiries that these professional truckers are well aware of the heavy responsibilities associated with truck ownership. They've taken the right steps by asking pertinent questions regarding their future operations in order to avoid costly mistakes further down the road.
Here's an excellent question that Steve S., of Salem, OR, e-mailed to me recently:
"Where can I get hold of something that will tell me what to look out for in the area of leasing on with a company as an owner-operator? While I believe the big companies out here are reputable, I suppose I base that opinion on "feelgoodism" and not real facts. I've been a company driver for the last 15 years, but now I'm in the process of purchasing a new truck, and I'm suddenly getting concerned about protecting my investment and myself from a bad or unethical lease. I want to know, and not just "think" I know that they will treat me right."
Well, Steve, you're smart for wanting to check things out prior to signing on with a company. It's definitely a "must" to know what motor carriers can and cannot do, and what items should be included within the lease contract. You can find out about written lease requirements by reading Title 49 CFR 376.12 of the Federal Leasing Regulations. These regulations spell out rules pertaining to payment period, charge-back items, escrow funds, and insurance, just to name a few. You can view a copy of these leasing regulations at www.ooida.com, or you can usually obtain one from a local library.
Once you've made yourself familiar with the leasing regulations, you'll have armed yourself with valuable information as you search for a good company with a good lease. I advise you to check out several different motor carriers before you finally decide on one. Ask the carrier for a copy of the lease so you can study it at your leisure and maybe have someone else look it over. Beware of a company who won't let you do this. They may have something to hide. Remember, it's not what the carrier "tells" you that's as important as what is actually "written" within the lease agreement. If you don't like the way the lease is worded, try negotiating a change. If that doesn't work, and the contract is not to your liking, it's time to move on to the next carrier on your list.
Speaking of negotiation, JTH writes:
"Whenever my husband leases on with a company, he always accepts the contract the way the trucking company presents it. That's not always to our advantage. He says that he doesn't try to negotiate a different settlement because they won't lease him on unless he agrees to their terms. If carriers can negotiate rates with shippers, why won't they extend the same opportunity to leased owner-operators?"
I've heard this complaint from many owner-operators who tell me it's not as easy as I make it sound when negotiating a contract. The truth is that while I know it's not easy, it's definitely worth a try. I'm not talking about tearing up the whole lease and starting over. If it's that bad, you should find the nearest exit. However, if there are specific items within the lease that you just cannot live with, try to get the company to simply line through these items and then both of you initial the change. If more truckers said "no" to unfair practices, they would eventually begin to gain more control over their own businesses. If enough owner-operators walked away from carriers who won't negotiate terms, maybe those carriers would begin to realize they are losing some really good contractors - those who take pride in their skills, and won't accept a contract where they could be compromising their protections under the Federal Leasing Regulations. You should at least make the attempt to negotiate your lease. Who knows? You may actually get what you want once in a while.
The best advice I could offer to any owner-operator, whether you're an old-timer or a first-time owner, is to read and understand the lease agreement before you sign it. If you need help with interpretation of the contract, you should have OOIDA's Business Services department go over the wording with you, or you can ask an attorney for advice. You should always know what you are agreeing to, and if you don't like what you see, try to negotiate or walk away. There are still many companies who will offer a good contract to owner-operators. The choice is yours.