by Ray Kasicki
Anyone can get caught with the wrong carrier, but taking steps to protect yourself can soften the impact of a bad decision
Here are some things to keep in mind, both when preparing to sign a lease and in your day-to-day operations: A carrier's lease is like a marriage contract. Knowing that many marriages fail, we need to protect ourselves with a prenuptial agreement - in this case a lease agreement. You may not have a lot of power to change everything in the lease, but after reading and understanding the lease you and the carrier may be able to agree on some changes. How your pay will be calculated (especially the way mileages are determined), loading and unloading issues, forced dispatch, who pays for what, equipment requirements, fuel tax credits, advances, and bonds or other escrow accounts are just some of the things you may wish to discuss with the carrier.
Insurance Buy your own insurance instead of getting it from the carrier and having it deducted from your settlements. I'm not talking about public liability or cargo insurance here. That's the carrier's responsibility, even though the cost comes out of your settlement. I'm talking about bobtail, unladen liability, non-trucking liability or whatever coverage is required by your lease - particularly the insurance that covers damage to your truck.
If it's your insurance, and it's time for a claim, it's between you and the insurance company; the carrier is not involved. After all, you have the insurance to protect you first and the carrier second, not the carrier first. If for any reason your lease is canceled, you still have insurance. If you decide to change carriers, you still have your insurance. After all you're the owner-operator, and you're doing this because you want to be independent. So, don't give up your independence.
Note: While you may transfer your own insurance from one carrier to another, in many cases the coverage is only in force while you are under lease to a motor carrier. So if you're breaking a lease with one motor carrier and it will be some time and miles down the road before you sign another lease, be sure to ask your agent whether you need interim coverage.
License plates Yes, it sure is nice to let someone else do all the work. You'd rather sit back and say I just don't like all that paperwork. But is it worth it? Are you giving up something? Independence is the name of the game. When the plates are in your name they're yours. If you want to leave that carrier you have no problem since the plates are in your name. You can come and go as you please. This is just another way to protect yourself. Note: If you are providing your own plates, be sure it's noted in the lease.
DOT physical When you get a DOT physical, make sure you always have the original copy of your long form in your possession. It can be used with another carrier and is generally good for two years.
Money One of the first things you do when you are thinking about a carrier is find out how they pay. How much is enough? Is their money good? Do they pay on time? Do they hold your money? Leasing regulations say you must be paid within 15 days of turning in the appropriate paperwork, though some carriers seem to overlook that provision. How deep will you let a carrier be in debt to you? $4,000? $5,000? It adds up fast. When will you say it's time to look elsewhere? Don't let a carrier run you out of business. Set limits now, not after they start owing you money.
Background checks Ask the carrier for drivers' names and numbers and call them to find out how this carrier treats their owner-operators. What do they like and dislike about this carrier? If the first one tells you there is nothing they dislike about the carrier, go on to the next driver. It has been my experience there is always something you dislike about a carrier. Try to locate some owner-operators who have left the carrier and find out why. Compare the information you get from both groups and decide whether this is a relationship you want to get into.
CDL Protect your license. I've seen drivers (note I didn't say professional drivers) that are proud of the number of tickets they have. Then the driver complains because he can't change carriers because no one else will take them when they have numerous tickets. Then there is always the possibility you could be sidelined for a 60-day suspension (or more) watching your truck payments and household bills mount up. Always drive as safely as you can and avoid the potential for getting tickets. If you do get a ticket, get a lawyer. Protect your license, it's your livelihood as well as your reputation.
Join OOIDA OK, I sound like a commercial, but OOIDA provides many services you may not be aware of. Before you sign any lease, call the OOIDA Business Services department and find out if they have had any complaints on that particular carrier. They will also review the lease for you and point out any violations of leasing regulations and other red flags that may affect you.
When signing a motor carrier's lease, don't forget you're talking about a marriage. That means there will be good and bad. Don't be confused by the fancy words and apple blossoms. Be prepared and know what your limits are, financially as well as the way you want to do business. There are some things we just can't live with. Don't expect more than is reasonably possible, but do everything to protect yourself in case this marriage fails. Don't forget, if there is something you really don't like and they won't change the lease, you're in the driver's seat. There are a lot of carriers looking for good owner-operators.
Remember you are an independent owner-operator.