A BUSINESS MANUAL FOR OWNER-OPERATORS PRODUCED BY OVERDRIVE AND ATBS

PIB19_FC_COMBO.indd 1 8/16/18 12:32 PM TBS_Ads.indd 7 8/17/18 10:47 AM 2019 Edition

ore than 70 percent of freight tonnage moved in the United States travels by truck. Those trucks include 3.4 million heavy-duty Class 8s, operated M by more 3.5 million drivers. You deliver the food we eat, the clothes we wear, the cars we drive and the building materials for our homes and offices. Everyday life doesn’t happen without you delivering the things that make it possible. Truck drivers carry the U.S. economy on their backs. That’s a lot of work. Which is why Overdrive editors and ATBS specialists, with the support of TBS Factoring Service, have teamed up to provide you with the 2019 edition of Partners in Business, the industry’s best manual for prospective and committed owner-operators. In this manual you will find the best research and advice from Overdrive, which has 50-plus years of experience publishing articles to help the owner-operator, and ATBS, the nation’s largest owner-operator financial services provider. There’s also input from TBS, which has been around as long as Overdrive, helping owner- operators and motor carriers apply for operating authority and improving their lives with a variety of cash flow solutions and other services to help them operate more profitably. When truckers work extra hard and take the risks to run their own show, driving can be a fun and rewarding profession. Overdrive, ATBS and TBS are working together to help keep you in the driver’s seat. Keep it moving!

Brent Reilly | President and CEO, Overdrive publisher Randall-Reilly

Todd Amen | President and CEO, ATBS

Jennifer Fogg | President, TBS Factoring Service

Questions? Call ATBS: (888) 640-4829 | 1

Intro_&_TOC.indd 1 8/14/18 5:06 PM This publication, as well as any associated workshop or other product, is designed to provide accurate and authoritative information in regard to the subect matter covered but does not take the place of competent professional legal and fi nancial advice. While reasonable eff ort was made to ensure accuracy of the information covered, the authors and publisher cannot be held accountable for errors or omissions. The reader is urged to consult with professionals such as attorneys, trucking accountants, insurance specialists and others for help with specifi c issues and questions.

Written by: Overdrive editors and ATBS consultants Designed by: Kenneth Stubbs

Overdrive 3200 Rice Mine Road N.E. Tuscaloosa, A 3540 800 33-5953 www.overdriveonline.com

ATBS 555 Zang St. Suite 400 akewood, C 80228 888 40-4829 www.atbs.com

© 2018, Randall-Reilly, A Business Media & Information Company, LLC, and ATBS. Authored, printed and fi rst published in the United States of America.

Copyright under U.S. law, as well as international treaty including the Berne Convention and Pan- American, and Universal Copyright Conventions. All rights reserved. No part of this book may be reproduced, distributed, displayed, altered or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by an information storage-and-retrieval system, without express written permission from the publisher. Brief passages (not to exceed 500 words) may be quoted for reviews.

Overdrive and Partners in Business are registered trademarks of Randall-Reilly, A Business Media & Information Company, LLC

2 | In partnership with Overdrive and ATBS

Intro_&_TOC.indd 2 8/14/18 5:06 PM Table of Contents

1. Becoming your own boss ...... 5 Take time to prepare for this big step

2. Bookkeeping and business analysis ...... 9 Tracking progress, filing income taxes and maximizing your bottom line

3. Understanding your revenue and costs ...... 13 There’s more to earnings than pay per mile

4. Managing time ...... 16 Follow these proven tips on planning your schedule to make more money

5. Controlling fuel costs ...... 19 Your survival depends on minimizing fuel consumption and getting a fair surcharge

6. Controlling tire costs ...... 24 Keep your no. 2 variable expense to a minimum with smart spec’ing

7. Managing money ...... 27 Best practices for healthy cash flow, debt avoidance and identity protection

8. Income tax and other taxes ...... 30 Good planning and recordkeeping help keep those payments at a minimum

9. Choosing a business structure ...... 37 What legal form works best for your operation?

10. Truck buying, leasing, financing ...... 39 Determine your best method for acquiring a truck

Questions? Call ATBS: (888) 640-4829 | 3

Intro_&_TOC.indd 3 8/14/18 5:06 PM 11. Choosing a trailer ...... 47 Spec’ing smartly can increase your profits

12. Maintaining your equipment ...... 49 Routine PM will save money over time and help determine when to trade

13. Choosing a carrier ...... 57 It’s expensive to switch carriers, so pick your partner carefully if running leased

14. Computers, mobile devices and the internet ...... 62 Online trucking resources combined with ever-cheaper digital tools can help you work faster, smarter and more profitably

15. Staying compliant and safe ...... 66 Protect your career by following regulations, practicing safe driving and using data to your advantage

16. Trucking insurance ...... 72 Understand the types of coverage and what your operation requires

17. Health and income insurance ...... 76 Paying for coverage of personal risks is a cost of doing business

18. Going independent ...... 82 Getting your own carrier authority comes with risks and rewards

19. Saving for yourself ...... 87 The habit of saving for personal goals will pay big dividends later

Appendix 1: Vehicle registration ...... 90

Appendix 2: Resources ...... 90

Appendix 3: Owner-operator glossary ...... 92

4 | In partnership with Overdrive and ATBS

Intro_&_TOC.indd 4 8/14/18 5:06 PM BECOMING YOUR OWN 1 CHAPTER BOSS TAKE TIME TO PREPARE FOR THIS BIG STEP

s an owner- marked 2015 and 2016, about the need to run a lot of operator, you enjoy things picked up noticeably miles while driving safely and more freedom in 2017. 2018 started out legally, but other qualities also from supervision reasonably well, fueling hope are important. A RESPONSIBILITY. than a company driver. As an that strong owner-operator Develop owner-operator leased to a prospects might continue your own business systems, and carrier, to an extent you’re able through 2019. set up a regular truck mainte- to set your own hours and take According to owner-operator nance program. Plan for the time off when you want. But business service provider hard times when your business those freedoms come with a ATBS, overall owner-operator is good. Set specific goals. big tradeoff: being financially net income averages have risen RELIABILITY. Good customer responsible and self-disciplined. to the highest levels the organi- service is vital to your success. The challenge is great, but the zation has seen since it began Being dependable means you’ll rewards can be, too. tracking the averages 13 years get the loads you need to get Why do you want to be an ago. Unless the economy hits a the revenue you want. owner-operator? If your an- bona fide recession, income in- MOTIVATION. Without the de- swer is to work hard, make creases are likely to continue. sire to earn money, the freedom more money and have a more For owner-operators, an- of being an owner-operator rewarding life, you have a good other clear plus is the avail- won’t amount to much when chance at success. The success- ability of money to finance the truck payment is due. This ful owner-operator is driven equipment. If you’ve been means being available to carry above all else by the prospect hamstrung since the 2008-10 the loads and being smart in of financial payback for time recession with marginal credit choosing profitable loads. and investment. and a truck in need of trad- WILLINGNESS TO LEARN. There’s reason to believe ing, or if you’ve been unable Seek knowledge. Ask questions. it’s a good time to pursue this to move into a truck for the Know your limits, and learn to dream, and that’s not based first time for these reasons, this overcome them. just on economists spouting should be good news. MECHANICAL APTITUDE. You rosy forecasts. It’s also based on the track record of the last QUALITIES OF SUCCESS couple of years. Most drivers who become Though anemic demand owner-operators already know

Questions? Call ATBS: (888) 640-4829 | 5

PIB19_CH1-3.indd 5 8/14/18 4:40 PM may not have to do major work on your truck, but every dollar OWNERSHIP RISKS AND REWARDS you save by doing simple tasks yourself goes straight to your There is more than one way to be a business owner in trucking. As the degree bottom line. of independence increases, so do the potential risks and rewards. LEASE-PURCHASE OPERATOR. You have signed a lease or a lease- SELECTING A BUSINESS purchase agreement to get your truck through a carrier or a third-party leasing company. Pros: Easiest way to get into business with little or no SERVICES PROVIDER down payment, credit rating or experience. You might be able to find a simple The most successful owner- walkaway lease that will let you test the waters without much risk. Cons: operators start modestly and Many sign the deal before they are truly ready and are saddled with too- manage well. Until you learn expensive equipment. Some deals restrict decision-making ability when it the ropes of owning your comes to equipment add-ons. Keep in mind that with many lease-purchases, business, focus on managing you’re leasing from the same entity that controls 100 percent of your income, who will by contract often make it difficult for you to take the equipment both business and personal elsewhere. Get somebody on your side who can interpret what the deal’s expenses. Along the way, you’ll legalese means. be responsible for a lot, such LEASED OWNER-OPERATOR. You buy your equipment, outright or with a as accounting, taxes, financial loan, and lease it to a carrier. You run under the carrier’s operating authority. goals and your own rules of Pros: Unlimited selection of equipment, total control over equipment conduct. A strong financial ser- modification and maintenance, and you decide to whom you will lease. Cons: No walkaway options. Once you sign to buy, you are committed. If you borrow vices provider can provide this for the equipment, you are committed for the entire loan plus interest, with assistance and guidance. severe financial consequences if you default. Over the long term, the abil- CARRIER. You get your own operating authority and become a motor ity to tie the financial side of the carrier. Pros: A higher profit margin with no carrier taking a piece of the business seamlessly into the sys- action before you get your cut. Almost complete freedom on how you run tems of freight partners could the business. Cons: That freedom brings more work and complexity. Do you want to develop your own customers, soliciting freight directly from shippers? make it easier for independent Or do you want to work through load boards or brokers? The latter is easier, contractors of all stripes to but also means giving some revenue to the broker. You’ll also be responsible manage the day to day of their for invoicing, collections, compliance, safety, drug testing, hours of service, businesses. licensing, permitting, fuel tax and mileage tax – and the list goes on. See Many owner-operators fail Chapter 18 for more on taking this route. within the first few years, as do most small businesses. A good services provider often can tallying receipts and settle- may be needed to maximize save you an amount of money ments can take several hours a your profitability. that more than covers the an- week. A good business service TAX PREPARATION. Many nual service fee. can, in effect, give you back federal and state income Such a provider should be that time. tax rules relative to trucking able to give you all the tools PROFIT-AND-LOSS STATE- are complex and constantly necessary for running a profit- MENTS. These tools provide changing. able trucking business. These snapshots of your business’ You need a business services include: health. A profit-and-loss state- provider with tax expertise PROFIT PLANNING. A profit ment shows your revenue, in trucking – one that has a plan is akin to a budget, or a fixed and variable costs, net Certified Public Accountant plan that helps you oversee income, contribution margin and Registered Tax Return your business and control your and break-even miles. Preparers. future, including both business BENCHMARKING. This is the This critical expertise helps and personal expenses and practice of comparing your professional drivers find every goals. business to the rest of the in- legal tax deduction, thereby BOOKKEEPING. Sorting and dustry to decide what changes helping to reduce your tax

6 | In partnership with Overdrive and ATBS

PIB19_CH1-3.indd 6 8/14/18 4:41 PM CREATING YOUR FINANCIAL MAP helps you make ends meet. It shows you exactly how much money is A business plan, also known as a road map that allows you to track needed for expenses, where it will be a profi t plan, is one of the most income and expenses over time, with spent and how much you can afford to effective business tools you’ll use as the goal of reaching your desired pay yourself. an owner-operator. Think of it as fi nancial rewards. A business plan Your business plan should show all sources of income and costs while taking into account industry averages, PROFIT PLAN personal expenses and cash fl ow. It also should provide this complete fi nancial picture in weekly, monthly and annual detail. It also allows you to know when you have reached your break-even point – after which every extra mile driven puts more money in your pocket. GETTING STARTED The best time to begin the planning process is before you start your business. The process will give you targets, and these can be compared later with your actual fi nancial performance to see where adjustments are needed to maximize p r o fi t s . In its simplest form, the business or profi t plan should identify your revenue — or gross income — and your expenses. All personal household expenses should be included. While your books may refl ect a profi table business operation, you may fall short of your personal needs and desires if household expenses are left out. BE REALISTIC As you work through this process, gather as many of your collected invoices or settlement statements, bills and receipts as possible. Accumulate three to four months of expenses to reflect your spending habits properly. Don’t forget to budget for savings, estimated taxes, unexpected situations and lean times. If you lack past data for developing your plan, be conservative in estimating your income, and slightly overestimate your expected expenses so you don’t start out with a fl awed plan. If there is money left over, place it into savings for emergencies. If you need help, a business services provider such as ATBS can estimate costs you may not be sure of.

Under this plan, the owner-operator runs 130,000 loaded miles, earning $74,511 on $176,800 in revenue.

Questions? Call ATBS: (888) 640-4829 | 7

PIB19_CH1-3.indd 7 8/14/18 4:41 PM burden significantly. A good service provider also PROFESSIONAL ASSISTANCE will support you in the event of an audit. ATBS, co-author of this manual owner-operators. It can use its RECEIPT ARCHIVE. A good and presenter at Partners extensive database to pinpoint provider will house receipts in Business seminars, is the dozens of owner-operator nation’s largest owner-operator benchmarks, measurements of and financial documents in business services provider. key operations, that are not a place where you can access ATBS has years of experience available elsewhere. them anytime on the road or in the trucking industry and ATBS clients make on average at home. This information partnerships with most major 40 percent more than their peers. should be in an encrypted owner-operator fleets. Let ATBS help you grow your The Denver-based firm business and gain peace of mind in secure site that keeps your per- provides bookkeeping, profit knowing that you are on the road sonal information safe. planning, profit-and-loss to success as an owner-operator. BUSINESS CONSULTING. A statements, tax preparation, ATBS enrollment specialists good business service provides incorporation review, a secure can be reached at (888) 640- continual support through online portal and consulting 4829 or via www.ATBS.com for business consulting to help you services for more than 40,000 answers to critical questions. better understand the essential tools of business and use them effectively. agents if a client is audited? ance sheets to calculate your • Does the provider offer an net worth. The balance sheet FINDING THE assigned consultant, or do you compares your assets with your RIGHT MATCH typically speak with a different liabilities. Choosing a business services person every time you call? Start with what your busi- provider is an important step • How does the provider ness owns: Write down how that should be taken care- charge? much money is in your business fully. Consider these criteria to Work with your business checking and savings accounts, make your choice: services provider to determine and don’t forget escrows or • How long has the provider key issues to address in your maintenance reserves your car- been in business and serving operation. rier may be deducting from the trucking industry? Based on this information, your settlement fund. Next, de- • Does the provider under- your consultant should help termine how much your equip- stand how the trucking indus- you complete your profit ment is worth. try operates and where it’s plan and fill in any missing Next are your business li- headed? information. abilities: your truck or trailer • Is the company large Once completed, your plan loans, business credit card bal- enough to provide the best will help you manage expens- ances, outstanding accounts services, benchmarking and es so you can run a successful with vendors and repair shops, comparison data? operation. It will allow you to etc. Subtract your liabilities • Is the provider’s customer make any necessary changes from your assets, and you have base composed of successful to your business on a monthly the net worth of your business. owner-operators and fleets? basis instead of at tax time, If it’s positive, it becomes an • Does the tax staff hold when it’s often too late. asset on your personal balance professional tax credentials sheet. If it’s negative, then it’s a and have trucking-specific ex- HOW TO DETERMINE liability. pertise? YOUR NET WORTH Do the same for your per- • Do the provider and its Profit planning can help you sonal balance sheet. The differ- tax department provide audit be financially secure when you ence between your assets and support by CPAs or enrolled retire. Take time to build bal- liabilities is your net worth.

8 | In partnership with Overdrive and ATBS

PIB19_CH1-3.indd 8 8/14/18 4:41 PM 2 CHAPTER

BOOKKEEPING AND BUSINESS ANALYSIS TRACKING PROGRESS, FILING INCOME TAXES AND MAXIMIZING YOUR BOTTOM LINE

ookkeeping is job of your business services scan the contractor’s receipts one of the most provider to help you deduct and provide a CD with the important activities as many legitimate costs as data to the owner-operator at B of successful owner- possible. Place an envelope the end of the year. ATBS also operators. The receipts and in your truck for collecting allows owner-operators to view records you keep are used your receipts, or use dedicated scanned receipts and financial in a number of areas of folders on your computer or documents online; this helps your business – income tax in the cloud for e-receipts. At owner-operators track and reporting and minimization, the end of each month, send manage paperwork easily when warranty issues, maintenance them to your business services they are on the road and pull information and monthly provider, who can sort and tally up key information, such as the profitability, to name a few. them and provide you with a receipt for the purchase of a A business services provider monthly profit-and-loss state- battery that proves it is under can save you time with this task, ment as well as accurate quar- warranty. but you should take an active terly tax estimates. Whether If you’re not sure if some- role in collecting the informa- you’re building spreadsheets thing is tax-deductible, save the tion. The more organized and on a laptop or using online receipt and check with your thorough you can be in your software such as that avail- business services provider. receipt gathering, the better. able at mygauges.com (see OPEN A SEPARATE You can simplify the book- “Simplifying recordkeeping”) CHECKING ACCOUNT keeping task by following six or other vendors (see Chapter 2 simple practices that translate to 14), the receipts are crucial in FOR YOUR BUSINESS. If higher profit with less hassle: case you are audited. Scanned you are the sole owner of the images of receipts are accept- business, open an additional SAVE EVERY RECEIPT, able; keep the original paper 1NO MATTER HOW SMALL. copy for any big-ticket item for Why “tip” the taxman? It’s the warranty purposes. ATBS will

Questions? Call ATBS: (888) 640-4829 | 9

PIB19_CH1-3.indd 9 8/14/18 4:41 PM personal account and save your- business use of your auto, etc. your truck on the road and self the extra fees that are as- Give a monthly record of these minimize downtime and main- sociated with business accounts. expenses to your business ser- tenance costs; required registra- Deposit your settlement checks vices provider along with your tion information; settlement and collected invoices in this other receipts. You must track statements from your carrier if account, and pay yourself for the date, location, amount and you’re leased; and bank state- driving from these funds. The reason for each expense to meet ments, business credit card amount to pay yourself is deter- Internal Revenue Service regu- statements and canceled checks. mined by your budget. lations. Special circumstances Pay all business expenses include: PROFIT-AND-LOSS from this account. A separate Entertainment. Expenses for STATEMENT account also will give you easy yourself, such as movie rentals All your records should be accu- access to needed information in or books, are not deductible. mulated throughout the month case you are audited, and bank However, if you entertain a and turned into a profit-and-loss fees for this account are tax- business associate, such as a fleet statement, also called a finan- deductible. manager or shipping clerk, the cial statement or a statement expense is deductible. Note the of earnings. Gather settlement USE A SEPARATE cost of the expense, the date, statements and receipts into like CREDIT CARD FOR 3 names of who was there and categories and total up at the end BUSINESS EXPENSES. the meeting’s purpose. of the month. Then incorporate Likewise, it’s wise to keep busi- Business gifts. If you make a your operating information in ness and personal credit card gift to a business associate such a consistent format to make the spending distinct. Find a credit as a dispatcher or a customer, profit-and-loss statement. card without an annual fee and record the cost, date, gift de- The statement should tell with a low interest rate and, ide- scription, the recipient’s name you how many miles you drove, ally, a generous rewards plan. and relationship to you. your revenue, your costs and Pay the balance in full every Transportation. For use of a how much money you made month. personal vehicle for business, during the month – your profit SAVE YOUR LOGS. include the date you started us- or loss. 4 Your log book and/or ing it for business, mileage for Building a monthly P&L electronic log records are your each business use and annual allows you to track progress best proof of your entitlement total miles. Include your busi- month to month to see if you to per diem (daily) expenses, ness destination and purpose of are improving. The statement mainly meal costs. If you’re each trip. should include ratios like using electronic logs, now a SAVE YOUR RECORDS. cents per mile and percent of requirement for most truckers, 6 You must keep the records revenue so you can analyze know how to save and access that were used to prepare your your performance. You also your history. tax return — records that sup- will be able to compare your port income and deductions — profit-and-loss statement to GET A NOTEBOOK TO for three years from the date you your budget to see if you are 5CARRY WITH YOUR RE- filed the return. on track with your plan (see CEIPT ENVELOPE. Use this Other records to keep in- Chapter 1). notebook — alternately, a docu- clude IRS quarterly estimated In addition, the statement ment or spreadsheet record on tax payments; monthly profit- should have a year-to-date your smartphone or computer and-loss statements; insurance (YTD) column that accumu- — to record those expenses documentation; maintenance lates each month into a total for which you cannot obtain records and reports; warranty for the whole year. a receipt, such as when you information, which should be Successful owner-operators wash your truck at a pay facility, available immediately to keep have to know how to adjust for

10 | In partnership with Overdrive and ATBS

PIB19_CH1-3.indd 10 8/14/18 4:41 PM changing conditions. If you SIMPLIFYING RECORDKEEPING don’t, profitability probably will decline. Are fuel prices low Creating basic monthly income/ drop it in the corresponding or high? What about insurance expense reports, profit-and- pocket — fuel, settlements or costs? Is the economy growing? loss statements and tax reports any expenses document. What do industry analysts say is accomplished more easily • At the end of each month, about conditions in the months with simplified recordkeeping. schedule two hours to catch up ahead? Business services help greatly with your filing. You likely soon Make it part of your routine here, but for those not using will find that you can get this to compare your P&L report a service, a simple process done in less time. with your budget and figure for gathering and organizing • Add the receipts in the out changes you need to make your paper receipts, combined folder’s first pocket. Staple to maximize profitability. with an online software tool the register tape to the Compare yourself with or custom spreadsheets on corresponding pile of receipts, other owner-operators. Com- your computer, can allow you and drop them back in the same to input your own data and do slot. Since they are stapled, parisons help you understand the computations with the least they won’t get mixed with new changes under way in the amount of effort to create the receipts. Do the same for the trucking industry and what reports. remaining categories. other drivers are doing to • Pick up an expanding • Supplement this system adapt. But be careful: Some folder at an office supply store by noting your odometer comparisons are dangerous. — likewise blank labels for the reading on the first of every Casually comparing settle- folders, a stapler and a desktop month. This allows you to track ment checks, for example, calculator with a register tape. total monthly miles and then can mislead you into thinking Fill out the pocket labels with calculate your true income per you are doing better or worse the categories listed in the box mile and costs per mile. than you are. It’s more effec- here. Some will not apply if you • Using online software — such tive to compare revenue and don’t employ another driver or as the mygauges.com software have space devoted to an office created by trucking radio host what other operators are do- or shop. Kevin Rutherford — or other ing to achieve revenue, and • Every receipt claimed programs, create a monthly entry also what they are doing to must be business-related. Car for each category, and enter reduce costs and minimize expenses apply only to business- your settlement data. Use the waste. If you are not doing related trips, such as to your software or spreadsheet data to as well in some areas as other truck dealer or repair shop. create your reports and manage operators, it is up to you to • When you get a receipt, your business. solve the problem. A good way to compare is through benchmarking. This EXPENSE CATEGORIES IF BUSINESS-RELATED is the key to understanding the • Car expense • Loading and • Rent or lease big picture – not just where you • Fees and unloading • Repairs and stand in relation to a few other commissions • Meals and maintenance operators, but to the industry as • Fuel, oil and entertainment • Scale fees a whole. A good business services additives • Nonoffice supplies • Settlements provider can provide key bench- • Insurance • Office supplies • Taxes and license marks, or averages, such as cost • Interest paid • Parking • Tolls per mile for dry van haulers. • Laundry reservations • Travel Such data can help you ana- • Legal and • Physicals and drug • Utilities lyze where you’re performing accounting testing • Wages and payroll well and where you need to make changes.

Questions? Call ATBS: (888) 640-4829 | 11

PIB19_CH1-3.indd 11 8/14/18 4:42 PM PROFIT AND LOSS STATEMENT

This profi t-and- loss statement example includes valuable operating information, such as percentage of revenue calculations for expenses. ATBS notes categories where the owner-operator is performing particularly better or worse than his or her peers, which provides an opportunity to focus on improvements. ATBS gives owner-operators the ability to access and analyze their profi t-and-loss statement from a secure online portal. Using a smartphone, tablet or PC, owner-operators can access their P&L statement, receipts, important tax information and profi t plan.

1 | In partnership with Overdrive and ATBS

PIB19_CH1-3.indd 12 8/14/18 4:42 PM UNDERSTANDING YOUR REVENUE 3 CHAPTER AND COSTS THERE’S MORE TO EARNINGS THAN PAY PER MILE

ost owner- In the following example, It would appear before do- operators leased Carrier 1 pays a dollar per mile ing the calculation that you to larger carriers and pays the owner-operator a are better off driving for the M are paid on a fuel surcharge and for unload- company that pays a percent per-mile basis or a percentage ing. Carrier 2 pays 70 percent of revenue. However, after fig- of revenue per load. The per- of the revenue of the load, but uring your percent of revenue mile basis is most prevalent no other expenses. Which car- pay, you make more than $100 among larger fleets, percentage rier would you work for? less, or 10 cents less per mile. at smaller. Pay per mile tends This example doesn’t mean to dominate discussions about COMPARING DIFFERENT mileage pay always is better. pay because it is easier to METHODS OF PAYMENT Rather, it illustrates how pay measure, and pay per mile Load from Stillwater, Oklahoma, to can differ among carriers. often is wrongly used as the Jacksonville, Florida – 1,120 miles Too often, operators overlook deciding factor in the decision the importance of gross rev- about leasing to a carrier. Carrier No. 1 pays by the mile: enue. Some will change carri- While pay per mile can be Mileage pay = 1,120 miles @ $1 per mile ers for an extra 1 cent per mile, a vital factor, it’s not a cure for = $1,120 sacrificing $10,000 of annual every ill. Nor does it mean a Unloading pay = $45 gross revenue by making the big settlement check is coming Fuel surcharge of 33 cents per mile = change. By focusing on just one your way. Why? Because pay $370 element of revenue, you can per mile always must be con- Gross revenue to driver = $1,535 miss the big picture. sidered in balance with gross Gross pay to driver = $1,535 divided by Pay per mile, unless your revenue. Gross revenue is the 1,120 miles = 1.37 cents per mile carrier offers bonus mileage total amount paid to you by a pay for shorter hauls or other carrier. It can include flat mile- Carrier No. 2 pays percent of variations, usually is consistent age pay, mileage pay that varies revenue: from month to month and year by length of haul, percentage of $2,032 gross revenue to carrier on load to year. Gross revenue is far less revenue pay, loading/unloading Percent of revenue pay = $2,032 x 70% consistent, and any changes pay, detention pay, stop in tran- = $1,422 sit pay, fuel surcharge, toll or Gross pay to driver = $1,422 divided by scale reimbursement, etc. 1,120 miles = 1.27 cents per mile

Questions? Call ATBS: (888) 640-4829 | 13

PIB19_CH1-3.indd 13 8/14/18 4:42 PM can have a disastrous effect tial to success and is achieved mechanical problems, time off on your fortunes as an owner- through on-time pickup and and, especially, costs all have to operator. Variables affecting delivery as well as good com- be considered. gross revenue include weather, munication. MYTH 5 – Your company can national and local economies, control how much it pays you per seasonal factors such as fresh MISCONCEPTIONS mile. Your company has limited produce hauling, changes ABOUT REVENUE influence on the rates it charges to aspects of your company Be aware of common revenue shippers because it is largely the such as its sales and marketing myths. Failure to do so can marketplace that dictates rates. personnel and customer base, handicap your business. communications, lanes of oper- MYTH 1 – Concentrate only on UNDERSTANDING COSTS ation, competition, regulation increasing revenue because costs Being able to survive and and average length of haul. will take care of themselves. Af- thrive as a business owner has While you have no control ter reaching your break-even as much to do with managing over many of these, there are point, only a fraction of every costs as it does with generating some ways you can help man- extra dollar of revenue goes revenue. Like the chief finan- age your gross revenue: into your pocketbook, while cial officer of any company, DETERMINE A REASONABLE 100 percent of every extra dol- you have to be concerned NUMBER OF MILES YOU EX- lar saved stays in your pocket. about rising costs, especially PECT TO RUN. This requires MYTH 2 – More revenue per mile without increases in revenue. careful consideration of factors is the answer to all problems. Rev- Trying to reduce costs, let such as your age, experience, enue per mile doesn’t change alone make sense of them, can motivation, financial goals, much from company to com- be a complicated task. Under- health, personal and family pany, but there can be a big dif- standing basic principles of needs, and the condition of ference in miles, gross revenue, operating costs can save you your tractor or trailer, and may reimbursements and fees. thousands of dollars a year: include estimates of average MYTH 3 – All you have to do to A PENNY SAVED IS $1,000 length of haul. Once you have be successful is run hard and get a EARNED. The owner-operator established a reasonable num- lot of miles. Revenue is only half who can save just one penny ber of miles to run each week, of the profit equation; costs are per mile over 100,000 miles month and year, you have goals the other half. It’s possible to driven annually will save to work toward. generate a lot of revenue yet $1,000 in a year. MEASURE YOUR RESULTS spend $1.10 to make every dol- COSTS ARE NOT THE SAME FREQUENTLY. Does your per- lar. Furthermore, in percentage EACH MONTH. If 9,600 miles formance match your capacity? of revenue pay programs with are driven one month and Does it match your goal? If it self-dispatch options for expe- 10,000 miles the next month, doesn’t, find out why and how rienced operators, like running there will be two different sets to correct it. entirely independent with your of costs for each month. For MANAGE YOUR TIME. You are carrier authority, choosing example, if your tractor pay- your own boss and in control loads to maximize revenue on ment is $1,850 per month and of how you use your time. The the shortest number of miles is you drive 9,600 miles in the time you spend driving and the best strategy to long-term month, your tractor payment delivering loads determines financial success. will cost you 19.3 cents per how much you get paid. (See MYTH 4 – You can tell how mile. However, if you drive Chapter 4.) well you’re doing by the size of your 10,000 miles, your tractor pay- ESTABLISH A RELATIONSHIP settlement check. The settlement ment will cost you 18.5 cents AND IMPROVE COMMUNICATION check is only a small part of per mile. This is one of your WITH YOUR FLEET MANAGER/ the success picture. Miles driv- major fixed costs while paying DISPATCHER. Trust is essen- en, loads hauled, conditions, off a truck loan.

14 | In partnership with Overdrive and ATBS

PIB19_CH1-3.indd 14 8/14/18 4:42 PM Fixed costs do not go down over time, but you can reduce A B C your cost per mile by driving more miles. The difference Miles traveled in 7 days 1,000 1,600 2,500 per mile here is only 0.8 cent, Total revenue ($1.40 x miles) $1,400 $2,240 $3,500 Variable cost per mile 79 cents 79 cents 79 cents which may seem like small Variable cost – total (79 cents x miles) $790 $1,264 $1,975 change, but remember the Fixed cost ($115 x 7 days) $805 $805 $805 “one penny saved” rule. In Fixed cost per mile $0.81 $0.50 $0.32 this example, the difference in Total cost $1,595 $2,069 $2,780 fixed cost is $960 per year. Total cost per mile $1.60 $1.29 $1.11 FOR EVERY EXTRA DOLLAR Profit/loss ($195) $171 $720 OF REVENUE GENERATED, ONLY Profit/loss per mile ($0.20) $0.11 $0.29 PART OF THAT DOLLAR IS PROF- IT. But for every extra dollar of cost saved, that entire dollar con- APPLYING FIXED AND just for cost-cutting but also for tributes to your profit. VARIABLE COSTS making business decisions. COSTS CANNOT BE UNDER- Based on the averages of cli- STOOD ON A PER-MILE BASIS An owner-operator leased to ents of ATBS through Decem- ALONE. In the example to the another entity might show a ber 2017, here’s the percentage right, the 10,000-mile month variable cost of 79 cents per of total revenue you should ex- results in a lower cost per mile. mile and a fixed cost of $115 pect to spend on key expenses: Also, as the cost per mile was per day. The chart above shows • Fuel: 29 percent. reduced, revenue went up for how to apply fixed and variable • Truck payment: 17.5 per- driving the extra miles – a costs to your business. Assume cent. double benefit per mile. pay of $1.40 per mile. • Maintenance: 5.7 percent. In Example A, the operator • Insurance: 4.5 percent, FIXED AND couldn’t break even, so there counting physical damage, VARIABLE COSTS was no money left to pay him- bobtail and occupational/ A fixed cost already is deter- self for driving or to cover per- accident premiums. mined and does not change from sonal expenses. In Example B, • License and permits: 2 month to month. Any expense the operator is making a mea- percent. defined by time — such as a ger profit, with a little money • Cell phones and other tractor payment, insurance pay- to pay himself for driving. And communications: 1 percent. ment, license fees — is a fixed in Example C, the successful The average ATBS client cost. That cost will be the same operator has money left over nets 39 cents for every dollar every day whether your truck is for savings and retirement after of gross revenue, meaning 61 driven one mile or 600. It is a paying all expenses. cents of each dollar earned has daily fixed expense and has to be Also, note how fixed cost per to go toward vital business ex- confronted 365 days per year. mile was reduced in the succes- penses. Keep that in mind the A variable cost is related to sive examples. next time you’re tempted to go how much you drive. Fuel, tires on a spending spree with a big and maintenance are good ex- WHERE THE settlement check. amples. Most variable costs will MONEY GOES On the other hand, if you’re be similar for every mile you Keeping track of all costs and paying yourself much less than run. These are the costs for dis- their shares of revenue can a third of your revenue, take tances traveled and other items be helpful in seeing whether a careful look at your records. that are required to move your any part of your operation is Chances are one or two costs are truck the distance your load abnormal compared to other out of control, or your revenue requires. operators. This is useful not is too low.

Questions? Call ATBS: (888) 640-4829 | 15

PIB19_CH1-3.indd 15 8/14/18 4:42 PM 4 CHAPTER

MANAGING TIME FOLLOW THESE PROVEN TIPS ON PLANNING YOUR SCHEDULE TO MAKE MORE MONEY

uccessful owner- advantage to look for loads that many an owner-operator, op- operators know that take you “through” home rather portunity in regional- and short- simply running hard than “to” home. The latter can haul work continues to expand. S is not enough. If it interrupt your revenue stream Average length of haul has de- were that easy, anyone could do and require additional time to clined markedly in dry van and, the job and expect the profits get back up to full speed again. increasingly, in refrigerated. to roll in. Understand it pays to As an owner-operator, you Shorter hauls take more time, slow down and that there is a should look at time off differ- and they cost more money on a tradeoff in higher costs, not to ently from a company driver. If per-mile per-load basis. While mention the increased risk, for a company driver takes a week carrier pay packages adjust to driving fast. If driving slower off, he loses only the opportu- shorter hauls with premium takes time away from you, you nity to make a weekly paycheck. per-mile rates or other tactics, can find ways of managing your When an owner-operator they’re not always quick to fol- time to get some of it back. For takes a week off, he has fixed low the freight trends. example, you can take vacation expenses to pay and won’t be As freight regionalization time or plan major work on your earning a paycheck. When he continues to hit other segments, tractor during the first week or returns to work, he not only has close work on the part of own- two of the quarter (early January, to replace the lost income, he er-operators and their custom- April, July and October). Never also quickly must cover the fixed ers and dispatch assumes much take time off during the last two expenses that were spent during greater importance in maximiz- weeks of the quarter (or the last his time off. For example, for an ing income. week of the month) when freight owner-operator with fixed costs typically is abundant. of $100 per day, seven days off THE SUCCESSFUL Sometimes it works to your would cost $700 in payments OWNER-OPERATOR’S that still have to be made. DAY PLANNER Though truly long-haul work Smart owner-operators make remains the bread and butter of every single week as profitable as

16 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 16 8/15/18 8:07 AM INCREASING EFFICIENCY

Make the most of your waiting time, or software such as ProMiles or the of hours on the morning of a delivery. such as while loading or unloading, many truck-specific GPS units from Manage fuel-related getting your truck washed, stopping at Rand McNally, ALK Technologies, expenses. You have to manage the the scale house, etc. TomTom, Garmin and others. Use cost of fuel and fuel taxes, as well as Take care of your rig. the fuel/route-optimization tools at the cost of time to fuel, which usually Check your tires and lights, and clean fuelsurchargeindex.org as well. is about 45 minutes per stop. The windows. Review maintenance records. Otherwise, follow these steps for typical owner-operator carries 200 Take care of yourself. Take maximum efficiency: gallons of fuel or more but buys only a walk if you can leave the rig. If you Deliver on time. If you deliver 100 gallons at a time. Often it saves aren’t able to leave, do stretches or late, the consignee may assign your time to put 175 gallons in the tanks exercises in the cab. Answer mail, dock door to another driver and put instead of continually topping off with write letters and pay bills. Cook a you last on the list. Delivering 15 100 gallons or less. healthy meal in your microwave, or minutes late can cost a whole day or Be prepared to deadhead read a book. even an entire weekend. instead of laying over. The Plan. Wipe off reflective tape Deliver as early in the day as time and money lost to a layover while waiting or while doing a pre-trip; possible so that you have a time can almost never be made up. If the you’ll be more visible and invite fewer cushion to get dispatched to your deadhead can get you to a good load inspections. Organize any clutter, next load. On appointment loads, within 24 hours, it might make sense. especially on top of the dashboard; a deliver 30 minutes early. An empty If you’re leased, don’t surprise cluttered dash is an open invitation to trailer gives you plenty of options, your fleet manager. Keep him or be inspected by law enforcement. but a load sitting on your trailer gives her informed of every detail that Review your log status with regard you only one option — waiting to affects service and your schedule. to expected pickups and deliveries, deliver. Set a personal and reasonable goal and where and when your next stops Early departure also helps when each week for the miles you want to are likely to be. Ask for directions to winter weather poses potential delays. run, and tell your fleet manager or every stop, or use mapping software, Leaving late is the major reason for dispatcher. Work with him or her to whether an app on a mobile device service failures — such as running out improve your miles and revenue.

possible. One trip is not enough manage. One week is the right every day of the week. time to be considered profitable amount of time to deal with ef- • Match trip length to the or unprofitable, and an entire ficiently. To do so, look at the optimum day of the week. month may be too much time to advantages and disadvantages of • Plan to deliver on the day

WHAT IS YOUR TIME WORTH?

Overdrive readers in 2015 indicated $60,000 in net income on 97,500 rates doesn’t always cover owner- appropriate benchmarks for miles on average. Those clients’ operators’ costs; including fixed detention rates to be charged to average fixed costs (including truck costs makes for a more accurate shippers and receivers for loading and trailer payments, insurances compensation. In addition, delays and negotiated with freight and the like) are added in the second but not part of the calculation brokers by independents. They part of the calculation to be covered below, you can add your average suggested adding fixed cost per under the final rate. Just matching variable hourly costs to idle or run mile to either total revenue per mile profit, or net income, in detention alternative climate-control devices. or profit/net income per mile. This example shows what the latter of PROFIT PER MILE: $60,150 ÷ 97,500 annual miles = 62 cents per mile those could look like based on the + FIXED COST PER MILE: $43,500 ÷ 97,500 annual miles = 45 cents per mile average numbers of independent = $1.07 (INCOME + FIXED COSTS) PER MILE ATBS clients in 2014. Such one-truck x AVERAGE HIGHWAY SPEED: 60 mph independents made more than = HOURLY DETENTION RATE: $64.20 per hour

Questions? Call ATBS: (888) 640-4829 | 17

PIB19_CH4-6.indd 17 8/15/18 8:07 AM you have the best opportunity of getting a load. SPOT MARKET RATES PRIMER • Plan to drive under a load on days when it typically is For independents with carrier authority, managing time extends to harder to get a load. being canny about when you plan to run with an eye toward negotiating the best rates with brokers. Past analysis has show that an operator’s Your personal weekly plan negotiation strength varies day-to-day in a given week. Typically, the will vary depending on the highest rates across major segments – dry van, reefer, flatbed – are paid weekly delivery/flow cycle of for load negotiated on Sundays, and the highest volume of loads for your region, typical length of all segments is seen on Mondays, also the weekday that tends to be haul, personal requirements best for flatbed negotiations, yielding the best rates. and other factors. Owner-ops tend to have less negotiation strength on Tuesday, The needs of customers and which shows the lowest weekday spread between brokers’ offered rates dispatch have to be consid- and actually paid rates. ered and often will determine Broker offers tend to rise by Wednesday, and owner-operators how your time is used. What’s start to see they can begin negotiating higher rates as the end of the important is to have a specific week is in sight. weekly plan that helps you be On a typical Thursday, brokers begin to get nervous about moving their freight before the week ends. This day is where drivers can really successful. begin to see a spread between posted rates and negotiated rates – SUNDAY: It’s like getting in upwards of 20 percent for dry van. an extra day if you can pick up Friday, however, is an independent carrier’s best negotiating day. or deliver on Sunday, since this Depending on conditions in the wider economy, you might be able to typically isn’t a day for either name your price, ideal as you set up your next week with this load. task. Being able to make the Behind Sunday, Saturday offers the second-highest paid rates. most of Sunday gives you a Rates start shooting back up on Saturday. Additionally, for any good head start on the week. segment, Saturday sees the highest spread of any day between broker MONDAY: Profitable own- offered rates and negotiated rates. er-operators deliver on Mon- day. Why? Delivering the first load of the week on Monday already should be in hand. freight. Being under a load lets you start your week with THURSDAY: This can with the longest possible miles miles already generated and be the make-or-break day of over the weekend will make the leaves time to be profitable the week. A load picked up best use of your time. during the rest of the week. on Thursday should either be SATURDAY: The week is On Monday you’ll find more short enough (less than 600 over, and your work and plan- load opportunities than on miles) to deliver on Friday, or ning should have resulted in a Tuesday, too. provide enough miles (at least profitable operation. But like TUESDAY: Unless it’s a 1,600) to carry you through Sunday, Saturday is an extra 2,000-mile trip, delivering the the weekend. Try to average day if you can pick up or de- first load of the week on Tues- 550-600 miles per day for the liver a load. day means the week usually trip, although on Thursday it’s Many an independent owner- won’t be profitable. Tuesday almost always better to take a operator has realized high freight is the day to take a hard look 350-mile trip and deliver it on rates by being the 911 service on at how many miles you have Friday. Turning down a short the weekend for a trusted broker. driven and how many more run just because it would mean If you’re using load boards on you need to have a profitable laying over until Friday may the spot market and can make week. turn out to be an expensive yourself available on Saturday WEDNESDAY: It’s hump mistake. or Sunday by posting your truck, day. By now, about half of FRIDAY: This usually is you might be surprised by the your gross revenue for the week the best day of the week for good results.

18 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 18 8/15/18 8:08 AM 5 CHAPTER

CONTROLLING FUEL COSTS YOUR SURVIVAL DEPENDS ON MINIMIZING FUEL CONSUMPTION AND GETTING A FAIR SURCHARGE

iesel fuel is tors. Many may be out of your your fuel bill. still king in the control, but no problem can be For good fuel economy, your trucking industry, remedied if it isn’t noticed. truck has to overcome three D but electric trucks It’s helpful to know mpg per things: rolling resistance, air are expected to emerge as month, per week and even per resistance and gravity. Fortu- legitimate options over the next load. That occasional haul of nately, your driving technique decade. Some have predicted steel across the Appalachians and other choices you make sales of e-trucks could make may be costing you more in can address each of these. up about 5 percent of all fuel than it’s worth. If your truck sales in 2026. But until numbers look bad, don’t give REDUCE AVERAGE then, controlling the cost of up; the worse your fuel econo- SPEED diesel is paramount to being a my, the more you have to gain Owner-operators get no short- successful owner-operator. by improving it. age of “encouragement” from You can make the wisest Armed with your mpg, cal- shippers, consignees and others business decisions about fuel culating your CPM is easy. to hurry, so it’s easy to get into when you know your fuel Suppose your truck gets 6 the trap of driving fast. But economy, expressed in miles mpg, and you ran 6,000 miles speed is the main reason for in- per gallon, and your fuel cost in a month, meaning you creased fuel consumption and per mile (CPM). burned 1,000 gallons (6,000 reduced profit. Experts agree Calculate your mpg simply divided by 6). If diesel aver- that every mile per hour driven by tracking your mileage be- aged $3 per gallon that month, over 60 mph reduces fuel econ- tween fill-ups and dividing the your total cost was 1,000 x $3, omy by one-tenth of a mile per total by the number of gallons or $3,000. Your fuel CPM was gallon. The typical argument you burned. Do this for all $3,000 divided by 6,000, or 50 against driving slower is that trips. Fuel economy constantly cents – likely the largest single changes, affected by weather, chunk of your total CPM. It loads, routes, traffic, terrain, will pay you huge dividends to road surfaces and other fac- consider strategies for cutting

Questions? Call ATBS: (888) 640-4829 | 19

PIB19_CH4-6.indd 19 8/14/18 4:45 PM you can make better time by THE POWER OF 2 driving faster and therefore make more money. But com- Improving fuel economy will yield substantial savings. Here’s an example of pare one driver running at 70 savings achieved by improving by 2 mpg, not an impossible prospect with today’s mph and another running at technology. Figure diesel at $2.50 per gallon, close to 2016’s average price, and at 60 mph. Driver A is 10 miles $5, which was close to the peak price in 2008. Assume 120,000 miles per year. further down the road than driver B, but at $4 per gallon, Gallons $2.50/gal. $5/gal. he’s spent $12.25 more to go 5.5 mpg 21,818 $54,545 $109,000 those 10 miles in the same 7.5 mpg 16,000 $40,000 $80,000 amount of time. Savings 5,818 $14,545 $29,000 That might not seem like much money, but the impact over an entire year is stark. If 20 percent to 40 percent of the A mobile generator costing as you drive 130,000 miles per time the engine is running to little as $200 will burn less fuel year and average 5.5 mpg vs. power climate-control devices and provide heating and cool- 6.5 mpg because you drive and sleeper compartment ac- ing. Not idling is even a point faster, you will spend $12,727 cessories and to prevent startup of pride for many truckers who more on fuel. In essence, you problems in cold weather. long have realized the benefits gave yourself a 10-cent-per- Just because idling is com- of shutting down the engine. mile pay cut. mon doesn’t make it smart. Choosing idle-reduction tech- Most owner-operators net Idling easily can cost you a few nology. This can be a difficult about 50-60 cents per mile. If thousand more in fuel alone decision. Systems and costs you divide the extra $12,727 per year, not including the vary widely. Diesel-fired heat- fuel expense that driving faster added engine maintenance ers are near the bottom of the costs by your net per mile of expense that results from ex- cost range for purchase and 50 cents, you would have to cessive idling, harder on your annual maintenance (about drive 25,454 miles more per truck’s engine than highway $1,000 with purchase and a year just to pay for the extra driving. In addition to operat- year’s worth of maintenance). fuel. When you look at it this ing costs, many governments Full-function diesel APUs/ way, speed actually costs you impose no-idling laws with gensets are at the top, up to time. Throughout the year, fines as high as $25,000. $8,000 or more, and battery- the hours of service limits will Instead, there are many al- powered systems have become mean that on some days you’ll ternatives. An extra blanket for common at similar or lessser log fewer miles at 55 mph than cold temperatures and window price points. you would at 65 mph. Even so, screens for when the weather Search with two main goals you won’t lose anything close is warm make it easier to turn – finding a system that fits your to 25,454 miles. off the engine. For about $80, application and one that gives you can buy a remote starter a healthy return on investment. LIMIT IDLE TIME with a temperature sensor that Evaluate your idle-reduction Idling requires about a gallon will start the truck at a specified need by keeping a detailed idle of fuel per hour, which can cost temperature. Infrastructure in log. Write down every time you you about $120 per week at $3 truck stop parking lots to pro- idle and why. Keep track of per gallon if your truck idles vide electrical power and auxil- hours idled and sort them by eight hours a day. According to iary heat and air has continued reason, such as air-condition- the U.S. Environmental Protec- to increase over recent years. ing, heat, AC power, warming tion Agency, line-haul trucks Auxiliary power units (APUs) the engine, etc. Try this for a not equipped with auxiliary can pay for themselves in a year, accounting for all seasons. power units might idle about reasonable amount of time. That may not be practical, but

20 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 20 8/14/18 4:45 PM if you keep this log for three tions in today’s market. Then biofuel can cause clogging. months and are disciplined in calculate the break-even point MAXIMIZE STORAGE. Wheth- your records, you will be able and return on investment for er you’re buying a used or a to make good estimates for the each solution. new truck, opt for larger dual other seasons. tanks. This gives you the option Idling solutions have pros OTHER SMART of pigging out on super-cheap and cons, and most revolve PRACTICES fuel and cutting down on the around the reason for idling; if In addition to reducing speed number of fuel stops, saving you idle only because you need and idling, there are several time. heat, then a full-blown APU is other good fuel conservation SPEC YOUR TRUCK WISELY. overkill. A better solution is a practices, each of which can Your paycheck will show small diesel-fired heater – easy reduce your fuel bill by 1 per- whether you chose a truck and inexpensive to use. cent to 3 percent – or several with a big engine and a lot of If you idle to produce AC hundred dollars a year: chrome or a truck engineered power for a computer, TV, cof- WATCH CASH FLOW. Don’t to meet your business needs fee maker, microwave, etc., tie up money needlessly in the and help you succeed. First, you also can find inexpensive fuel tank when downtime of a there is the initial extra expense alternatives to a diesel-powered few days or more is expected. for the purchase, then the add- APU. Inverters and high-ca- If you know a low-price area is ed cost of fuel consumption. pacity battery systems will keep on your route, don’t fill up at a Weight and maintenance are in small appliances running for more expensive stop; limit your even sharper contrast between days. Add a small solar panel, purchase based on your mpg. a lifestyle truck — a wannabe and you can keep the batter- TAKE CARE WITH BIOFUEL. show truck — and an aerody- ies conditioned and extend Biofuels tend to be expensive namic truck that is an efficient that time as well, perhaps us- and produce lower fuel mile- tool for business. In fuel savings ing some of the new electrified age. Know the level of biofuel alone, the aerodynamic truck parking installations if you need (B20, for example, is 20 per- generally more than offsets the to park for an extended period. cent biofuel) that is allowed resale value of the stylish truck. Once you have a clear un- under your engine warranty, It also yields greater load ca- derstanding of how often you and use only OEM-approved pacity, more comfort, less noise idle and why, research the op- fuels. Carry extra fuel filters, as and higher profit. On the other hand, opera- tors with too-low horsepower GETTING WITH THE PROGRAM settings for the application will find their feet always hard on Owner-operators often can save a network fuel stops that are too the throttle, consuming more hefty amount of money when they costly, are too far off route, sell fuel. Some have benefited in are able to participate in discount inferior fuel, are dangerous or fuel economy by retuning the fuel networks. poorly maintained, or are perceived engine control module for If your fleet has a fuel-optimizer as a profit center for the carrier at maximum fuel economy, in- program, use it. An optimizer owner-operators’ expense. If you stalling full-flow mufflers or us- program helps an owner-operator have concerns about a stop on the ing one of several new engine/ plan a trip based on fuel prices fleet network, respectfully bring transmission combinations and locations in the carrier’s them to the fleet’s attention. built for maximum mileage, fuel network. Fees for using such The National Association of Small offering peak torque at much networks have become rare thanks Trucking Companies offers members to competition for drivers. the opportunity to tap into the lower rpms than traditional Owner-operators are well association’s directory of fueling diesels. advised, however, to pass up stops to find the lowest prices. PERFORM REGULAR MAIN- TENANCE. This ensures your

Questions? Call ATBS: (888) 640-4829 | 21

PIB19_CH4-6.indd 21 8/14/18 4:45 PM truck is running efficiently. side trips to a minimum and customers; the same company Also, check your current miles using precise directions will pay that will pay extra for loads per gallon at each fill – if it off in savings. traveling only in Western states falls off, determine the reason. might ask for a discount on Start a preventive maintenance GETTING A trips in other areas. routine; check often enough FUEL SURCHARGE For independents with au- to catch low oil, a dirty air fil- Since fuel prices surged two thority, develop your own ter or an air compressor leak. decades ago, fuel surcharges surcharges for contract rates Don’t use a higher-viscosity oil have become widespread to quoted to shippers, and know than you need. help carriers and their opera- that most brokers negotiate MAINTAIN TIRE PRESSURE. tors guard against further price all-in rates irrespective of any To reduce rolling resistance, spikes. added surcharge. Making cer- check air pressure in all 18 HOW TO FIGURE WHAT A tain those rates sufficiently cov- tires and fill them up at least SURCHARGE IS WORTH. As long er current fuel costs with plenty weekly to the manufacturer’s as you know your truck’s fuel of profit left over is key. specifications. The trailer tires economy, you can calculate SURCHARGE FIGURED AS may belong to your carrier, how well a fuel surcharge com- PER-MILE. Suppose a surcharge but why pay the extra cost of pensates you for rising prices. is designed to cover increases pulling a trailer with underin- Many carriers pay a sur- above $1.25, and fuel costs flated tires? charge when the national aver- $2.50. Ideally, you’ll receive a SLOW YOUR ACCELERATION age price for a gallon of diesel, surcharge covering that $1.25 AND DECELERATION. Both will as reported weekly by the U.S. spread. consume less fuel and be easier Department of Energy, exceeds If your truck gets 6 miles on your equipment. Slowing a certain price – often $1.10 to per gallon, divide $1.25 per acceleration is especially im- $1.25. The surcharge increases gallon by 6 mpg. That equals portant running on hills or in incrementally with diesel 21 cents per mile. A surcharge the mountains because it helps prices, either on a cents-per- at that level allows you to reduce the effects of gravity. mile basis or on a percentage break even. Now assume you Rapid acceleration gets you an of what the customer pays the actually get 7 mpg. Dividing extra few seconds but creates carrier for the load. Carriers the $1.25 by 7 means a sur- premature wear on the engine, often structure their surcharge charge of only 18 cents per driveline and tires – along with scale by assuming a certain fuel mile is needed to break even. increasing your fuel costs. efficiency, such as 6 miles per If you’re driving for a fleet SHIFT WISELY. Don’t drive gallon. that has a surcharge based by engine sound but by rpm. Some owner-operators on its company trucks’ 6 mpg If you’re not absolutely sure make a healthy per-mile profit average, you come out 3 cents about your engine’s sweet spot, from their carriers’ surcharge per mile ahead. ask the manufacturer. because good fuel economy SURCHARGE FIGURED AS CUT OUT-OF-ROUTE MILES. practices allow them to average PERCENTAGE. When a sur- If you’re like many owner- better than 6 mpg. Surcharges charge is a percentage of gross operators, with 6 percent to 10 traditionally have been based revenue, the calculation is percent of your miles out of on the national average of die- similar. Take the same situation route, you possibly could cut sel prices. – you get 6 miles to the gallon them by 3 percentage points. In recent times, particularly and diesel is $2.50 a gallon, Doing so would save an extra in the case of dedicated re- so you need a surcharge of 21 3 percent on fuel, as well as gional routes, they are based cents per mile to cover your on other variable costs such on regional prices or prices costs. Assume you’re offered a as tires and maintenance. Re- along specific lanes. This can 1,000-mile haul for $1,100 in thinking your route, keeping be a double-edged sword with gross revenue. Start with your

22 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 22 8/14/18 4:45 PM surcharge target of 21 cents fuel, but your ultimate fuel taxes quarterly, and North per mile, and multiply by miles. tax bill is calculated accord- Carolina revises its own semi- Now see what your $210 ing to where you drive. If you annually. surcharge would be as a per- purchase fuel in high-tax states Other fuel-buying costs de- centage of the gross. Divide it and drive most of your miles in pend on how your fuel taxes by $1,100 to get 19 percent. lower-tax states, you will get a are managed. Most leased That’s the level you need to refund when you file your IFTA owner-operators depend on a cover your extra fuel costs. report. carrier to collect and distrib- There are no rules cover- You cannot reduce your tax ute fuel taxes. If you’re leased ing fuel surcharges. As with outlay unless you choose hauls and your carrier handles your freight rates, anything goes. that avoid high-tax states. What fuel taxes for you, simply look But once you understand how you have more control over is for the cheapest pump prices. surcharges work, it’s easy to how much you pay strictly for Some carriers charge a fee for see the potential for profit. fuel when the fuel tax is not this, and some pay simply by Because fuel surcharge calcu- considered. averaging the mileage of their lations involve some sort of PUMP PRICE MINUS TAXES entire fleet. If your carrier does fuel mileage average, a fuel- = REAL COST. The key to find- that, and you average a better efficient owner-operator or ing the cheapest fuel is to know per-gallon average than the small fleet owner always can the current fuel tax rates, both fleet, you could be paying more beat the averages. federal and state, and any state tax than you actually owe. For As fuel prices have remained surcharges. Subtract taxes to this reason, some make the lower than the $4-plus peak find the raw fuel cost in each case that it’s always best for an they hit several years ago, state, then buy where fuel is owner-operator to handle his/ owner-operators have had to cheapest. The strategy means her own fuel taxes. get used to seeing lower fuel that you buy without regard for Whatever the case, a good surcharges. With lower prices, whether you are paying more lease will itemize all charges, in- though, ATBS’ Todd Amen at the pump – or in taxes. cluding fuel taxes and how they notes that drivers now can top IFTA also considers state are assessed. If your settlements off their fuel tanks rather than surcharges, which complicates do not reflect what is stated in only filling halfway up and forc- the fuel-buying strategy. Indi- your lease, you should ask for ing more frequent fuel stops. ana, Kentucky and Virginia clarification and, if necessary, If you find that you’re de- have per-gallon surcharges; look for an alternate method of pending too much on your Kentucky, New Mexico, New paying your tax. Not all carriers, fuel surcharge, you may not be York and Oregon have per- however, allow leased operators charging a high-enough rate to mile surcharges. While some to opt out of their system, so haul the freight. owner-operators buy only make sure you understand how enough fuel to get through the carrier handles IFTA before FINDING THE surcharge states, this practice signing on. CHEAPEST FUEL can backfire, depending on the You must get your own IFTA An effective fuel-buying practice actual cost of the fuel in each account to do your own fuel is to maximize fuel purchases in state. There may be times tax reporting, whether you do low-fuel-tax states and mileage when buying more fuel in a it yourself or through a third run in those states. The Inter- surcharge state is more eco- party. You do not have to have national Fuel Tax Agreement nomical. your own operating authority to between the United States and Part of the challenge in get an IFTA account, but inde- Canada facilitates the report- smart fuel buying is keeping up pendent owner-operators must ing, collection and distribution with changing surcharges and have such an account in their of taxes to states and provinces. taxes; Georgia, Massachusetts base plate state and be respon- You pay taxes every time you and New York revise their fuel sible for quarterly reporting.

Questions? Call ATBS: (888) 640-4829 | 23

PIB19_CH4-6.indd 23 8/14/18 4:45 PM 6 CHAPTER

CONTROLLING TIRE COSTS KEEP YOUR NO. 2 VARIABLE EXPENSE TO A MINIMUM WITH SMART SPEC’ING

ust as a truck with and tread depth and pattern. tire applications are long haul, improperly geared All play a role in proper regional, on/off-road and urban. rears will incur extra spec’ing, and smart spec’ing The different applications mean J costs for its owner, so, can save money in two ways: different tire lives, from as little too, will a truck with the wrong reducing tire cost per mile and as 20,000 miles for urban to tires. Many more factors than fuel cost per mile. Attributes that more than 200,000 miles for a size account for having the reduce one cost can have the long-haul team. right tire for a specific truck in opposite effect on the other cost, If you’re spec’ing a new a specific application. so tread carefully. That’s easier truck, you can pick any tire A tire dealer can make said than done at a time when size suitable to your applica- recommendations based specialization abounds. tion. A new truck’s drivetrain on vehicle usage and tire Tire makers have moved in and engine controls are set ac- characteristics such as price, fuel recent years toward products cording to the spec’d tire size. economy, durability, traction, that are designed to meet specific Replacement tires, however, miles to removal, retreadability service needs. Since longer may require drivetrain and tire life means lower costs, the engine adjustments. Chang- effort put into careful spec’ing ing tire sizes also might cause will pay off well. The four main clearance issues.

24 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 24 8/14/18 4:46 PM PRACTICE GOOD HABITS FOR LONG TIRE LIFE

PERFORM ROUTINE MAINTENANCE. If road temperature rises about 2 degrees, and post-trip inspections. a technician can initiate by hand even the and hot tires are prone to losing tread FIGHT IRREGULAR WEAR. Check axles slightest irregular movements in tie rod more quickly and failing. Don’t overinflate, and suspension components (bushings, tie ends, kingpins, wheel bearings and torque either; an overinflated tire sustains rapid rod ends, kingpins, shocks, etc.), replacing rods, that spells trouble. and irregular wear and is more susceptible any that show excessive wear. On the steer The plungers inside shock absorbers to damage from running over debris and axle, change your shocks at least as often create friction, and friction creates heat, scrubbing curbs. as you change your tires. On the drive axle, so if the shock, not the outer dust barrel Underinflated tires build up excessive get more aggressive, replacing shocks covering the top half of the shock, is hot heat, which can damage the tire and halfway through the tire’s life and when the to the touch after driving, it’s working. If shorten its life. Inflation also affects tires are changed. it’s cool to the touch, it’s not working and performance, fuel economy and DOUBLE DOWN ON ALIGNMENT. Many should be replaced. Make sure bushings at maintenance costs. people believe they should get new tires the top and bottom of shocks are inspected A Michelin study shows that a 15 percent installed before they have a truck aligned. and replaced whenever worn. If you can over- or underinflation can reduce a tire’s The opposite is true — take your truck to the grab the shock absorber and rattle it, the lifespan by 10 percent. Research from the alignment shop with the old tires on. That bushings have pounded themselves out. American Trucking Associations’ Technology way, technicians can read your tire wear Shocks should be checked every & Maintenance Council has shown to learn what is wrong with the alignment maintenance service cycle and replaced in underinflation by just 10 percent— less than and determine more precisely how to make pairs if there’s any sign of leaking fluid. 11 psi on a 105-psi tire — can result in a fuel adjustments that solve the problems. Also MAINTAIN PROPER INFLATION. economy drop of 1.5 percent. make sure your bearings are adjusted Ironically, maintaining correct inflation EMPLOY GOOD DRIVING HABITS. One properly in all positions, and check for is free and relatively easy, yet it’s the element of tire wear you have complete proper mounting — a simple inspection. Look highest-saving maintenance you can control over is how the truck is driven for a ring molded into the tire where the rim perform on your truck. Improper inflation under less-than-ideal conditions. More and tire meet. Measure the distance from the is by far the greatest reason why tires conservative driving over rough surfaces rim to that line at four points around the tire; fail or wear out prematurely, also wasting helps reduce wear. each measurement should be within 2/32- fuel. Daily pre- and post-trip inspections Speeding, hard braking, curbing and tight inch. If the variance is greater, the assembly give owner-operators the opportunity turns cause tires to wear faster or even needs to be broken down and remounted to check pressures and also look for develop irregular wear. On the other hand, properly. leaks, punctures, broken valve stems or steady acceleration, braking and steering Mounting should be followed with a embedded objects such as nails. Even can extend tire life. Many of the problems check of the radial run-out (deviation of the absent damage, truck tires typically lose caused by bad driving habits show up as tire from a perfect circle) and lateral run- one to two pounds of pressure monthly uneven tire wear. If you notice unusual out (deviation of the sidewall from a perfect from normal use. A slow leak might cost shimmying or repetitive bumps, inspect plane). Both measure how well the wheel you one to three pounds of air a day. For your tires. Even absent rough driving, look assembly is mounted on the hub. Good each pound of pressure lost, a tire’s on- for irregular tread wear in your daily pre- quality run-out gauges cost less than $100.

More isn’t always better. rolling resistance rather than est possible alternatives for RR Rather than last longer, tires tires with more scrub resistance rating (97 and 86) improves fuel with deeper tread might wear designed for regional opera- economy to 6.52 mpg. faster, burn more fuel and tion. The tires may wear faster, While shallower tread make driving harder if they’re but they save enough in fuel to depth equates to better fuel applied wrongly. And the tradi- more than cover the extra tire economy, it also usually tional miles-until-removal mea- replacement costs. means shorter tire life. The sure of tire performance more Consider this common good news is tire manufactur- often now plays second fiddle tractor-only scenario: The steers ers are using technology to in long haul to picking tires have a 125 rolling-resistance counter this inherent tradeoff, based on fuel economy. rating, the drives are at 137, and using different compounding Some regional fleets are go- the truck gets 6 mpg. Replacing and silicate makeups to help ing to long-haul steers for low steers and drives with the low- enhance life.

Questions? Call ATBS: (888) 640-4829 | 25

PIB19_CH4-6.indd 25 8/14/18 4:46 PM Understanding tread by position Tire choices are about compromise, particularly when it comes to spec’ing the right tread. In general, steer tires are usually rib-type tires with medium tread depth, while drive tires, when traction on snow or mud might be a factor, tend to be more aggressive with cross grooves (lugs) and deeper tread depths. If a fleet of over-the-road trucks never leaves Florida highways, the fleet would benefit, in both wear rate and fuel economy, from using rib tires on every wheel position.

STEER DRIVE TRAILER • Four or five straight solid ribs support • Tread pattern designed with closed • Shallow tread delivers longer life and lateral forces created during normal shoulder (shoulder ribs) for long-haul guards against irregular wear. handling and cornering and by wind drag. service to prevent irregular wear and • Strong solid shoulders for strong • Tread pattern design and tread provide good handling. dragging forces and scrub. compound resists irregular wear in long/ • Tread pattern designed with open • Special compound reduces rolling medium-haul service or is cut- and chip- shoulder (shoulder lugs) for regional resistance. resistant for on/off-road service. operation, offering secure traction. • Tread depth delivers long tread life while Blocks in the central tread for all. offering low rolling resistance for greater • Deep tread for long tread life, but a low fuel efficiency. rolling-resistance compound for fuel economy.

OTHER SMART TIRE SPEC’ING PRACTICES

SHOP FOR THE BEST VALUE. Get markings have been scrubbed off the payload-sensitive application, the the most for your money, whether you side, think twice before buying. weight savings could yield bigger spend a little or a lot. It’s tempting to A common practice is to buy new revenue, reducing that time period shop primarily by sticker price, but steer tires, place the first retread dramatically. An automatic tire cost per mile and retreading potential on the drive and the second on the inflation system can address the are more important considerations. trailer. Trailer owners have more most common complaint about wide Making an informed choice means potential for retreading because of singles, inability to “limp” to the next keeping written and dated records options for repositioning tires. service site with a flat, by keeping of purchase, fuel mileage and tread Casings that are rated higher — tires inflated to proper pressure. depth, then comparing records with fewer repairs and lower heat GO LOW-PRO. For long-haul on- between models you’ve used. history — tend to be placed on the highway applications, a low-profile Consider warranty in any value drive axle since the torque on those tire set-up with a shorter height calculation. tires leads to higher heat generation. than width offers advantages in fuel USE RETREADS. Premium tire USE WIDE SINGLES. Wide singles efficiency, handling, weight, overall makers design casings for retread weigh less and save fuel. One also truck height and tire life over more use. New tires today can be retreaded costs less than the two tires they’re standard configurations. The aspect up to four times after their initial designed to replace, although you ratio — sidewall height measured in a tread life ends. The cost of a retread have to buy new rims to get in the percentage relative to its width at its tire is half that of a new tire — or in game. Wide singles are retreadable, widest point — of the most common some cases even less than half. On too. With a fuel-efficiency gain of 4 11R22.5 tires is about 100 percent, the downside, some carriers and state percent due to the reduced rolling meaning the sidewall height and governments restrict retread use on resistance singles offer, though, the width are the same. Low-pro tires’ steer axles. And not all retreads are nearly $2,000 yearly fuel savings will aspect ratio is about 80 percent created equal. If the retread isn’t pay for the new wheels and tires in with size designations such as from a reputable dealer, or if its less than three years. If you’re in a 295/75R22.5.

26 | In partnership with Overdrive and ATBS

PIB19_CH4-6.indd 26 8/14/18 4:46 PM 7 CHAPTER

MANAGING MONEY BEST PRACTICES FOR HEALTHY CASH FLOW, DEBT AVOIDANCE AND IDENTITY PROTECTION

t’s important to create accurately if your personal deny the inevitable. Remem- a separate bank finances are mixed in with ber AIG? American Interna- account that will be your business. tional Group’s fatal exposure I used to manage the Every month you should during the financial crisis income and expenses of write a “distribution check” or of 2008 was insuring bonds your business. All income make a direct transfer online blindly based on subprime from your trucking business from your operating account home loans. When it came should be deposited there. In to your personal checking ac- time to pay up, AIG had its addition, trucking expenses count to cover your personal pants down. It had to rely on should be paid out of this living expenses. The target a $183 billion taxpayer bailout account. In the event of an amount can be determined by to honor its commitments. IRS audit, having personal looking at the monthly per- Like insurers and banks, finances mingled with your sonal and family cash require- you’re subject to develop- business could cost you ments shown in your budget. ments that could threaten thousands of dollars. In your livelihood. At the very addition, it will be impossible RESERVE ACCOUNT for you and your accountant Saving is not easy. It’s much to analyze your business harder, though, when you

Questions? Call ATBS: (888) 640-4829 | 27

PIB19_CH7-9.indd 27 8/15/18 8:10 AM least, you know your equip- age your cash flow. banks offer this service, which ment will wear out. Smart AVOID BEING OVER- automatically draws from your owner-operators save for LEVERAGED. Back in 2005, savings or credit card account maintenance in proportion to free-wheeling lenders and to cover a bad check. If using miles run. See Chapter 12 for home buyers thought hous- savings, you obviously need to savings recommendations. ing prices would rise forever. keep a good stash to make it The best owner-operators Lenders made ridiculously work. Linking to a credit card have at least $5,000 in re- large loans to borrowers with is a less favorable option, but serve before they ever go into ridiculously low incomes and if it’s paid off quickly, it’s still business. The purpose of credit ratings. It was just a a lot less costly than bouncing the reserve account is to set matter of time before wide- a check. aside money for large or un- spread defaults would bust • If you don’t have online ac- foreseen items that could put everyone’s bubble. count access, get it. Even if you a substantial drain on your It can be easy for an don’t pack a computer on the operating cash, such as ma- owner-operator to rack up road, once you’re signed up jor maintenance items, tires, too much debt. A large truck at your bank or credit union quarterly estimated taxes and loan with double-digit inter- for mobile banking via your insurance deductibles. est is bad enough; throw a smartphone, you can man- few maxed-out credit cards age your finances anywhere CASH FLOW PROBLEMS in the blender, and you’ve you have web access or a cell A few sure ways to avoid fi- got a deadly concoction. signal. That includes check- nancial trouble as an owner- Successful owner-operators ing your balance and cleared operator: never take on more debt than checks and purchases, as MINIMIZE CASH ADVANCES. they can manage to repay on well as deposits and moving When they become owner- a regular schedule. money from one account to operators, many drivers car- AVOID OVERDRAFTS. There’s another. ry forward the company-em- nothing like logging in to your INDEPENDENTS, USE A FAC- ployee habit of taking weekly bank account to see a nega- TOR. The demand for cash cash advances for expenses. tive balance and outrageous when starting your own com- Undisciplined owner- overdraft fees. Numerous pany presents many chal- operators have been known banks use a tiered structure lenges. Late payments, long to use that cash on unneces- for those fees; they go up as billing cycles and high fuel sary accessories, entertain- more checks bounce. And costs contribute to why half ment and other unbudgeted some banks have developed of small businesses fail in expenses. Frequent and keen memories. That check their first year. unwise use of cash advances that bounced a year ago could If operating under your can make it difficult to get a mean your next mistake will own authority is your inten- true picture of where your trigger the tiered rate. tion, consider using a factor- money is going. Also, since • Monitor your account. Re- ing company to enhance cash this cash already is deducted cord every check as soon as flow and provide the support from your settlement, it can it’s written. Don’t forget deb- that will help build up your be mentally defeating to keep it card purchases. Develop a cash reserves. Factors offer getting small settlements. In system for logging automatic independents quick access to addition, transaction fees can monthly drafts, such as for the cash tied up in their in- add as much as 10 percent to utilities, whether it’s an item voices, less a discount. the advance. in a spreadsheet, a note on a Factors such as TBS Fac- Work toward using your calendar or a future entry in toring Service also provide business operating account, your checkbook. benefits that include collec- not cash advances, to man- • Use overdraft protection. Most tions, broker credit informa-

28 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 28 8/14/18 4:50 PM tion, accounting services and comparisons of current re- members is also well-known discounted fuel networks with wards and other terms for lead- for access to discounts com- significant volume savings. ing cards. Study offers carefully parable to large-fleet volume There are two types of fac- because high annual fees and discounts. tors. With recourse factors, if interest rates can wipe out the the factor is unable to collect value of rewards. LOOK FOR BIG on certain invoices, the factor retrieves its payment from ALTERNATIVES TO UPSIDE POTENTIAL the owner-operator, who is CREDIT CARDS Before the housing market ultimately responsible for the Comdata and similar fuel showed visible signs of im- collection. Nonrecourse factors cards are available to inde- pending doom, a scattered are the opposite, and since pendents looking to combine handful of clever guys studied they assume total responsibil- maximum fuel discounts with mortgage data that seemingly ity for collecting, the rate (typi- the accounting aspects of a smart people overlooked. The cally 5 percent) they charge debit card tied to a tradition- few independent thinkers, and will be higher than that of al bank account. For single- later others, placed virtual recourse factors. truck and other small fleets, bets that trillions of dollars CREDIT CARDS. It is use- the Comdata discount fuel in home loans were going to ful to have a business credit network can be opted into go bad within months. They card. However, owner-oper- for discounts off the cash could lose a little if they were ators often spend too much price. As part of Master- wrong, but could make fantas- because the using the card card’s Maestro point-of-sale tic profits if they were right. is seemingly painless. Yet if network, all Comdata cards They were. a credit card balance is not are usable anywhere the Likewise, most owner- paid off at the end of each Maestro logo appears. Com- operator businesses stick to a month, the interest charges, chek Mobile in recent times leased operation with ordinary sometimes exceeding 18 per- also has taken funds manage- freight. That’s fine for an op- cent, can mount rapidly. ment to mobile devices. erator who’s satisfied with his You’ll get the best rate on Another is the FleetOne net income. Those with large credit cards, as well as other Truckers Advantage card incomes, though, almost al- forms of lending, by keeping for Owner-Operator Inde- ways have grasped opportuni- a high credit rating. Federal pendent Drivers Associa- ties others overlook. law now requires each of the tion members. The NASTC It could be shippers ripe three major credit reporting Quality Plus Network for for the picking by a small in- companies to send you a free National Association of dependent operator. It could copy of your credit report, Small Trucking Companies be niche hauls that require on request, once a year. Visit special trailers, elaborate se- www.annualcreditreport.com. curement or tedious govern- If you’re going to use credit FUEL CARD RESOURCES ment clearance. Making these cards, reap the benefits of use moves requires risk, money by selecting one with a rewards Comdata: and time, but the return can program. Many credit cards www.comdata.com be substantial. have programs that reward Such opportunities increase use of the card with merchan- FleetOne Truckers on the recovery end of eco- Advantage: dise, travel credits or other www.truck- nomic cycles. It’s easy in the incentives. For business use, ersadvantage.com flush of good times to forget cash-back rewards are usually NASTC Quality Plus Net- lessons so clearly illustrated the most measurable and cost- work: www.nastc.com during hardship. It’s best to effective. Bankrate.com offers have a good memory.

Questions? Call ATBS: (888) 640-4829 | 29

PIB19_CH7-9.indd 29 8/15/18 11:29 AM 8 CHAPTER

INCOME TAX AND OTHER TAXES GOOD PLANNING AND RECORDKEEPING HELP KEEP THOSE PAYMENTS AT A MINIMUM

mong the biggest new owner-operators run your business. For anyone who challenges in into problems. You can avoid was a company employee, this operating your any big surprises on April 15 is a major change. It was your A business is by using good planning and employer’s responsibility to understanding how you are recordkeeping throughout the deduct all required taxes from taxed. year. your paycheck, which then This is an area where many As an owner-operator, you were reported on the W-2 you now are responsible for pay- received in January of the fol- ing your taxes yourself and lowing year. calculating the net profit for Now you will receive a Form

30 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 30 8/14/18 4:50 PM 1099 MISC, which shows the for employees. For 2018, rates profit also is used to calculate gross earnings your carrier re- are unchanged from 2017 at the taxes due at the end of the ported to the Internal Revenue 15.3 percent. This is made up year when the Form 1040 is Service. of 12.4 percent Social Security filed. The profit equation you Your weekly settlement state- tax and 2.9 percent Medicare should use is: ments and receipts provide the tax. GROSS PAY explanations for the deductions FEDERAL AND STATE INCOME (as reported on 1099-MISC) that will help you arrive at TAX. This is calculated on your – ALLOWABLE your net pay. If you examine tax return. As a company em- BUSINESS EXPENSES the weekly net pay of a typi- ployee, this amount was esti- = NET PROFIT cal company driver, you might mated and withheld from your If you fail to show deductions conclude that owner-operators check. As an owner-operator, or file a tax return, the IRS will make more than twice the you are responsible for its esti- determine the taxes that are due money. mation and payment. based on their estimate of your But no taxes are deducted ESTIMATED TAX PAYMENTS. income from 1099s provided from owner-operators’ settle- Those who expect to owe at by your business partners and ment sheets or payments from least $1,000 in tax after sub- not consider your deductions/ brokers and shippers, to say tracting withholding and cred- expenses. This amount certainly nothing of expenses. its are required to make quar- will be much higher than you Furthermore, owner-oper- terly payments of self-employ- otherwise would have been re- ators do have to pay the same ment taxes and federal and quired to pay. taxes as the company employ- state income taxes. Though As an owner-operator, you ee, plus the employer’s share of the IRS allows estimates based have many deductible ex- the Social Security and Medi- on the prior year’s data, own- penses. The main criteria in care taxes (both considered er-operator financial services determining deductibility are self-employment taxes). As an provider ATBS uses current whether you have a record of employee, only 50 percent of data to compute estimated the expense and whether it the self-employment taxes were taxes due. is an ordinary and necessary deducted from your pay, but as For payment vouchers and business expense. Other than an owner-operator, 100 percent addresses for IRS estimated honesty, the best protection of these taxes must be paid on payments, as well as other fed- from audits and penalties is the net profit of your business. eral tax information, visit www. good recordkeeping. Keep all Both are paid on Form 1040 irs.gov. Each state that imposes records that support every de- at the end of the year, but income taxes has a website to duction you claim on your tax estimated tax payments must obtain their payment vouchers return, beginning with your be made each quarter. They’re and addresses. logbook for those per diem de- often 20 percent to 30 percent The IRS works like any other ductions. of the net income received over business. If you make a late With electronic logs, make the quarter. Complying with payment, or no payment, it sure you download your books this regulation not only avoids is authorized to apply penal- every month or so for tax pur- a penalty, it also eliminates any ties and interest based on the poses; a leasing carrier is not surprise of a huge tax bill as amount of tax due. likely to keep them beyond the April 15 approaches. time required for compliance. DEDUCTIONS AND Save and label expense re- TYPES OF TAXES RECORDKEEPING ceipts, maintain an expense log SELF-EMPLOYMENT TAXES. Owner-operators have to or spreadsheet, and sort it all at These equate to the Social Se- estimate the profit of their the end of every run. curity and Medicare withhold- business so that estimated tax A receipt is the most obvi- ings paid through a company payments can be made. The ous evidence of a deductible

Questions? Call ATBS: (888) 640-4829 | 31

PIB19_CH7-9.indd 31 8/14/18 4:51 PM purchase, but you also can use have it mailed by calling (800) C. It directly reduces the self- canceled checks, bills, credit card 829-3676. employment taxes and income statements, invoices, an expense taxes owed on the return. notebook – anything showing PER DIEM EXPENSES It’s important to realize you when, where and what you The per diem is the tax- can’t deduct your total per bought and how much you paid. deductible amount the IRS diem from your tax bill dollar Don’t be too quick to label assumes you spend on meals, for dollar. But owner-operators expenses “miscellaneous,” ei- beverages and tips when you’re still can deduct 80 percent of ther; the more specific you are, away from home on an over- the total per diem of $63 a day, the better. night business trip. or $50.40. Don’t forget to collect re- The new tax law, the Tax There’s the option of direct ceipts for lumper fees or any Cuts and Jobs Act (TCJA), ef- expense deductions, but meals expenses automatically charged fective Jan. 1, 2018, does not are deductible at only a 50 per- to your credit card such as allow a taxpayer to deduct un- cent rate, so an owner-operator tolls, scales and credit card reimbursed business expenses would have to consistently fees. Many owner-operators as an itemized deduction on spend more than $100.80 per maintain separate credit cards Schedule A. day to exceed the per diem’s for business and personal use This was passed in an effort $50.40 (80 percent of the $63). just to simplify keeping track of to simplify tax preparation To claim the per diem on any such expenses. since most taxpayers do not trip, you must be away from Don’t overspend on sup- itemize their deductions. home for the night, which you plies, equipment and services For company drivers, per can prove through your logs. A in your zeal to accumulate diem is considered an unreim- trucker who leaves the terminal deductions. Only a portion bursed business expense and before dawn, works a 14-hour of those expenses will be re- therefore is no longer deduct- day and then returns that night couped through your tax filing. ible. The only way a company has not worked a single day for IRS Publication 552 goes into driver can benefit from per the per diem deduction by IRS aspects of keeping records you diem under the TCJA is if the standards because he didn’t might not have considered, carrier reimburses per diem as spend the night somewhere. such as the kinds of records part of the driver’s pay. to keep and how long to keep Per diem for owner-operators DEPRECIATION them. is an ordinary and necessary The standard depreciation You can download the publi- business expense reported not for a Class 8 truck, commonly cation “Recordkeeping for In- as an itemized deduction, but as called “straight-line” deprecia- dividuals” from www.irs.gov or a business expense on Schedule tion, is an evenly paced three- year deduction that’s spread WHAT’S IT WORTH? over four tax years: year one, 17 percent of the cost of the In this example, keeping records of business expenses saves $515 in income tax truck; years two and three, for someone in the 15 percent tax bracket, or more if a state income tax applies. 33 percent each; year four, 17 percent. EXPENSES TAX SAVINGS Also common is a varia- Personal vehicle use $200 Self-employment tax tion of the four-year formula Contract labor $700 (15.3% of $1,700) $260 known as accelerated deprecia- Work clothing $300 Income tax tion. It takes 77 percent of the Credit card charges $500 (15% of $1,700) $255 equipment’s value in the first TOTAL $1,700 TOTAL $515 two years, 23 percent in the final two. As a result of the new TCJA

32 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 32 8/14/18 4:51 PM depreciation deduction can YOUR ROLE IN TAX PREP be taken only in the year the equipment was purchased. If you want to avoid the most common Most leased owner-operators make Another change made under mistakes seen in owner-operator tax about $1.20 or more per mile with the the new tax law is that bonus returns, you need to get involved in fuel surcharge included. The number of checking the major numbers your tax dollars on your 1099 should be higher depreciation can be used for preparer uses. Doing this can save you than the number of miles you ran both used and new assets. Un- thousands of dollars in taxes. Or it could during the year. If they’re similar, it’s der the previous tax law, bonus save you from thousands of dollars in close to $1 a mile, possibly indicating depreciation was allowed only penalties and interest if your preparer missing surcharge revenue. on new assets. makes a stupid mistake in your favor. VERIFY THE ACCURACY OF THE Should equipment expenses An example: A husband-wife owner- 1099 AMOUNT. Having established exceed operators’ income for operator team had a feeling something that the amount is reasonable, go the year, which is likely for the wasn’t right on their return, though further. A relatively small mistake, like year the equipment is bought, it had been prepared by a trucking an extra $5,000, wouldn’t jump out, yet the bonus depreciation deduc- specialist. The couple had shown a you would pay $1,000 in tax you didn’t tion cuts income to zero. The net operating loss on their Schedule owe. Verify the amount by adding each new legislation allows them to C for seven years; an operating loss is settlement to determine your 1099 often the result of high depreciation. revenue. carry that loss forward into the Their most recent tax return, CHECK AT LEAST THESE THREE next year, which could help however, showed less than $1,500 in EXPENSES. lower their tax bill for that year depreciation. • Fuel. You know the rough amount and even subsequent years. The preparer, following settlement of your weekly fuel spending. Multiply When the bonus depreciation sheets that separated mileage pay that by 50 (assuming you took off a rate begins to fall in 2023, own- from fuel surcharge pay, was including few weeks) to get a year’s estimated er-operators likely will return only mileage revenues in the gross total. to using the standard deprecia- numbers. Fuel surcharge payments • Maintenance. See how your tion deduction. were listed under “reimbursements,” big expenses add up. If you know Accelerating depreciation which is not standard accounting you had one $8,000 repair and total like this, however, is no magic practice. So gross revenue was less maintenance is just over $10,000, bullet. It’s not for everyone, than $100,000 each year, even though there’s probably a mistake. the per diem showed more than 250 • Per diem. Look at your Schedule given it could speed the higher days on the road each year. This is C for meals and entertainment. Take tax bills that come when de- an absolute giveaway that the gross the total number of nights away from preciation runs out. That also revenue is incorrect. home, and multiply it by $63. Then could move the taxpayer into a This mistake resulted in under- multiply that number by 0.8. That higher tax bracket. Too many reporting income by $20,000 to should be your total deductible per owner-operators have used a $40,000 per year for seven years. Tax diem. similar tactic attempting to was underpaid by $3,500 to $7,000 per If you find mistakes or red flags catch up after they’ve failed to year. With interest and penalties, the for one of these categories, continue make their estimated quarterly liability could be as high as $75,000. checking entries, from largest dollar taxes. Here’s what you can do to avoid amount to smallest. If amounts in Owner-operators with a such situations: these are correct, odds are the tax full tank of financial self- SPOT-CHECK YOUR 1099 TOTAL. return has been prepared correctly. discipline can use bonus de- preciation to zero out tax bills as long as possible while also legislation, if an owner-oper- Starting in 2023, this bo- diligently saving enough each ator chooses, he or she may nus depreciation deduction year — typically 8 percent deduct 100 percent truck and dwindles 20 percent a year of gross revenue — for the trailer purchases until the end until 2026, and it’s eliminated inevitable day when the IRS of 2022. in 2027. However, the bonus comes calling.

Questions? Call ATBS: (888) 640-4829 | 33

PIB19_CH7-9.indd 33 8/14/18 4:51 PM LEASE VS. PURCHASE: purchasing his truck has de- $118,000 for an aerodynamic A TAX ANALYSIS ductions in the first year that truck with a 70-inch sleeper If you are leasing your truck, are $10,200 greater than the and a comparable lease of the you can deduct the entire lease driver. But in the fourth same truck, tax savings are amount of the payment each year, the lease driver still will greater with the lease – almost month. have his $24,000 per year, $7,000 more over five years. Example 1: Tom leased his and the purchaser will have However, all other things truck Jan. 1. He is paying $19,800 of depreciation left being equal, it makes more $2,000 per month. His total plus interest of $4,800 to de- sense financially to buy since deduction is $24,000 ($2,000 duct. the total adjusted cost of the x 12). The purchaser gets higher vehicle with conventional loan On the other hand, if you deductions in the first three financing is $10,000 less than are purchasing your truck, you years with the fourth year close the cost of the leased vehicle can deduct the depreciation on to equal. The net effect is a tax after a 20 percent buyout at the the total cost of the truck and delay for the owner-operator end of the term. For more on the interest charges that are purchasing the truck. The tax this tough financial choice, see included in your payment. The will be paid in later years, not Chapter 10. truck is depreciated through eliminated by depreciation. accelerated depreciation over Note also that if you trade MINIMIZING YOUR TAXES three years. every three years, erosion of Following are examples of tried Example 2: Tom purchased depreciation may have set in and proven tax reduction tips: his truck Jan. 1. The price is by your fourth or fifth trade, GET HELP. The U.S. Internal $60,000. He is paying $2,000 and you’ve lost much of the tax Revenue Code is 3.4 million per month for four years to benefit enjoyed by people who words long. In type this size, pay off the truck, 80 percent buy less often. it would fill at least 60 issues of which is interest in the first On the other hand, consid- of Overdrive magazine, with no year. ered financially, it usually costs room for photos or ads. That’s His depreciation deduction less to buy in the long term. why owner-operators need a in year one is 33 percent of Take, for example, the com- business services provider who $60,000, or $19,800. His inter- mon five-year lease period specializes in owner-operator est deduction is $19,200. His measured against the likewise businesses. total deduction is $39,000. common five-year note on a SAVE MONEY TAX-FREE. If As these examples illustrate, new truck. you don’t have a retirement the owner-operator who is With a purchase price of account, start one. Up to a point, the money you put into an IRA, SEP or 401(k) is tax- TAX CALENDAR exempt until you start drawing it out many years later. Put ITEM DUE DATE money into it regularly. Individual tax returns: original due date April 15 TRACK PERSONAL VEHICLE Filing extension due April 15 (extends to Oct. 15) MILES. You cannot deduct Estimated tax payments mileage on your personal ve- hicle to get to and from work, 1st quarter April 15 but you can deduct it if you 2nd quarter June 15 make a business-related trip 3rd quarter Sept. 15 to the bank, the post office, a 4th quarter Jan. 15 business meeting, a truck show, Federal Highway Use Tax Aug. 31 ($550) a dealership, a supply store or a parts yard – even to a grocery

34 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 34 8/14/18 4:51 PM TAX REALITY for medical-related trips, and TAX MYTH 14 cents a mile for charitable “In the year you start This is not true, especially if you are leasing your trips such as Meals on Wheels your business, you will truck. deliveries. owe no tax.” GIVE TO GOOD CAUSES. Do- “You will get a big refund You potentially can get a refund to the extent nations to churches, charities your first year.” of taxes paid. Example: If your withholding as a such as the Red Cross and the company driver was $100 before you became an Salvation Army, and nonprof- owner-operator, and you paid no additional taxes during the year, the most you normally can receive its like Trucker Buddy all are as a refund is $100. tax-deductible if you itemize your taxes. Gifts to business “You should be Not necessarily. Incorporation only makes sense incorporated.” when the tax savings are greater than the additional associates are tax-deductible costs. (See Chapter 9, “Choosing a Business but limited: $25 in gifts per Structure.”) associate per year. HIRE THE KIDS. If you put an “You don’t have to Payments are required quarterly. make estimated tax adolescent child on the payroll payments.” and pay her, say, $4,000 for the year, she pays no taxes on “ ‘Tax-deductible’ or Most of the time it reduces your federal taxes only ‘writeoff’ means getting from between 15 percent and 30 percent of the the income because she didn’t something free.” value of the item purchased. make enough – but you pay no tax on it, either. Make sure the “You can deduct Because you deduct only your actual expenses while deadhead mileage and working and are taxed only on the profit you make kids are doing age-appropriate days off because of while working, you’re already getting a deduction work, and keep documentation illness.” for deadhead and time off. of it, including filing a W-2. CLAIM TUITION TAX CREDITS. “You can deduct the cost Generally the dog is deductible, as a security of your dog.” measure, as long as it is part of the trucking If you’re paying tuition for operation. Typically this means that the dog lives in yourself or your children to a the truck and is always with the truck. qualified educational institu- “You can deduct out-of- You deduct your actual expenses while working, tion, take the tuition tax credit route miles.” which already includes out-of-route miles, as with – a dollar-for-dollar savings deadhead, and you can’t deduct anything twice. off your tax bill, up to $2,500. “You can deduct the You can deduct actual expenses or the standard Paying the full tuition by Dec. standard mileage rate mileage rate, but not both. For most owner- 31 will allow you to credit the for every mile you run.” operators, the actual expense deduction usually entire amount on your taxes. makes sense. This only works for students “You can deduct tips Only if you actually pay the tip. Falsely claiming tips seeking an undergraduate de- for maintenance, tire is fraud. gree and enrolled at least half- changes, repairs, etc.” time. There is a four-year limit “You can negotiate a Such deals, called offers in compromise, may be on this credit. deal with the IRS to pay granted in extreme cases and are based on your USE THE CALENDAR. Keep a back taxes at a few cents ability to pay. trucking-specific tax calendar on the dollar.” at your home or in your truck. You can find one on the ATBS website containing important store if your purchases were For tax year 2018, the IRS tax deadlines throughout the business-related. Keep a log deduction for business miles year and frequently missed tax in which you note the date, is 54.5 cents. There are also deductions. mileage and purpose of each smaller deductions for other Before Dec. 31, buy whatever business-related trip. personal-vehicle miles: 18 cents big-ticket business equipment

Questions? Call ATBS: (888) 640-4829 | 35

PIB19_CH7-9.indd 35 8/15/18 11:30 AM you know you need: new tires, WATCH YOURSELF IN THESE AREAS a laptop or an in-cab heater. Even if you buy it on credit, Potential audit problems for owner-operators: you get the tax benefit quickly while postponing the cost. NO FIXED RESIDENCE. Make sure In most instances, the home-office Deductions must be busi- you have an established residence deduction is legitimate only when ness-related. Here are a few where you collect mail, even if it’s a driver has a spouse or partner examples: a parent’s house you rarely visit. who stays at home and regularly Without a home to be away from, does the load booking, dispatching, • If you wash your truck at you don’t qualify for the daily per handling of multiple trucks or other home, you can claim the cost diem writeoff for meals. business functions. You’ll also need of household water and deter- QUESTIONABLE HOME OFFICE. your business services provider to gent for washing the truck. The IRS rules for home offices are help you with the paperwork, as • You can deduct a flyswatter so strict that they exclude most the required IRS Form 8829 gets for your truck, flashlight bat- owner-operators. Deductible home confusing. teries, cleaning supplies and a offices must be used exclusively for MINGLED ACCOUNTS. No law bunk comforter. the business and nothing else, not requires separate business and • You can deduct an enter- even at nights and on weekends. That personal checking accounts or tainment expense if you buy goes for any equipment in the office, credit cards, but the law of common dinner for a driver you are including the computer and the TV sense says otherwise. If you’ve trying to recruit for your com- set. More of a hurdle to truckers is mingled church and state, good that the deductible home office must luck proving to the taxman that a pany. • be the operation’s primary place of grocery receipt was for meals in the You can deduct coveralls, business and must be used regularly. truck. but not blue jeans. You can deduct steel-toed shoes, but not tennis shoes. compliance with its tax rules. especially for independents. If IRS AUDITS If you receive a notice you circumstances such as those The IRS usually has three are being audited, the first put you among the one in 25 years to challenge deductions thing you should do is contact who meet face to face with or income stated on your re- the person who prepared your the IRS, make sure you’ve got turn by requesting an audit, so return. the documentation. you should keep your records However, only a Certified The ATBS Tax Resolution for at least three years. Public Accountant or Enrolled team specializes in helping The statute of limitations Agent can represent you in owner-operators who get can be up to six years for re- an audit. The IRS says 4 per- behind on their taxes and turns where there is evidence cent of tax returns filed by can assist with wage garnish- of an understatement of in- the self-employed with at least ments, IRS tax liens, IRS come of 25 percent. If the re- $100,000 in revenue get special representation, audits, offers turn is found to be fraudulent attention. in compromise and more. with the intent to evade tax, or Claiming substantial ex- Consultations with the ATBS if no return is filed, an action penses not common to a sin- Tax Resolution team are free can be brought against you at gle-truck owner-operator — and confidential. any time. such as utilities, advertising You ultimately are respon- The fact that the IRS is or inventory — might draw sible for your tax return. Some auditing your return does not an audit. The reality of the tax preparers are aggressive in mean that you or your CPA owner-operator world is that claiming deductions; be aware made a mistake. The IRS a single engine rebuild can of what’s being submitted on periodically randomly selects spike expenses for the year; your behalf, and make sure some returns to determine income also can be volatile, you’re comfortable with it.

36 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 36 8/14/18 4:51 PM 9 CHAPTER

CHOOSING A BUSINESS STRUCTURE WHAT LEGAL FORM WORKS BEST FOR YOUR OPERATION?

here are different operator. Many leased owner- person. The individuals form- ways to set up an operators stay with this form, ing the partnership are taxed owner-operator though it has its downsides. separately, as they would be if T business. Each One is liability protection. In they were sole proprietors. A business form has its advantages the eyes of the law, the owner partnership also can be formed and disadvantages, and one may of a sole proprietorship is the easily, but a written agreement work better than another for business. In the event of an acci- is recommended to spell out du- your particular situation. The dent, you could be liable for mil- ties, responsibilities and financial advice of a CPA, tax attorney lions of dollars in damages and terms. Your business services or business services provider medical expenses. That’s why it’s provider can help you draw up who specializes in trucking is important to carry bobtail insur- a simple written partnership recommended before a decision ance (or unladen liability – see agreement. is made. Here are the six types Chapter 16). The advantage of a partner- of businesses: Also, debt incurred by the ship might be in having access SOLE PROPRIETOR. This is a business is the responsibility of to extra start-up capital or in business owned by one person. the owner. If your business gets providing a co-driver who can It is the least expensive, sim- into financial trouble, creditors help you drive more miles. To be plest and least regulated type of can seize your house and other successful, each co-driving part- business structure. Unlike the personal possessions. ner should bring something to other forms, there is no formal PARTNERSHIP. A partnership setup, as it begins when you start is similar to a sole proprietorship earning revenue as an owner- but is owned by more than one

Questions? Call ATBS: (888) 640-4829 | 37

PIB19_CH7-9.indd 37 8/14/18 4:52 PM the table, such as financial skills or mechanical expertise. Each DO YOU NEED AN EMPLOYER IDENTIFICATION NUMBER? partner is liable for the actions of the other in a partnership. You need an EIN if you answer “Yes” to • Trusts, except certain grantor-owned There are two types of part- any of the following: revocable trusts, IRAs, exempt 1. Do you have employees? organization business income tax nerships: 2. Do you operate your business as returns Family or nonfamily part- a corporation or a partnership? • Estates nership. Members of a family 3. Do you file any of these tax • Real estate mortgage investment can be partners. However, family returns: Employment, Excise or conduits members (or any other person) Alcohol, Tobacco and Firearms? • Nonprofit organizations will be recognized as partners 4. Do you withhold taxes on • Farmers’ cooperatives only if certain Internal Revenue income, other than wages, paid to a • Plan administrators Service criteria are met. nonresident alien? Also, if you provide health insurance Husband-wife partner- 5. Do you have a Keogh plan? for employees, you may need a ship. If spouses operate a busi- 6. Are you involved with any of the National Standard Employer Identifier ness together and share in the following types of organizations? for electronic health transactions. profits and losses, they may be considered partners whether or not they have a formal partner- generally not recommended for and subject to double taxation ship agreement. owner-operators. both at the corporate and indi- LIMITED LIABILITY COMPANY. CORPORATION. A corporation vidual level. To set up a C Corp, The LLC is a common form is different from a sole propri- you must file articles of incor- for independent owner-opera- etorship or partnership because poration with your state. Do-it- tors with their own authority. it is treated as a separate entity yourself kits are available, but it’s Like the S Corp (discussed from its owners, shareholders best to hire an attorney to avoid below), the LLC offers protec- and employees. Incorporation mistakes and to address state tion for owners, and profits can laws differ from state to state. laws. This usually is not the best pass through the owner’s per- Setup cost varies from a few choice for an owner-operator. sonal income tax return if the hundred dollars to a few thou- S Corp. This allows the LLC has a sole-proprietor tax sand. In addition, incorporating driver, still an employee, to designation. This means you requires numerous forms, re- report the income of the S are not subject to double taxa- cords and formal annual meet- corporation on his personal tax tion such as in a C Corp. LLCs ings. Incorporating outside your return. Since the income is tax- generally are simpler and more home state can lead to problems. able at the individual level, no flexible than corporations. Normally, incorporating is not double taxation exists. S Corp However, an LLC can have a good choice for owner-opera- earnings are not subject to an S Corp designation, in tors because costs usually exceed self-employment tax, but com- which case taxes are filed benefits. pensation must be considered similarly to an S Corp. Each There are two types of corpo- “reasonable” or it immediately state treats LLCs differently. rations. will be a red flag to the IRS and For instance, if the LLC is set C Corp. The corporation potentially trigger an audit. A up in Wisconsin and an ac- pays taxes on the income it good rule of thumb used by ad- cident occurs in another state, earns. The driver is an employee visers at ATBS is to think about liability protection may be of the corporation and should setting up an S Corp when net affected. LLCs can be expen- receive a payroll wage W-2 from earnings consistently begin to sive to set up. the corporation. If the driver exceed $70,000-$75,000 yearly. LIMITED LIABILITY PARTNER- does not receive a payroll wage At that point, tax savings will be SHIP. The LLP can be expensive W-2, the amount taken out of greater than the costs to set up and complicated to set up. It’s the corporation is a dividend and run the corporation.

38 | In partnership with Overdrive and ATBS

PIB19_CH7-9.indd 38 8/21/18 7:53 AM 10 CHAPTER

TRUCK BUYING, LEASING, FINANCING DETERMINE YOUR BEST METHOD FOR ACQUIRING A TRUCK

t’s no secret that monthly payments include from buying through a carrier’s affording a new tractor principal and interest. With lease-purchase plan. has become more many finance contracts, you Traditionally, few owner- I complicated for owner- pay more interest per payment operators take this route toward operators and many smaller in the early years, and pay acquiring equipment, though carriers over the past decade down more of the principal per there’s evidence that with the as equipment costs have risen payment in the later years. rising cost of new trucks, it’s be- dramatically. Nonetheless, as LEASING. Leasing is similar coming more common. Mainte- acquisition patterns change, to renting. You pay for the nance contracts included as part one of the most basic decisions use of a truck that is not actu- of the deal, where the leasing you need to make remains the ally yours. When the lease is company assumes responsibility same: whether to buy or lease. up — usually in three to five for most maintenance, could be Each option has advantages years — you do not own the good insurance against emis- and drawbacks. truck as you would if it were sions-system issues seen in 2007 PURCHASING. When you financed; you return it to the and later model-year diesels. take out a loan and arrange to lease company. However, you finance a truck, you are buying can elect to purchase the truck DEFINE YOUR BUSINESS the vehicle and will own it at at a predetermined price. This Most potential owner-opera- the end of the contract. A loan residual value of the truck is of- tors wouldn’t dream of going requires monthly payments, ten agreed upon in the original usually over four to seven years lease document. Leasing mod- for new power units. Your els can vary greatly and differ

Questions? Call ATBS: (888) 640-4829 | 39

PIB19_CH10-12.indd 39 8/15/18 8:13 AM to a carrier without already Before talking with a sales owner-operator? Are you required having a truck. Any reputable representative about buying or to buy base plates at startup? carrier representative will be leasing, make sure you can an- Does your carrier require ad- eager to talk with you and swer a few key questions: ditional purchases, such as an help you understand his op- • Does the carrier have tractor onboard communications sys- eration before you own the restrictions that will affect your pur- tem? When are these required? truck. As you talk with poten- chase? Some companies won’t • How much will you need as a tial carriers, further outline use trucks that are beyond a down payment for insurance? your business model. This is a certain age, or may require ad- • What are you being paid per great opportunity to spec the ditional items such as a head- mile or percentage, and what are right truck for the work you ache rack. the average miles per month you can are planning. • What fees apply to you as an expect to run? Dispatchers and

BUYING/LEASING COSTS

This chart shows differences between traditional loan financing versus TRAC and full-service leasing in buying a $150,000 truck. Full-service lease, including maintenance, truck registra- TRAC lease with zero down, tion, IFTA administration, ve- Traditional loan financing with 15 percent ($22,500) residual hicle replacement in the event zero down, 7 percent interest at lease end of downtime, etc.

Loan term: 60 months Lease term: 60 months Lease term: 60 months

Monthly payment: $2,970 Monthly payment: $2,539 Monthly payment: $2,300 + 7 [+ an average $375 reserved cents/mile = $2,853 (assum- monthly to make ending residual ing 100,000 annual miles) payment]

What you have in the end: What you have in the end: What you have in the end: Ownership, with the ability Ownership, with the ability Continued liability for a to earn income without the to earn income without the monthly payment. Options sizeable monthly payment sizeable monthly payment generally would be limited to starting a new lease or turning in the truck, though inking a new deal to finance the truck’s remaining market value to take ownership, de- pending on the leasing com- pany, may be an option

What you don’t have: What you don’t have: What you don’t have: $178,211 in principal and $174,840 in lease and re- $171,180 or a truck unless interest sidual payments you start a new lease or financing agreement

40 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 40 8/15/18 8:13 AM cure equipment financing. Your TRUCK LEASING TIPS credit history could contain • Spec the most common type of they are well within the mileage plans wrong or harmful information truck for your application to maximize of your operation. Be aware of altera- that you’ll want to explain to resale value. tion restrictions. a potential lender. Always be • Compare the stated residual value • If responsible for maintenance, upfront about your problems. with the resale value of a similar truck. make sure warranties pass through Showing you have overcome Ask to see the truck’s maintenance to you. hard times demonstrates deter- records before signing the lease. • Find out when payments are due mination and strong character. • Don’t rush. Check out two or more and what to do in case of an accident When you apply for a loan, lease deals. If possible, have an ac- or damage. be prepared to provide as countant or attorney look at the deals. • Understand the conditions under much information as you can. Try to negotiate. which you can get out of the lease. Show the lender you are a busi- • Get a written cost comparison • Before signing a lease, consider ness owner first and a truck between an outright purchase and maintenance funds. (See Chapter 12 a lease from each dealer. Have your for savings amounts for the truck as operator second. accountant assess each. it ages.) You’ll need a budget, a cash- • Make your lease term as short as • Understand how the IRS views flow statement and a business possible, and know what happens at the agreement. If the lease does not plan. the end of the lease. include a buy option, you cannot de- A detailed budget will assure • Make sure there are no mileage preciate the vehicle, but you can write the lender you can meet the fi- limitations. If there are, make sure off payments as an expense. nancial obligations of owning a truck. A cash-flow statement shows your projected revenue other owner-operators may loans, such as cars or houses, will be sufficient to meet cur- be more candid than other are lowest because assets are rent obligations. A business company representatives. See backing them up. A bank’s plan outlines the details of Chapter 13 for more on choos- business loan often is about 1 your operation, including the ing a carrier. percent a month or 12 percent types of freight you’ll haul, the annually, though good-credit traffic lanes you’ll run and the FINANCING YOUR borrowers in recent years have rate you’ll be paid. It also lists EQUIPMENT seen rates as low at 5 percent the name, address and tele- Financing a truck can be on truck loans. phone number of the compa- frustrating, confusing and Get a copy of your credit re- ny to which you plan to lease, time-consuming, especially for port before you attempt to se- as well as a contact name to first-time buyers. It also can be costly if you are not prepared. The more deliberate you are WARRANTIES about this process, the better One of the biggest misconceptions is such that they can’t keep up with your position. Give yourself about warranties is that they are recommended maintenance savings. plenty of time to shop for a bumper-to-bumper. Most warranties, Warranty costs increase with equipment truck and for favorable financ- especially on used trucks, are limited. age but can decrease with a major ing. Visit dealers and ask ques- All the same, robust powertrain war- investment, such as an engine or trans- tions. Know what risk you pres- ranties, even those applied late in the mission rebuild. ent for a potential lender. life of a used engine, have saved many With both new and used equipment The good news is that truck an operator’s bacon. They’re effective warranties, take as much time as you loans, like business loans from a insurance against premature failure. need to understand the warranty being bank, usually have much lower Owner-operators still making payments offered. Gain a solid understanding of rates than credit cards. Loans on their truck or rebuild loans will claim procedures, such as who accepts for trucks and other secured benefit, as will operators whose income and rejects claims.

Questions? Call ATBS: (888) 640-4829 | 41

PIB19_CH10-12.indd 41 8/14/18 4:54 PM WHAT ABOUT BUYING USED? end ratio, tire sizes and styles, weight, doesn’t have this information or otherwise accessories, auxiliary power units or puts you off, move on. Other dealers will The market for used trucks, favored other idle reduction technology, mileage, work with you, and their cooperation is by owner-operators in a majority of sleeper size, etc. Specs properly matched critical to making the right decision. Take purchases, is better than it has been to your application also contribute to time to research the operation in which in years. Thanks to a higher volume of better fuel economy. Most used trucks the truck has been used, whether it’s been newer used trucks becoming available, were not spec’d for optimal fuel mileage, parked for extended periods of time and prices have dropped. Also, interest rates so dig deep to find what you need. what preventive maintenance has been are in owner-operators’ favor, particularly START YOUR SEARCH. Many online done. If the truck came from a large fleet, those with good credit. resources are available to search for chances are its maintenance records are While the supply of used cars is almost used trucks. A simple Google search will available. endless and the cars on a lot near you get you started. List all truck models SCHEDULE INSPECTIONS. Three will be the same cars at any dealer that might meet your criteria; in the separate inspections are ideal, performed across the country, it’s not so simple for beginning, you might want to try to by shops other than the selling dealer: commercial trucks. match your criteria exactly, but if you • Engine inspection by an original EVALUATE COMPONENTS AND are having trouble, lighten up a bit on equipment manufacturer shop (i.e., a FUEL EFFICIENCY. The model alone the requirements. Give yourself plenty Detroit Diesel garage for a Detroit engine), tells you very little. Because trucks can of time: 30 to 60 days is not out of the including tests for dyno, engine blow-by, be spec’d so many ways, you need to question. Be persistent. oil analysis and charge air cooler, and know much more about components NARROW YOUR LIST. Once you have an evaluation as to whether the engine’s in a particular vehicle — the engine, found three to five trucks that meet condition is reasonable for its mileage. transmission, rear-end ratio, horsepower your key requirements, rank them by • Front-end inspection. This provides a and torque settings, component weights your preferences. Run a VIN check online good indication of how well the truck has and weight limits, etc. These specs can through services such as RigDig.com to been maintained. impact your profitability, so make sure get as much history as possible; you will • Finally, a bumper-to-mudflap you get the right truck for the job. find ownership history, insurance claims, inspection by a well-qualified mechanic. With your application in mind (type of accidents, mileage history and more. Ask the mechanic for his opinion on the freight, regions of haul, expected weight, When you find a clear reason not to buy a truck overall, including the condition of etc.), spec the truck from the bumper to certain truck, put it aside and move on. all major systems. the mudflaps. The first two priorities are RESEARCH IN DEPTH. Call the dealer If you are diligent each step of the always fuel mileage and low maintenance and get as much information as possible: way, you should be confident in devoting cost. The things to consider include maintenance history, full ECM reports, increasing amounts of time and money body style, engine, transmission, rear- pictures, even video. If a dealer says he toward making the right choice.

verify that lease. to lend money for an over-the- because they are in the business If you plan to run inde- road truck. In their opinion, of selling trucks. pendently, you’ll need to list “rolling collateral” is not a USED TRUCK DEALERS. Your contact information for your good risk. If you’ve been doing dealer may refer you to lend- customers. Bring your lender a business at the same bank for ers other than captive finance list of credit references, even if a long time, however, and have arms. you don’t have a perfect credit an established relationship with COMMERCIAL LENDING IN- history. Include present and a loan officer, it could be worth STITUTIONS. These finance past creditors. taking this route if your credit companies are not necessarily is good. affiliated with truck manufac- FINANCING SOURCES CAPTIVE LENDING INSTITU- turers, but certain ones cater to There are multiple options TIONS. These finance compa- the trucking industry. for borrowing money. Check nies are owned by equipment around for the lender that best manufacturers. They often are GETTING THE MONEY suits your needs. more willing than banks to lend The cost of borrowing is gen- BANKS. Banks are reluctant money to new owner-operators erally low right now, so with

42 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 42 8/14/18 4:54 PM good credit, you should be able situations. These options in- used to 72-month loans — the to get a good loan. With an “A” clude: owner-operator’s favorite — try credit score above 700, a bor- Variable rates. Most truck to make a 48-month deal work. rower often can get a loan for loans have a fixed interest rate, Qualifying for a good rate. Big 5 or 6 percent. A “B” credit which means that you pay the contributing factors to interest score between 650 and 700 will same rate throughout the term rates are how much you put be around 7 to 9 percent, and of the loan. Sometimes you down, the type of truck you a “C” score between 600 and can get a variable rate. This buy, your credit score and your 650 will be around 9 percent usually is a good deal if prime loan-to-truck value ratio. to the low teens. A credit score rates hold steady or drop, but For owner-operators with much lower than 600 might if rates go up too much for too good credit and who have a make it difficult to get a loan long, you might end up paying sizable down payment, local right off. more than you would have un- banks can offer rates below 10 Whatever type of financ- der a fixed-rate loan. percent. Those with credit is- ing you choose, keep in mind More principal up front. With sues could see rates higher than that truck loan interest rates this option, your monthly inter- credit card rates. can vary by two or three per- est charges and payments de- Though some owner-opera- centage points from lender to cline over time. Having lower tors may find it difficult to get lender, or even more – a poten- payments in the latter part of financing, lenders today are tial difference of thousands of the loan helps in two ways: It much more willing to work dollars in interest costs over the gives you more cash for truck with used truck buyers than life of a loan. maintenance as the truck ages, in recent, tougher years. The No matter where you obtain and it allows you to save for upturn in freight over the three financing, the following can your next down payment as the to four years preceding 2016 affect your interest rate: time to trade approaches. brought many lenders back into • Credit history. People who Skip-payment plan. Designed the business. have good credit get the lowest for truckers with seasonal While the price of trucks con- interest rates. freight, this plan allows you to tinued to get higher, the ability • Stable job history. Job- miss a payment or two during to make an economic return hopping indicates a lack of re- slow times. You make the ar- with that investment was there. sponsibility and rings the alarm rangements at the time of pur- At the same time, high-mileage for a lender. chase. A variation is an exten- trucks make lenders more • Longtime residency. People sion of the first payment, say hesitant, and they’ll also want who live at the same address to 45 days, something many decent down payments, often for a long time usually have a lenders are willing to do if your around 20 percent. better credit rating. credit is strong. First-time buyers could Don’t take the first financing Programs for buyers low on see interest rates of 18 to 20 option you’re offered. You can cash or credit. Some owner- percent, and first-time buyers negotiate loan rates just as you operators without the cash for a and buyers with credit prob- can haggle over the price of big down payment or access to lems should be wary of service a truck or the rate on a load. favorable loans have seen success charges that could add $1,000 Interest rates vary because buying in carrier sales programs or more to monthly payments. of many factors, and finance for used fleet trucks. Unlike Many lenders are using past managers have some leeway many lease-purchases in such credit scores to “dig deeper” when setting a rate for you. programs, buyers do not have to into buyers’ credit profiles in be affiliated with the carrier. today’s market. Yearly earn- TWEAKING THE LOAN A shorter loan period. This ings, business longevity, how Some finance companies offer means higher payments but long you’ve had a commercial creative solutions for particular big savings in interest. If you’re driver’s license, a recent home

Questions? Call ATBS: (888) 640-4829 | 43

PIB19_CH10-12.indd 43 8/14/18 4:54 PM foreclosure or truck reposses- agreement are spelled out. make sure you know the total sion, and items that show up Work up a budget to get an purchase price. The cost of on public records all have a idea of what truck payments interest isn’t the only factor. bearing on your financing. you can afford and how much Given the price and condition Meeting debt obligations revenue you’ll need to cover of a truck at the beginning of and saving for a 25 percent payments and other financial the lease, you should make an down payment should open obligations. Given the age of informed estimate of what it the door for a first-time buyer’s the truck, estimate what it will will be worth by the time you financing. Those buyers also do be worth when you complete take ownership. Otherwise, well if they have three to four the contract. you run the risk of having little accident-free years in trucking. Many carriers offer no-mon- equity to put toward your first ey-down contracts, but this of- trade. Some buyers have come LEASE-PURCHASE ten means higher periodic pay- to final payment only to find PLANS ments. Be alert to the amount the truck is worth less than the Lease-purchase plans are of any balloon payment at the amount owed. somewhat well-used paths to contract’s end and how you’re COMPARE LEASE-PURCHASE truck ownership, particularly going to save for it. PROGRAMS. If you haven’t among operators with other- The terminal rental adjust- been with a company long, es- wise shaky credit, but Overdrive ment clause (TRAC) lease, tablish trust with management surveys of recent history have the basic form of the lease- and learn the details of the op- shown fewer than a fourth of purchase, is intended to allow eration. Once you understand all owner-operators purchasing shared responsibility between your company’s lease-purchase trucks this way. Carrier lease- the lessee and lessor. program, call other carriers purchase programs generate the It gives the owner-operator and compare their programs. most controversy for practices the right of ownership at the RESEARCH YOUR COMPANY’S that favor the company at the lease’s end while reducing FINANCIAL STABILITY. Most owner-operator’s expense. cash outlays over that term. lease-purchase programs tie Common complaints in- The operator can choose to you to the company until the clude abnormally high weekly pay the residual, or balloon, at end of the lease, so the compa- payments, mileage reduction the term’s end or opt to take ny’s health could impact your toward the end of the contract, whatever equity he or she may ability to complete the lease. If undisclosed fees and charges, have — if the truck is worth the company is publicly traded, and the inability to transfer the more than the residual amount its financial picture is available leasing arrangement to another owed — and move into a dif- online and elsewhere. If it’s carrier. But some carriers live ferent truck, using the equity private, don’t be afraid to ask up to the commonly expressed as a down payment. Secured about its long-term financial intention of developing an directly with a dealer’s finance prospects and debt level. Learn owner-operator base and help- department, a TRAC lease about its reputation within the ing contractors develop their generally will be available only industry. businesses. to those with better credit than Research the economic out- If you have questions after is required of a traditional loan look for its primary shippers. reading the contract, consider in today’s world. A downturn in freight could hiring a lawyer or financial ESTIMATE TRUE COSTS. reduce your miles and destroy adviser to review it. Make sure Calculating the total cost of a the chance of completing your items such as down payment, truck under a lease-purchase lease. weekly or monthly payments, plan can be difficult. It’s easy CHECK OUT THE TRUCK YOU maintenance escrow account, to hide the amount of interest INTEND TO LEASE. Ask to see length of contract and what in vehicle leases. Beyond know- maintenance records, and in- you’ll owe at the end of the ing the monthly lease payment, quire about any major repairs.

44 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 44 8/14/18 4:54 PM USED AND NEW EQUIPMENT INVESTMENT: TAX IMPLICATIONS

The tax-related legislation that four-year depreciation schedule. the $60,000 taxable income, leaving went into effect in late 2017 tempts For example, consider a $150,000 a $30,000 loss. In both years, no tax businesses of all shapes and sizes truck purchased by an owner-operator is paid. to invest in equipment in exchange with an annual net income of $60,000, • In year three, the previous year’s for expanded ability to carry losses a figure close to recent annual $30,000 loss would carry forward but forward and reduce taxable income. averages among the entire owner- could leave as much as $30,000 in While no owner-operator purchases operator population: taxable profit, not considering other equipment merely for the tax write-off, • Under the new tax rules, in the deductions. know that new rules allow through first year, $150,000 depreciated would • Finally, in year four, no 2022 the entire cost of a new- or leave a $90,000 loss to carry into the depreciation losses from the truck used-truck purchase to be written off next tax year. purchase remain to be carried forward. as a business expense in the year of • In year two, the $90,000 loss See Chapter 8 for more about tax purchase rather than the standard carried forward would again zero out options for depreciating equipment.

Make sure all recalls have been and saving money, but some plan eventually take ownership addressed and problems fixed. lease-purchase escrows give of their tractors? If warranties are offered, study limited or no control over your the terms. use of the funds. There might CLEANING YOUR CREDIT Ask how many times the be a minimum balance require- Bad credit adds tens of thou- truck has been leased. This not ment that forces you to pay out sands of dollars to the price of only will give you insight into of pocket for a repair. a truck or a house by increasing the equipment itself, but also Other escrow accounts can the cost of borrowing money. the lease-purchase program. be required, such as a security During the late-2008 credit Numerous leases on a par- escrow to cover expenses the crunch, lending terms tight- ticular truck should be a red lessee fails to pay. So make sure ened, though they’ve loosened flag. that you can get the escrow recently. However, having good BE PREPARED FOR THE PAY- balances back when you com- credit continues to be important OFF. In the case of an end-of- plete the lease or if you change and pays off in much better lease balloon payment, devise carriers. rates than what bad-credit bor- a financial plan that will ensure ASK QUESTIONS. If you’re rowers are forced to accept. you can make that final pay- thinking about a lease-purchase An owner-operator with bad ment. Calculate what you will plan, ask the carrier: credit may get turned down by owe compared to the truck’s esti- • What happens if I want to the fleet to which he hoped to mated actual value at that point. change carriers? lease. He may get turned down You don’t want to be underwater • Is there a penalty for early by a government agency when at the end of the lease – owing payoff? he applies for a loan to pur- more than the truck is worth. • Will an accurate account chase a low-cost anti-idling kit. Nor do you want to make pay- of payment show up in every Lucrative military or otherwise ments for years and have little settlement? sensitive freight might never go or no equity because you can’t • Will I be able to show a onto his truck because the Pen- make that final payment. profit after payments are de- tagon or other shippers don’t UNDERSTAND ESCROW AC- ducted? consider him a good risk. COUNTS. A maintenance es- • How long before I own the Keep in mind that for a self- crow (also see Chapter 12) can truck? employed person such as an be helpful if you are inexpe- • What percentage of lease- owner-operator, personal credit rienced with a truck’s upkeep purchase participants in your and business credit are indis-

Questions? Call ATBS: (888) 640-4829 | 45

PIB19_CH10-12.indd 45 8/14/18 4:54 PM tinguishable. Self-employed have to put down 20 percent can find a card that will enable people sometimes want to or more as opposed to the you to do that without costing show a loss at year’s end for tax traditional 10 or 15 percent. you more in the long run. My- purposes, but that negative net Buyers with a credit score in FICO.com offers a free online income looks bad to a lender. the 500s, on the other hand, calculator that can show you When you seek financing may be out of luck outside of whether such an offer really is from a truck manufacturer, a lease-purchase arrangement a good deal. your local bank or any other – at least temporarily. • Avoid signing up for new lender, you can try to make The Used Truck Associa- cards. The average American clear to the loan officer the dis- tion recommends this three- makes fewer than two credit tinction between your business step process for climbing out applications a year, so if you finances and your personal fi- of a bad-credit hole: do even three in a given year, nances. Credit bureaus, howev- Be willing to start with a you’re hurting your credit er, don’t make that distinction; cheap used truck, coupled score. Your ideal ratio should they just crunch the numbers 1with a strong maintenance sav- be one credit card for each in- to determine your credit rating. ings plan. stallment loan, up to five cards. Here’s a breakdown for how Bite the bullet on interest That means your truck loan your credit score is calculated: rates. You might pay 18 or “earns” you one credit card, • Your payment history: 35 220 percent interest, but on a your mortgage a second credit percent. $20,000 truck, that means only card and so on. • Outstanding debt: 30 per- an extra $30 to $40 a month. • On the other hand, if you cent. Work on improving your have an old credit card that • The length of your credit credit rating and qualifying you barely use anymore, don’t history: 15 percent. 3to refinance the loan at a better be too quick to close it out. Its • The types of credit you rate in a year or two. mere existence provides a boost use: 10 percent. There are many ways to to your credit score, 15 percent • The new credit you re- improve your credit rating, of which depends on the length quest: 10 percent. though it takes time. The obvi- of your credit history – or, in The good news is that even ous ones include: other words, how long you’ve the worst credit situation can • If you’re in arrears on any been someone’s good customer. be improved. As little as two or accounts, pay what you owe — • Don’t co-sign a loan, even three years of good payment including penalties — as fast as if you’re trying to help out a behavior can make a positive possible, even if it means living close friend or relative. In many difference in your credit score, off Ramen noodles. states, if the primary borrower which assigns more weight to • Pay bills, including all misses payments, the creditors recent acts than to older ones. personal bills, on time. Often can turn to the co-signer for In the meantime, lenders are this means making a business satisfaction. You could lose your out there for truck buyers even budget and a household budget truck – even your house. with C-level and D-level credit, and sticking to them. • Use what you save. Once especially in the used-truck mar- • Reduce your credit card you’re current on your truck ket. And certain carriers always balances. The ideal is to pay and mortgage payments and are looking to groom owner- off each one monthly to avoid have paid off your credit card operators, providing bookkeep- interest, but even if you can’t debt, you’ll have extra money ing and business advice to help manage that just yet, pay them each month that’s no longer those clients succeed. down until each balance is no being spent on interest and In the general lending mar- more than half the card limit. penalties. Put this “found mon- ket, those with a credit score • Consolidating your credit ey” into your emergency fund in the low 600s probably can card debt onto one card can or your retirement savings, or find a lender but likely will be worthwhile, but only if you invest it.

46 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 46 8/14/18 4:55 PM 11 CHAPTER

CHOOSING A TRAILER SPEC’ING SMARTLY CAN INCREASE YOUR PROFITS

s a trailer worth the and this is not out of the without a trailer. investment? For many question for leased owner- Even if that spread seems owner-operators, yes. operators. One big advantage promising, consider how using I It can take less than of trailer ownership for many your own trailer will affect your four years to earn back that owner-operators is the peace freight arrangements. investment, even when buying of mind in knowing who’s in As long as a leased owner- new equipment. charge of maintaining trailer operator can stay busy without According to Overdrive re- tires, brakes and other equip- incurring too many out-of- search, most independent ment. On the other hand, that route miles, the investment in a owner-operators already own maintenance is a chore — and trailer could be worth it. their own trailers, as do about an expense — that bobtail-only An owner-operator who half of leased owner-operators. owners don’t have. owns a trailer also has more re- While some leased operators Many fleets pay more to driv- sponsibility for staying loaded, don’t have the pressing need ers with their own trailers, but as company drop-and-hook to provide a trailer that most it can be tricky to determine if operations are mostly off-limits, independents do, they often that premium is worth the add- and there has been an increase find trailer ownership has sig- ed costs of ownership. New dry in drop-and-hook freight in re- nificantly added earning poten- vans cost about $30,000, and cent years. tial. Leased owner-operators maintenance costs, primarily who own their own trailer for tires and brakes, often aver- SMART TRAILER gross about 6 percent more, or age at least $1,500 a year. SPEC’ING $10,000 annually, than those To assess the value of bring- Factors such as maintenance who don’t. They keep more ing your own trailer into a lease expenses, longevity and han- than half that. arrangement, add the expected dling ease play vital roles in Some independents own revenue with a trailer, and sub- more than one trailer so they tract the estimated associated can haul van freight one day costs. Then compare that num- and flatbed freight the next, ber to the expected revenue

Questions? Call ATBS: (888) 640-4829 | 47

PIB19_CH10-12.indd 47 8/15/18 11:33 AM the frequency, the faster the ture guard liner to protect the LEASED OPERATOR equipment wears. trailer interior against punc- TRAILER OWNERSHIP Consider your trailer’s ver- tures, thermoplastic coating PROS satility, spec’ing the size, model, to apply to suspensions and • Increased revenue style and axle and suspension landing gear, and a steel liner • Confidence in condition of configuration so you can run with a rigid backing instead of equipment the trailer in several states, as a plywood liner. • Depreciation savings in first three REDUCE WEIGHT. ownership years well as in Canada. If you in- Weight • Opportunity to customize operation tend to haul in California, be reduction helps operators who to fit your needs aware of laws that involve trail- typically “load out” at 80,000 ers. California is the only state pounds because it means addi- CONS that has an axle spacing law tional payload capacity. It also • Increased maintenance costs • Increased administrative costs that requires a distance from helps those who usually “cube (insurance, plates, etc.) the kingpin to the rear axle be out” because for every 300 • More responsibility for staying 40 feet or less. In other states, pounds you eliminate, you gain loaded 43 feet is typical. Spec’ing 0.2 percent in fuel efficiency, • Possible reduction in total loaded a sliding axle will give your experts say. miles due to less drop-and-hook trailer the versatility to meet The biggest weight saver is standards in California and spec’ing aluminum, which also other states. is more corrosion-resistant than getting what you want in a MINIMIZE MAINTENANCE. steel. You can spec aluminum trailer. You won’t realize low Spec premium quality for side posts and roof bows in dry cost per mile if your trailer components such as long-life vans. Aluminum can be substi- breaks down, is expensive to brake linings, wide brakes, tuted for steel in crossmembers maintain or can’t handle your long-life wheel ends and seals. that support the floor and for loads well. Knowing definitive- Controlling corrosion also hardwood flooring. Aluminum ly what you intend to transport, will reduce maintenance wor- rims can replace steel disc where you plan to work and ries. You’re reducing cost per wheels. how long you intend to keep mile and maintenance costs SPEC FOR FUEL SAVINGS. the equipment will help you by spec’ing special coatings The same physics that ap- balance price with projected that protect trailer parts. Some ply to tractor fuel economy maintenance costs. Smart trailer manufacturers offer improvements can be applied choices will keep your operat- galvanizing to protect door to the trailer. The more aero- ing costs low and your resale frames, hinges and the entire dynamic the tractor, the more value high. subframe. critical it is for the trailer to KNOW YOUR APPLICATION. Spec’ing any system that play a complementary role At spec’ing’s core is under- eliminates wearable parts will in streamlining airflow. Stud- standing your application. minimize maintenance. ies have shown that the fuel- Hauling heavy-footprint prod- Hendrickson’s Intraax sus- economy difference between ucts such as paper rolls requires pension integrates the axle into a typical fleet van and a more higher floor ratings. Applica- the beam with no wearable aerodynamic trailer is 1 mile tions with additional equip- parts on the axle connections. per gallon or more. ment such as automotive racks In reefers, a glass-reinforced An owner-operator could require interior designs that thermoplastic liner can reduce add $10,000 or more to his protect the trailer from damage maintenance expense and help bottom line in one year by us- during loading and unloading. the trailer maintain excess ing a trailer with strong aerody- Loading cycles can vary cooling capacity, reducing op- manic features. That means the greatly – from weekly to mul- erating costs. Similar premium trailer would pay for itself long tiple daily loads. The greater products could include a punc- before it wears out.

48 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 48 8/15/18 11:33 AM 12 CHAPTER

MAINTAINING YOUR EQUIPMENT ROUTINE PM WILL SAVE MONEY OVER TIME AND HELP DETERMINE WHEN TO TRADE

reventive when to change if at more dis- gets too dirty also will prolong maintenance can tant intervals. Also important is life. Using quality fuel filters be expensive, but using quality oil and filters, as will, in turn, prolong injector P neglect is even well as timely coolant servicing life. Various long-life antifreeze more costly. Systematic PM (including system flushing), be- options, such as extended life saves you money in the long cause these practices will help coolants and coolant filters that run by reducing the chances make an engine last longer. add supplemental coolant ad- of equipment failure on the Using synthetic transmission ditives on a controlled basis, road and reducing time lost to and axle lubes and changing at should be considered even repairs. It also helps reduce the required intervals also will help though the initial cost may be severity of failures if they do the life of those components. higher. occur. Some industry estimates Don’t neglect other less-fa- A simple maintenance plan say preventive maintenance miliar practices. Adjusting the that doesn’t require technical can cut breakdown costs in overheads after break-in and skill and special equipment will half, and a properly maintained then at the required infrequent include tires, engine oil, wip- engine will last much longer intervals saves fuel, reduces oil ers, lights, filters, coolant and and also use less fuel. sooting and wear, and is likely Nearly all owner-operators to prolong the life of both change their oil often or use oil valves and injectors. Replacing analysis to determine precisely injectors before combustion

Questions? Call ATBS: (888) 640-4829 | 49

PIB19_CH10-12.indd 49 8/14/18 4:55 PM belts/hoses. A more technical PM will include brakes, drive SAVING FOR MAINTENANCE axles, wheel seals, transmission, batteries, exhaust, driveline, Every good PM schedule begins with establishing a maintenance escrow savings suspension, steering, clutch and account. An industry standard for maintenance escrow savings is based on a engine. time-proven formula: AN OUNCE OF MAINTENANCE ESCROW SAVINGS SCHEDULE Age of Truck Maintenance Savings PREVENTION New 5 cents/mile Become familiar with every 1 Year or 150,000 miles 6 cents/mile inch of your truck, and know 2 Years or 300,000 miles 7 cents/mile which components can fail and 3 Years or 450,000 miles 8 cents/mile under what circumstances. You 4 Years or 600,000 miles 10 cents/mile don’t have to be a mechanic, 5 Years & older or 750,000+ miles 15 cents/mile but you should be familiar with a truck’s mechanical opera- tion and how systems interact. these problems, have a quali- give advice about oil changes, Manufacturers recommend fied technician inspect your rig lube and filter replacement, a standard PM schedule for every six months or even more and other maintenance. Take every model. The Technology frequently. An alternative is advantage of your leverage & Maintenance Council of having lubrication service done before you buy to get all the the American Trucking As- at a dealer or truck stop where information you can. Manu- sociations also provides PM experienced technicians will facturers’ websites often offer guidelines for tractors and look for problems as they work. detailed information. trailers. Follow these schedules The same can be said for Separate warranties often are diligently, and you’ll head off a maintaining a trailer. For a written on the engine, trans- lot of trouble. dry van, check the suspension mission and other components Daily pre-trip inspections, re- during pre- and post-trip in- because they are supplied by quired by the U.S. Department spections, perform a pre-load different entities. Find out the of Transportation, can help adjustment and annual inspec- duration of the warranties and identify problems before they tion on the bearings, check the what it will take to maintain become emergency situations. brake lines regularly, and check their validity. You might want A leaking differential should be tire inflation and wear regular- to consider extended warran- repaired before the lubricant ly. Also replace the work scuff ties when available. loss causes component failure. liner to protect the trailer walls, Choose a dealer carefully. Early warning signs found by check the roof during pre- and Make sure its service depart- engine or driveline component post-trip inspections for holes ment has the technicians and oil analysis can alert you to and leaks, inspect the thresh- equipment to handle major serious problems before costly old plate often, and inspect repairs and that they have a troubles occur. If you have a the floor to spot weak spots or helpful attitude. Talk to the truck with more than 300,000 small holes. parts and service manag- miles, consider running a dyna- ers, and form a relationship. mometer test once a year. BEGIN AT THE DEALER From there, take the same Always look for common The best time to start a regular relationship-building approach problems such as seal leaks, PM program is when you’re to local tire and engine shops, loose bolts, chafed wires and buying your truck. If the dealer an alignment shop and an hoses, improper adjustments doesn’t volunteer detailed in- air-conditioning shop. Deal- and worn, broken or missing formation on maintenance, ask ing with pros who specialize parts. If you cannot recognize for it. A good dealer is happy to in one maintenance item is

50 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 50 8/14/18 4:56 PM be able to file warranty claims TIPS FOR BRAKE MAINTENANCE properly, and your profits will suffer. It’s no surprise that violations for brakes are among the most cited, given Good maintenance records their constant wear and critical safety role. While that’s enough reason to keep can help you determine aver- them in shape, another big factor is cost. age miles per gallon, expenses The cost of a brake-related mobile service repair easily can exceed $1,000, and that’s without a tow. on a per-mile basis and other Pre- and post-trip inspections are critical for identifying issues before viola- key benchmarks helpful in cut- tions occur. Obvious red flags include rust streaks, air leaks, oil stains, air lines ting costs. They also can help rubbing on crossmembers or frame rails, bad or missing gladhand seals and you spec your next truck. brake components that are worn, missing, broken or loose. Look at components such as air chambers that may be corroded or rusted. TIME TO TRADE Also check the air system for contamination or water, slack adjuster, brackets Maintenance costs typically and air lines that may be hanging low. rise in the third and fourth Also listen for leaks by building pressure in the air system while keeping the ownership years. Fifth-year parking brakes applied, then walking around the truck listening for leaks. When costs often drop because the doing this, look at your air gauges to make sure the compressor is building truck needs certain work in its correctly, and make sure none of the warning lamps are illuminated on your fourth year that isn’t required dash. Finally, inspect the pad thickness visually, measure caliper position with a the next. However, the cu- ruler, and inspect rotors for cracks every four to six months. mulative cost of maintenance Catching any of these issues during your inspections can eliminate acceler- — your average cost per year ated wear, brake damage and damage to other components. since you took ownership — and your cost per mile still in- crease each year. No matter how rigorous your key to holding costs down in work done on your truck and PM efforts, the time will come the long term. Take time to let prove that required work has when you’ll spend more on the service manager or even been done. Committing every maintenance than you would the owner of the shop know shop visit to paper and creating for a new truck. How will you your goals and plans. Ask their a calendar of scheduled visits know when that time comes? advice about maintenance will pay off. You also should Your maintenance records will scheduling. keep a schedule of future work tell you. Do things such as occasional- to be done. This schedule will Create a maintenance bud- ly taking pizza to the mechan- help you avoid overlooking get, and track your mainte- ics, which can go a long way something vital. nance expenses. When they toward building a relationship Devise your own mainte- rise to a point that seems exces- with the people who maintain nance service report, and use it sive, check with your business your truck. Also compliment to keep a record of every dollar services provider, who can the work once in a while in- you spend on your truck. Keep help you determine how much stead of complaining that ev- receipts on repairs. Keep old your fuel, oil and maintenance erything is too expensive. An- parts in case of a warranty dis- costs have increased due to the other way to build relationships pute. When you use the truck truck’s age. is through referrals; if you’re service report, note all war- Your insurance agent can happy with a shop’s work, rantable purchases and repairs, help determine how an equip- spread the word to others. and include a record of your ment upgrade will affect your out-of-pocket expenses such premiums. Your financing KEEP GOOD RECORDS as cab fares, meals and motel source can discuss various op- Only with complete and accu- stays related to time lost due to tions for the purchase of a new rate records can you track the repairs. Otherwise, you won’t truck, and your accountant can

Questions? Call ATBS: (888) 640-4829 | 51

PIB19_CH10-12.indd 51 8/14/18 4:56 PM EXTENDING OIL LIFE

Oil might cost more than you realize, considerations of extended drains. You wear metals. This tells if components especially if you’re not getting might need better capacity for dirt or are wearing out and which component maximum use of it. Do a typical change better internal construction. it might be. Lead and copper together yourself, and it still costs about $250 • Choose the right oil grade. All indicate bearing wear, while iron and or more for the oil alone. But assume premium oil refiners offer diesel oils that chromium together could mean cylinder you extend your change interval from are extended drain-capable. Lubes with and ring wear. Are necessary additives 15,000 miles to, say, 25,000 miles. That a lower initial viscosity grade number present in the correct quantities? The extension over the million miles of are better for cold starting under harsh test will tell, as well as if contaminants an engine’s expected lifetime would conditions. This allows many operators to such as fuel dilution, soot, water or save a lot. Allowing a modest amount curtail idling, which helps extend change coolant are present in dangerous for disposal costs and nothing for intervals. New oils that hit the market in quantities. Finally, the test will show downtime or labor, the total savings late 2016 are classified as CK-4 for pre- the oil’s physical properties, such as from adding 10,000 miles to change 2017 engines and FA-4 for 2017 or newer viscosity, total base number (TBN), intervals over 1 million miles would engines. oxidation and nitration. amount to almost $8,000. • Get routine oil analysis by a Good information also allows you Oil life is quite flexible. A competent qualified laboratory. At the point of a to correct budding problems before operator can extend that life potential oil change, the oil is either they cause damage. An oil analysis significantly by paying attention clean enough to keep using it or dirty, report indicating fuel dilution can be to maintenance and altering his already causing damage. Oil analysis is a sign of a failing injector; if that goes operational behavior. Minimizing idling a critical requirement to supplement unrepaired, it will cause excessive wear time alone will extend the life of oil proper maintenance. New engines exhibit metals and bearing failure. Coolant significantly because idling puts more levels of contaminants that remain from intrusion is another problem that can undesirable stuff in the oil than even initial construction of the radiator, oil go unnoticed but is detected easily hard driving. Responsible refiners are cooler and exhaust gas recirculation with oil analysis. Coolant in the oil will willing to stand behind their products cooler. Knowing not only the miles on the strip out the zinc and cause high wear even when extending changes. oil, but also the total hours the engine metals and ultimately premature engine Operating and maintaining your vehicle has run, is critical to knowing whether a failure. When you see high soot levels, or vehicles according to the experts contaminant is coming from outside and check the charge air cooler and for could allow you to extend changes likely to cause damage. exhaust restriction and low operating without fear of problems. If you buy oil from an oil supplier temperatures. and consistently use the same brand, When switching from the previous THREE KEYS TO EXTENDED DRAINS it’s possible the oil refiner will offer free CJ-4 oil to the new CK-4 or FA-4 oil, there • Use good filtration practices. Proper oil analysis. If not, ask your supplier could be changes in typical oil analysis filtration extends the life of oil. Use or engine dealer for information on a properties, such as levels of calcium, a filter that will meet all the engine reputable lab. A good analysis report magnesium, zinc and phosphorus. There manufacturer’s specifications, and will cost $30 to $50. Analysis should also might be a change in the typical always change it at the recommended be performed at every drain if using viscosity, but none of that should cause interval. Involve the filter supplier in extended intervals. The lab will test for problems.

explain potential depreciation point that a new truck would tenance and operating costs benefits that would accompany get an additional 2 mpg. An- of an old vehicle are higher a new purchase. other indication to trade is than the comparable costs Industry experts say you when your total maintenance attached to a new vehicle. should consider replacement costs reach 15 percent of your The estimated resale value of when your fuel mileage drops gross revenue. the old vehicle, coupled with 2 mpg or more in spite of con- As a rule of thumb, con- any manufacturer’s incentive servation efforts, or if truck sider a new purchase when on a new vehicle, may offset technology develops to the the principal, interest, main- the higher cost of a new ve-

52 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 52 8/14/18 4:56 PM icle principal and interet DIY MAINTENANCE RESOURCES t ti point a trade ae ene Draw on the wealth of maintenance coverage featured in Overdrive via the magazine’s website. A list of how-to articles as WAYS TO SAVE MONEY well as other stories, with links to the archived stories, is available ON MAINTENANCE via overdriveonline.com; search “Staying ahead of the inspectors.” en aed tee Areas covered include tires and brakes, lights and electrical systems, engine and done a poor o o preentie drivetrain, trailers and others. aintenance too an oner- operator a te ere trin to ae one t tere are top or areoe cain itance o idel ed an a to ae one on PLAN FOR EMERGENCIES. erice are te leetet aintenance itot ipin ront tire it a nail in it America (www.fl eetnetamer- and cortin diater ltiple lit ot ecae o icaco and ational rc STAY ON SCHEDULE. lan a ort circit or a ddenl rotection ntparrant or aintenance cedle ailed rae linin it pt co erice netor e a torol a o plan ti een te ot aintenance- i r rier ervie ee al and tic to it a oner-operator ot o red irer ntt- SHOP AROUND. e oner- coiion or ot o erice readonco i aailale operator cite price a teir if a DOT inspector fi nds the to earc or erice in par- priar actor in decidin problem fi rst. The industry’s ticlar area ere to teir oil e top trc enine tire and cer- CATCH OVERLOOKED ITEMS ie ore eit to cone- tain oter anactrer ae EARLY. Timely fi xes to these nience t oetie te cot created elp center ac- prole can redce toand o conenience can e i ceile ia a toll-ree ner o dollar a ear in operational r to do a e price copari- or proprietar artpone cot elpin aoid rea- on online or oer te pone application ee center can don and proidin etter epeciall i o aent done pt o in toc icl it erice to or ctoer o in ear lo loo into te te nearet erice otlet or • CHARGE AIR COOLER. e benefi ts of buying as part of a eerenc aitance it in ront o te radia- group or via a fl eet, a member- ndependent readon tor and loo lie a radiator t ip oraniation or a trc services off er similar as- i deined to cool pereated

TIPS FOR KEEPING THE LIGHTS AND REFLECTORS SHINING BRIGHT

Flickering or dim lights are usually pre- by technicians to penetrate the wire to conspicuity tape. These are required on failure symptoms that can be caused measure voltage or continuity. most trailers to be equipped on the sides by improper bulbs, damaged wiring or Looking at incandescent lighting and rear with a means of making them corroded sockets. A dim or fl ickering vs. LEDs, LEDs cost more but offer more visible. LED light is even more likely than an signifi cant advantages. A red Drivers can receive violations incandescent to indicate a problem incandescent lamp has a rated life for having defective refl ectors and beyond the light itself – most often of 5,000 hours, while a red LED lamp conspicuity tape and should make sure corrosion. has a rated life of 100,000 hours. refl ectors are free of cracks and dirt. Corrosion prevention starts by sealing LED technology also is resistant Conspicuity tape also can degrade over connections properly when the light is to mechanical damage, shock and time to the point where it no longer is installed. Grease also can further prevent vibration. refl ective, making that driver a sitting the damage of corrosion. It also helps to To prevent violations related to duck for a lighting violation or, worse, an remove any wire probes or picks used lighting, don’t overlook refl ectors and accident.

Questions? Call ATBS: (888) 640-4829 | 53

PIB19_CH10-12.indd 53 8/15/18 11:37 AM SPEAKING ‘DPF’ A DPF is not a spin-on-type filter cleaning cycle. At 130,000 miles, flow- like an oil filter or a cartridge-type test the filter, then again at the next You’re chasing sun on Interstate 40 out filter like a fuel filter. The ceramic filter service interval and the next one after past El Paso, Texas, maybe a little Willie itself, a little smaller than a loaf of that if it’s still OK. and Waylon on the stereo while you bread, sits in a metal canister that also Driving style, application and more gaze idly at the landscape. You’re won- acts as a collection device for soot. play into how often a DPF needs to be dering how long it will take to reach a WHEN TO CLEAN. Much like a cleaned. Vocational, urban and stop- peak on the horizon when a little yel- clogged catalytic converter on your car, and-go applications have much shorter low light on the dash winks on, spoiling a plugged DPF interferes with efficient intervals than long and heavy. Idling the serenity: Your diesel particulate exhaust flow. It can lead to compres- also can shorten the interval. filter needs attention. sion or combustion problems if left There are two types of DPF ash Since 2007, heavy-duty diesel en- untreated. In most cases, the DPF burns cleanings. One is changing out the DPF, gines have had DPFs installed to meet off accumulated soot through either a usually because it is chipped, cracked, increasingly stringent particulate- “passive” or “active” regeneration. burned or melted, which takes about 2.5 matter-emissions regulations from the Passive regeneration occurs be- hours. A full cleaning takes around four U.S. Environmental Protection Agency. tween 50-60 percent and above engine to five hours. In most situations, the warning lights load, when exhaust gas temperatures Cleaning is not cheap: A machine on operators’ dashes don’t mean the can rise to 570 degrees and above. to clean a DPF costs about $20,000, truck is in any real trouble. Neither is Under active regeneration, trig- which helps explain why getting the the engine. That light is just telling you gered by a series of steps taken by the unit cleaned can run you approximately a normal function in the life of a post- operator while the vehicle is stationary, $500. Replacing the DPF costs around 2006 diesel engine has to take place. the fuel doser ahead of the DOC in the $2,000. Even better news is that it probably system is engaged to bring tempera- If your engine is a 2010 or later will require very little of you. tures up to 1,100-1,200 degrees to burn emissions spec and you’re using Still, as with any truck component, off soot. diesel exhaust fluid for the selec- failures can happen. If you understand Either event is likely the reason that tive catalytic reduction system to DPF maintenance cycles, you’ll have yellow dash light came on. If the DPF separate nitrogen and oxygen in NOx a better idea of when you need to get warning light is blinking, this is what emissions, beware long periods of help and when you can get back to is happening. If the light comes on downtime (a month or more) in ex- watching the scenery. and stays on, it’s time to get the DPF treme weather and/or DEF stored for WHAT A DPF DOES. Any truck cleaned. long periods without climate control. manufactured after Jan. 1, 2007, has a While the regeneration process DEF is about two-thirds water, so if DPF. There’s actually a lot of heavier- burns off accumulated soot, it does it sits for long periods in extreme heat than-air stuff in diesel smoke. EPA calls not clean out the actual filter media or cold, it can lose some of its water it “diesel particulate,” better known as that traps the particulates. And be- content. A loss of just 1 percent of that soot. These are ultra-fine particles of cause the regeneration process will content can get active fault codes for elemental carbon with adsorbed com- not burn off all the ash, eventually it low-quality DEF, eventually causing pounds such as sulfate, nitrate, metals will collect in the canister and fill it your engine’s ECM to derate the engine and organic compounds. A DPF is engi- up. Work with a service facility to get by degrees. If you run out of DEF, it will neered to trap such particles. an idea of where your DPF is in its derate you to 5 mph.

air from the turbo before it gets Engine manufacturers differ level, at 2,500 weekly miles into the intake manifold for as to how much CAC pres- at 6 mpg and $3.50 per gal- more efficient combustion. sure loss is acceptable, usually lon for diesel, you’d be losing Seeing a water leak from a 5 to 7 pounds in 15 seconds. $112 a week. radiator is easy, but your CAC But given the immediate drop • CRANKSHAFT DAMPER. needs to be pressure-tested to in fuel mileage a leaky CAC Most engine shops will tell find leaks. You can make or causes, it makes sense to re- you this doesn’t need to be purchase a test kit, or have place a unit that leaks just 2 replaced. They don’t even re- it done at any engine shop. pounds in 15 seconds. At that place it on an in-frame. This

54 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 54 8/15/18 11:37 AM is a mistake. The crankshaft damper, designed to reduce 23 TOOLS TO TAKE ON THE ROAD torsional twisting from the force of the connecting rods 1 A set of eight hand wrenches and 14 An electrical current tester. sockets. 15 C-clamps. being driven down by combus- 2 Two standard adjustable crescent 16 An air-pressure gauge. tion, wears out. Consequently, wrenches, one 6 inches and one 10 17 An awl. engine force and vibration are or 12 inches. 18 Pliers of various sizes. not transmitted throughout 3 A fuel-filter wrench. 19 Flashlights of various sizes, the entire frame and driveline. 4 Two vise grips, one 6 inches and including one for your pocket, one This leads to many problems, one 8 inches. for flagging help and a large free- not the least of which is driver 5 A hacksaw with spare blades. standing lamp for night repairs. fatigue. 6 A carpenter’s hammer. 20 Jumper cables, at least 20 feet Maintenance problems run 7 A ball-peen hammer. long. the range of broken alternator 8 A 30-inch crowbar or pry bar. 21 Towing chains, 20 feet of brackets, broken air-condition- 9 A set of flathead, Phillips and 20,000-pound strength. ing brackets, clutch and drive- star-tip screwdrivers in various 22 A torque wrench. sizes. 23 A handheld remote diagnostics line problems and even loose 10 Rolls of duct tape and electrical unit that communicates with or faulty electrical connections. tape. the truck’s onboard computer, There is no way to inspect a 11 A can of WD-40 or some other or in the case of newer-model crankshaft damper: Replacing spray lubricant. Don’t lose the trucks, mobile-device/laptop it at 500,000 miles is recom- straw. software capable of interpreting mended to avoid problems. It 12 A knife. ECM fault codes for maintenance will cost $700 to $1,000, more 13 Wire and metal snips. troubleshooting. in some engines. • FLEXIBLE RUBBER FUEL LINES. These can deteriorate internally with no visible wear mpg. You can install a high- assuming 125,000 miles per or damage. Internal deteriora- performance flow-through year with an oil change ev- tion can cause lines to swell muffler on most trucks for less ery 25,000 miles. A 10-truck and restrict fuel flow, trigger- than $200, and your return on fleet can save almost $3,000 ing fuel-mileage declines and investment is nearly immedi- a year by changing from gal- power loss. ate. You’ll also notice better lon jugs to bulk delivery in Trucks with fuel mileage throttle response. a tank. A first step in deter- issues can benefit from line • SHOCK ABSORBERS. When mining whether buying bulk replacement ($300 to $400) shocks are worn, it can lead to oil makes sense for you is to to the tune of 0.3 to 0.4 mpg. excessive vibration, irregular contact a local distributor and If your truck has more than tire wear and driver fatigue. explore pricing. 700,000 miles and an unex- Many experts recommend re- Disposal is normally an as- plained loss in mpg, it would be placing shocks every time you sociated cost, but if you live recommended. replace tires. near an oil-recycling refinery, • FACTORY MUFFLERS. BUY OIL IN BULK. The do- you might be able to sell your These can cause exhaust re- it-yourself oil change is a waste oil. Some small fleet strictions from day one. The standard for many owner- shops use waste oil to heat longer they’re used, the more operators, especially those their facilities. soot buildup you see in the with their own authority. A muffler itself, and the more one-truck operator can save TIPS ON DOING exhaust restriction is created. $200 or more a year by mov- IT YOURSELF Restriction robs your engine ing from gallon jugs to 55-gal- While your free time is valu- of performance, power and lon drums for oil purchases, able, every maintenance job

Questions? Call ATBS: (888) 640-4829 | 55

PIB19_CH10-12.indd 55 8/15/18 11:37 AM you can do yourself is a job tives. Your cost: About 20 cents POTENTIAL FOR LOSS you don’t have to pay someone per test for one test strip. Shop else to do. Common do-it- cost: $20. Time: 15 min. Suppose your truck’s engine blows yourself jobs include fluid and DEALING WITH while you’re under a load. Your filter changes, as well as routine carrier likely will have to dispatch work on relatively simple com- DEALER SERVICE another driver to deliver the load. ponents such as wipers, lights, Many longtime owner-opera- Meanwhile, you’ll have to pay for belts and hoses. tors have had at least a minor the tow and find a replacement The basic rules always apply: conflict with a dealer over a engine. If you lose a week’s worth • Get expert advice for any repair. Whatever the problem, of work at, say, $1.10 per mile, new project, and be sure you never underestimate the need you’ve also lost $2,750 in revenue. aren’t violating warranties. for effective communication. As The lack of attention to your • If you’re not comfortable long as you’re talking to some- engine could end up costing more doing any job, take it to the one, a compromise is possible. than $20,000: shop. BASIC STEPS Rebuilt engine: $18,000 Here are some cost break- • Don’t just show up and Road service: $650 downs for a few common jobs: demand instant service. You’re Lost revenue GREASING. Greasing is simple hardly the only one with a “hot (current load): $1,100 and inexpensive. You can pur- load.” Making an appointment Lost revenue chase a high-quality lever-action is ideal. (future loads): $2,750 grease gun, grease and wipes for • Make accessible your com- Total loss: $22,500 less than $50. Your cost for each plete service and warranty re- job: About $10. cords, and never tell the dealer Shop cost: $35 to $50. Time: what to fix. Instead, explain all 45 minutes. you know about the problem, outcome. Understand that the CHANGING FUEL FILTERS. and if possible, take a service manufacturer cannot force This doesn’t require many person on a test run to recreate the dealer to do anything. tools, but learning the proper conditions. • Even if all else fails, suing technique is important, so • If diagnosis is a problem, can be expensive and is not consult your owner’s manual. ask dealer personnel to discuss likely to succeed unless the You’ll need a band clamp of the issue with factory service dealer clearly is violating the appropriate diameter for fuel people. If local technicians are terms of a warranty, disobey- filters, a catch pan and a small too busy, call the factory rep- ing an applicable law or acting container of fuel. Your cost: resentatives and ask them to in bad faith. $20 per job. Shop cost: $25 to assist the dealer or allow you to GENERAL TIPS $30. Time: 30 minutes. relay relevant information. • Work through the selling CLEANING CONNECTIONS • When a problem is not dealer, who has a greater mo- AND CABLES. Special battery identified readily, authorize an tivation than other dealers to terminal cleaners are inexpen- hour or two of labor for diag- do warranty work or go to bat sive, and other connections can nosis. It’s cheaper than experi- for you with the factory. be cleaned with sandpaper or menting with repairs and more • Keep your cool, and dem- steel wool. Your cost: $10 per likely to yield results. onstrate a positive attitude. No job. Shop cost: $80 to $100. • If speaking to a service one wants to cooperate when Time: One hour. representative is a dead end, they’re treated rudely. INSPECTING COOLING SYS- appeal to the service man- • Having a good long-term TEM. To check your system, ager, dealer managers and relationship with dealer per- buy test strips and measure ultimately the owner. Failing sonnel will help. Your best antifreeze concentration and that, a factory representative leverage is the ability to take the level of anticorrosion addi- might be able to influence the your steady business elsewhere.

56 | In partnership with Overdrive and ATBS

PIB19_CH10-12.indd 56 8/15/18 1:06 PM 13 CHAPTER

CHOOSING A CARRIER IT’S EXPENSIVE TO SWITCH CARRIERS, SO PICK YOUR PARTNER CAREFULLY IF RUNNING LEASED

he increased revenue posite approach. Pick a name you understand everything that can come from on the list and start looking for and how cooperative the car- changing carriers is a reason not to choose that one. rier is. If you can’t get straight T easy to understand, Maybe the company requires answers about the lease now, but the cost involved in making more experience than you have odds are you’ll have the same that switch often is overlooked. or requires a newer tractor. obstacles if you decide to work It can be thousands of When you find a carrier you with that carrier. In most cases, dollars. And when you look can’t eliminate, put it on your these conversations will get closer at revenue and costs short list. When you reach five, your list down to two or three. instead of just pay per mile, follow these steps: • SCHEDULE A VISIT TO net income often isn’t any • CONTACT THE CARRIERS EACH COMPANY. If there are b e t t e r a t a d i ff e r e n t c a r r i e r. DIRECTLY. Request a copy of multiple locations, visit corpo- Choosing a carrier should be their lease agreement. Read rate headquarters. It might be approached systematically. First each lease from front to back expensive and time-consuming, search for carriers that pull the and make notes. Lists things but you are trying to eliminate kind of freight and run in the you like and don’t like about needless risks as you design geographic area that interests the lease and things you don’t your business. you. List as many potential understand. If they can’t or • REQUEST A VISIT with carriers as possible. won’t send a lease agreement, someone in each department Most people will try to find scratch them off the list. one name that fits all the pre- • CALL EACH CARRIER ferred criteria. Take the op- AGAIN. You need to make sure

Questions? Call ATBS: (888) 640-4829 | 57

PIB19_CH13-15.indd 57 8/15/18 11:57 AM you would deal with as a leased OTHER QUESTIONS owner-operator. If they don’t have time for you now, do you Ask recruiters and owner- What is your owner-operator think they will have time for operators these questions turnover rate? Turnover at larger you after you sign the lease? about any carrier: carriers is nearly always high, but • PRIOR TO YOUR VISIT, When would I get my sign-on bo- anything near 100 percent is cause WRITE DOWN QUESTIONS for nus? Some carriers pay it when you for concern. each department, such as dis- deliver your first load, others after Do you have a purchase pro- patch, safety and compliance, 90 days, others after six months or gram for tires, parts and other operations and settlement. even later. items? Discounts offered by fleets, These steps will prepare What are your strongest lanes? such as those set up with truck stop you well for getting the critical You need to know where the freight is chains, can save you money. information you need. Once and where it goes. What is your policy on cash Do you pay lumper fees? Some you’ve done so, the business- advances, money services and carriers provide a set amount to pay fuel cards? You should avoid asking minded approach you’ve dem- lumpers, which sometimes might not for advances, but it’s good to know a onstrated will help establish be enough. Find out what’s covered company’s policy, as well as arrange- you as a professional who de- and what your obligations are in all ments regarding money services like serves respect. loading and unloading situations. Comchek and fuel cards. What fees must I pay? Learn How do your escrow accounts QUESTIONS TO ASK OF about base plates, insurance, equip- work? By law, the lease clearly must PROSPECTIVE CARRIERS ment, deadhead pay and drug-test fees. define all fees and reimbursements PAY. Ask if fuel surcharges Will there be multiple-stop carriers can take from owner-opera- are available and if they are loads? If there are, will you be paid tor escrows. How much of that would packaged with base pay or paid for each stop or a flat fee? you get back if you left, and how long separately. Check whether the Do you have dedicated runs? would it take? Companies with dedicated freight, of- fuel surcharge is nationwide or What is your policy on major fering added schedule predictability, breakdowns? Find out if the car- regional and what miles-per- may require you to qualify for those rier will stand behind you in such an gallon rate the surcharge is runs based on where you live or other emergency. Ask the terms of repay- based on – 6 mpg is common factors. Learn how it works. ment. (see Chapter 5). Confirm that Do you have an owner-operator What are your rider and pet 100 percent of the surcharge is advisory board? Carriers with such policies? If you like to take along passed to owner-operators. boards demonstrate an interest in your spouse, significant other, child Ask if the carrier offers lay- relations with owner-operators. and Fido, then don’t forget to ask. over pay, empty mile compen- sation and pay for loading and unloading, or reimbursement for lumper charges. Do they KNOW THE LAW ON LEASES reimburse for tolls? Do they pay your fuel taxes, or are they Whatever’s in a lease contract must agree with federal law. Not sure what the charged back to you? When law says? Go to www.fmcsa.dot.gov and type 376.12 into the search box. That will are settlements paid? give you the truth-in-leasing regulations, which specify what a written lease must Does the carrier impose contain, including complete specification of compensation, responsibilities of each party for costs, chargeback items and how they are computed and more. chargebacks? Ask about pay- ing for liability insurance or onboard fleet management sys- tems such as electronic logging devices or tracking systems. locations (detention) is increas- required to switch to ELDs. Hourly pay for time spent ingly important — and preva- Does the carrier offer pay for waiting at shipper and receiver lent — as carriers have been detention? Does it guarantee

58 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 58 8/15/18 11:57 AM to half of the industry’s drivers THE COST OF CHANGING CARRIERS get little, if any, detention pay. Independent owner-opera- You can’t leave one carrier and thinking of leaving in anger, as often tors running under their own expect to be up and running at the is the case, cool off first. Could you new carrier the next day. It can analyze your own costs and manage carrier authority bill direct take three weeks between winding your business better to succeed shippers as much as $70-$100 things down at your old carrier where you are? How will a switch hourly for excessive detention; and getting up to speed at the affect your reputation? No matter it’s unlikely you’ll get such rates new carrier. It takes time to turn how good a driver you are, job- from your carrier as a leased in the trailer, company-provided hopping paints you as a malcontent. operator. electronic logging device or other HOME TIME. In assessing dispatching equipment, base plate, TOTAL COSTS routes, loads and miles, ask if permit book, etc. The many costs involved in certain routes or regions are You then have to bobtail to the new changing carriers can total open that would accommodate carrier and attend orientation. Then thousands of dollars: your desired amount of home you have to get all your paperwork DOWNTIME. You’ve been earning time. Make similar inquiries filled out and wait to get a load. It can $50,000 a year and working 300 take longer than three weeks before a days a year; that’s $167 a day. Mul- about specialized work such as settlement check is received. tiply your income by the days you’ll heavy-haul or high-touch loads. That’s three weeks of lost be down. Ask carriers about available revenue. True, you avoid the INITIAL ESCROW FUNDING. miles and routes, and question variable costs, such as fuel, that Even if you eventually get it back, their operators about the miles would have gone with earning that it’s often due before you get any they’re getting. revenue, but it’s a net loss to you. income. Some carriers build it over CULTURE. As with people, Your fixed costs don’t stop. Your time via settlement deductions. companies have personali- truck payment and your insurance INSURANCE. Some carriers ties. Some carriers will want payments still are due. And you charge it to the owner-operator; to control everything you still have your personal bills. If the some don’t. do, and others will give you transition drags out, costs could BASE PLATES. Unless you bring plenty of rein. Some compa- total as much as $12,000 or more. your own. This loss doesn’t include the cost PERMIT FEES. Some carriers nies provide limited benefits of learning a new system and new pay them; some don’t. to owner-operators, such as routes at the new carrier, likewise DRUG TESTS. Most carriers pay fuel networks and insurance building a working relationship with for these. assistance. Don’t overlook dispatch to prove your credibility. EQUIPMENT. You might need to possibilities at small carri- And remember, what recruiters tell invest in tiedowns for flatbed work, ers, particularly if you’re you might be a best-case scenario, chains for northern hauls, pumps looking for more operational and it may be some time before and compressors for tank opera- freedom. Some prominent you’ll be in that situation. Before tions — or a tractor paint job. larger all-owner-operator car- switching, ask yourself some hard EMPTY MILES. Unless you’re riers likewise operate with a questions. Have you done all you switching to a hometown carrier, maximum of load, route and could at your current carrier? Unless multiply your cost per mile times you’re an obvious problem, your the miles you have to deadhead to schedule choices for the ma- carrier wants to keep you. If you’re the new carrier. jority of their drivers. PHILOSOPHY. Does the car- rier’s way of doing business that pay regardless of whether businesses have moved in the match yours? Ask whether it’s collecting it from the ship- direction of time-based pay company drivers get dispatched per/receiver? systems with hourly detention- before owner-operators, or While that increasingly is the pay plans, often billed after whether company drivers get case, old practices survive at one or two free hours, though better loads. Even owner-op- many carriers. Many of those some research suggests that up erators who work for the same

Questions? Call ATBS: (888) 640-4829 | 59

PIB19_CH13-15.indd 59 8/15/18 11:57 AM company can get significantly monthly just to break even. and your hourly revenue esti- different pay; the difference can Be sure to include nonrev- mate as you begin to gather in- be as much as 30 cents per mile. enue miles, such as deadhead formation about pay packages. Would you be in the carrier’s or a trip to the shop, in your Ask carriers detailed questions top tier – or bottom tier? monthly estimate. Those miles about all revenue items and You usually can survive one also cost money. any cost items they cover or switch in a year, though it’s dif- If a company agrees to pay help cover. Chart those num- ficult. Switching twice in a year you a dollar per mile for dead- bers on a spreadsheet to begin could put you out of business. head but it costs you $1.10 to your evaluation. To make your If you have a good relationship operate the truck, you’ll have comparisons as accurate as with your driver manager, en- to make up that lost 10 cents possible, make sure you under- joy the company’s culture and per mile elsewhere. stand some of the more confus- have opportunities to get the Profit margin (net income as ing aspects of pay packages: miles and pay that you need, a percentage of total revenue) LEARN HOW MILEAGE IS then chances are you won’t be for independent owner-opera- CALCULATED. If a carrier pays better off anywhere else. tors without a carrier partner by the mile, ask which system hovers at about 40 percent for is used. Short miles give the EVALUATING CARRIER owner-operators who do not shortest route, so they are the COMPENSATION include pay to themselves as a least desirable to an owner- Recruiting ads call out to you business expense, such as in an operator. from trucking magazines and S Corp arrangment. Practical route miles average websites offering diverse pay In your evaluation of com- 3 percent to 5 percent more. and benefits. With so many pensation, you ideally want Hub miles average 3 percent carriers recruiting owner- to beat the averages. Overdrive to 5 percent more than practi- operators and so many factors research in 2016 showed cal route miles, but few carri- to consider within each pay that more than 40 percent of ers use that system. package, it’s no wonder drivers owner-operators try to hit a Many fleets have switched have a tough time estimat- profit margin target above 40 from short to practical miles, ing potential revenue and net percent. which amounts to an across-the- income from advertised com- For some elements of a pay board raise. Practical miles sys- pensation packages. package, such as detention pay, tems use measurements based While comparing pay pack- it’s also helpful to know your on actual addresses or ZIP ages is a time-consuming, often revenue per hour of driving. To codes and account for common- frustrating endeavor, the key is determine this, multiply your sense alternate routing. to start with an understanding per-mile rate by your average Fleets won’t pay drivers the of how much you need to make driving speed. For example: each month to cover your ex- penses. Only then will you know Pay rate per mile $1.10 Owner-operators’ Average speed x 59 mph whether a carrier’s pay package profit-margin targets GROSS Unsure is a good deal for you. REVENUE 50% or Figure your total cost per mile PER HOUR = $64.90 29% or more by adding fixed and variable less costs for the year and dividing Knowing your hourly rate by 12 to get the average per helps you determine whether month. Then divide that num- the detention pay you’re of- 30-39% 40-49% ber by average monthly miles fered adequately compensates

to determine your cost per mile you for the revenue you lose According to 2016 Overdrive research, profit for a given month. This will sitting on a load. margin targets are a consideration of the large majority of owner-operators when be what you will need to make Use your break-even point analyzing potential income.

60 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 60 8/15/18 11:58 AM LEARN HOW PERCENTAGE OF PAY SYSTEMS’ PROS AND CONS REVENUE IS CALCULATED. a carrier pays by percentage, Many carriers have bucked tradition by offering owner-operators a choice of pay understand the calculations. packages. It’s typically either a company-dispatched mileage-pay program or a percentage-pay program in which owner-operator self-dispatch offers greater operational latitude. There are advantages to each. An owner-operator running load’s all-in revenue. Others on percentage shares the brunt of market conditions with the carrier, earning less money in bad times, whereas a mileage program in such times is an attractive of the revenue, or 90 percent safety net. In an environment with rates rising steadily, operators on a percentage program can benefi t with a sort of built-in pay raise without running more miles. of 100 percent with added cost Operators who excel in percentage pay shift their focus from weekly mileage targets to revenue targets, ideally achieved on the fewest possible miles. Research Such distinctions can account conducted during 2017, as freigh rates improved, showed most preferring such for hundreds of dollars’ diff er- operational latitude to maximize income. ence over 10,000 miles. LEARN THE POLICY AND MILEAGE PAY VS. PERCENTAGE PAY PRACTICE OF FUEL SUR- CHARGES. Find out exactly how the surcharge is comput- ed and whether it compensates for all or only part of rising diesel prices. The best-case surcharges to all clients and pays all surcharges to the - • Rate to the truck inherently stable • Rate per loaded mile variable by pays only on collection, ask with miles lane/market conditions for the average amount passed • Often little self-dispatch freedom • Self-dispatch often available on to owner-operators, and • Fuel surcharge often averaged • Fuel surcharge paid in lump amount among fl eet accounts/diesel prices according to individual negotiated LEARN THE REAL COST OF accounts ANY CO-OP PROGRAM. • Niche specialization possible but not • Niche specialization by lane/freight plan to make use of a carrier’s in operator’s control within reach with self-dispatch cooperative buying program, ask what the markup is on things • Home time in control of dispatcher • Home time a function of operator’s ability to customize schedule purchase has to be repaid. Make sure you’re getting uct/milemaker), Prophesy a good deal. Some carriers Mileage and Routing (www. with fuel programs charge mile.com), ProMiles (www. - fl eet whether its rate paid to promiles.com) or ALK’s PC every time they use the fl eet’s drivers matches its rate charged Miler (www.pcmiler.com). fuel card, which can add up Some fl eets also off er mileage to hundreds of dollars per routing system the fl eet uses. pay that varies according to the year. On the fl ipside, buying - haul’s length, generally paying fuel at a cheaper rate could parisons with programs such as Rand McNally’s Milemaker fees. Crunch the numbers to (www.randmcnally.com/prod- fi nd out.

Questions? Call ATBS: (888) 640-4829 | 61

PIB19_CH13-15.indd 61 8/15/18 11:58 AM 14 CHAPTER

COMPUTERS, MOBILE DEVICES AND THE INTERNET ONLINE TRUCKING RESOURCES COMBINED WITH EVER-CHEAPER DIGITAL TOOLS CAN HELP YOU WORK FASTER, SMARTER AND MORE PROFITABLY

t’s still possible to track apps and software and steadily well less than $1,000. You can an owner-operator dropping prices, tracking your find a smartphone for little business with paper business electronically makes initial cost that can perform I and pencil. But with more sense than ever. many of the functions that improvements in consumer You can outfit yourself with used to be the sole domain of technology, owner-operator a powerful laptop or tablet an internet-connected com- equipped for wireless internet puter, and it doesn’t require access and software designed a truck stop Wi-Fi (wireless to manage your business for internet) subscription.

62 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 62 8/14/18 4:59 PM Some owner-operators use receive and send e-mail, keep return the equipment or call a tablet to have some of the track of your own fuel tax and for customer service. advantages of a smartphone scan your receipts to retain but with more of the feel and electronic copies, a laptop with TRUCKING BUSINESS functionality of a laptop. scanning and GPS functions SOFTWARE The savings from managing would be a wise choice. The market for owner-operator your business, as well as reve- A smartphone or tablet also and small-fleet software has nue boosts using sophisticated may do the trick, in some cases expanded rapidly with a shift to services such as online and/ with the right peripheral de- web-based services that allow or on-demand load matching, vices. you to access your account from will net you a speedy return on If you decide on a laptop any device with an internet con- your investment. or tablet, consider one with a nection. screen large enough to double You can manage your busi- HARDWARE as an entertainment center on ness anywhere you can find in- Any computer with the right the road. ternet access – something that’s software, or phone or tablet While shopping at brick-and- become much easier, as Wi-Fi with the right app, will allow mortar stores has its advantages, service has spread to truck you to track and analyze your shopping online gives you many stops, rest areas, restaurants and data in much the same way more models and prices to motels, and cellular broadband that a good business services choose among. When buying a access can fill in the gaps when provider would – evaluating computer online, some vendors Wi-Fi isn’t available. It doesn’t your costs, revenue and per- allow you to customize the com- take much technical expertise to mile comparisons. However, puter to your specs. turn your cab into a full-service if you choose to handle those Other tips: office. tasks yourself instead of del- • Ask other owner-operators Most business software is egating to a service provider, be what they like and don’t like easy to use, even for the tech- prepared to spend many hours about their devices. nologically challenged. Many organizing paperwork and • Read technology and con- providers offer manuals, on- entering data. And depending sumer product reports, and line support and phone help on your expertise with the pro- visit manufacturers’ websites to lines. For trucking business gram you use, you could meet configure computers and get a software, you have two general some frustration in crunching sense of direction. choices: the numbers and making sense • Consider buying refur- CUSTOMIZED SPREADSHEET. of them. bished equipment from a If you’re so inclined, you can Consider these two main reputable source for the cost design your own spreadsheets things before making a hard- savings. Be sure to ask about or databases based on a stan- ware purchase: the warranty. dard program that already • Determine what you want • For a computer, ask what might be on your computer, to accomplish. What is the re- software comes free with the such as Excel, Quicken or Mi- turn on investment time for the machine. Many come with a crosoft Money. Your business purchase? Can it be justified suite of Microsoft Office prod- services provider can help you. financially? ucts such as Word and Excel, TRUCKING-SPECIFIC SOFT- • Know your options. You though similar software is WARE. Many software packages don’t have to know everything available free for any user with have been designed for owner- about the hardware, but you a g-mail account online via operators. These programs should make sure it will per- Google’s Drive function. perform a variety of functions, form the services you need. • Keep all receipts, registra- including tracking expenses, If you want to run trip- tion information and original determining cost per mile, cal- planning software with GPS, packaging in case you need to culating fuel taxes and record-

Questions? Call ATBS: (888) 640-4829 | 63

PIB19_CH13-15.indd 63 8/14/18 4:59 PM ing maintenance and warranty custom-designed software from Overdrive’s Facebook page (face- smartphone apps linking users information. RECORDKEEPING AND LOGGING SOFTWARE companies Convoy, Uber Freight book.com/OverdriveTrucking) with dealers and service loca- The better programs can and others. also provide forums for thou- tions for warrantable and other Laptop and smartphone applications make keeping track of records easier for compile your data in different Traditional freight brokers also sands of truck drivers through repairs and roadside assistance. owner-operators. With the free Expensify app, you can log mileage and store photos have made strides in technology dozens of specialized bulletin Search the apps market on ways to generate reports that of receipts for purchases less than $75 for tax recordkeeping. There are also a with in-house load matching ser- boards and sharing venues, your phone to download the give you insights about your number of mobile scanning apps that allow you to upload and send copies of bills of operation that might not be ap- lading, IFTA paperwork and other documents instantly. DriveAxle, CamScanner and vices of their own, with some of including those for owner- apps, most available for iPhone parent otherwise. Genius Scan are just a few of the available scanning apps available to drivers. Laptop the larger ones, including names operators and others dedicated and Android. Some programs also offer software such as that offered by Driver’s Daily Log (driversdailylog.com) has been such as C.H. Robinson, Land- to topics important to them. Companies such as ProMiles internet access to your data used by operators for years now, replacing paper log books. star and others, also moving into Through these discussions, (www.promiles.com) provide and the software. Some products are automatic onboard recording devices (AOBRDs) or electronic more automation of the freight truckers and industry experts truckers with accurate routes Many software packages logging devices (ELDs), which have been required equipment except for exempt transaction process. share vital information and of- and mileage. have streamlined access via operators since December 2017 — these hours of service logging programs are fer solutions to problems. For market data, keep an smartphones and tablets. Inte- connected to your engine’s electronic control module. If not connected to the TRUCKING INFORMATION Truck stop chains such as eye on rate and lane stats via gration with associated smart- engine ECM, smartphone- or laptop-based logging programs must be able to be Dozens of sites provide Pilot Flying J (www.pilotfly- DAT Solutions’ website, www. retrieved and printed or emailed/faxed for view on request by law enforcement phone or tablet apps also can other information tailored to ingj.com | MyPilot app), TA dat.com. Its “Trendlines” and since December 2017 are only legal for use for exempted operations. (See truckers. Overdrive’s website, Petro (www.ta-petro.com | weekly reports track aver- simplify recordkeeping. Chapter 15 for more). Access your ELD options via Overdrive’s quick-comparison The software and hardware OverdriveOnline.com, offers TruckSmart app) and Love’s age spot and contract freight chart at OverdriveOnline.com/2015eldchart. Don’t decide on an ELD before assessing a constantly updated mix of markets change quickly. Re- ancillary functions of the software that may meet other business needs. (www.loves.com | Love’s Con- rates, with analyses of the search your options thoroughly news, interactive forums and nect app) list their amenities best and worst lanes in Amer- before deciding to invest. blogs from Overdrive editors, and offer locating services, ica – important if you’re self- it’s also accessible by email, fax video, features, a reader trucks parking and updated fuel prices dispatching. Truckstop.com’s TRUCKING ONLINE LOAD MATCHING or phone. The Truckstop Mobile photo gallery and more. The via their smartphone apps. Trans4Cast reports offer mar- With a connection to the inter- Freight matching once meant app is available on iPhone and Overdrive Radio podcast, also All major truck and engine ket analyses on a weekly basis net via a smartphone or laptop, scraps of paper with phone Android platforms. found on Overdrive’s website, is makers have websites where via Trans4Cast.com. you can find virtually anything numbers stuck on truck stop • DAT TRUCKERSEDGE (www. a resource for tips from expe- visitors can see the latest prod- Federal and state govern- you need to know concerning bulletin boards, or postings on truckersedge.net) is powered by rienced owner-operators and ucts, look up warranty infor- ments have websites that al- technology and your business. a TV monitor. Today, online the DAT network, the oldest fleet owners. mation and find service and re- low you to pay taxes online, Many owner-operators now load boards link independent load board in the United States. Social sites such as Let’s pair facilities. Many equipment research regulations and report use the internet to: owner-operators to freight TruckersEdge.net also provides Truck (www.letstruck.com) and makers also have developed possible violations. The Federal • Check traffic reports, based on posting time, equip- a mobile version of its website Motor Carrier Safety Admin- weather and fuel prices. ment type and specific lanes. for smartphone users. For users istration (www.fmcsa.dot.gov) • Find and book loads. All the major boards now have without a TruckersEdge sub- MONEY MANAGEMENT APPS site has links to all trucking • Send bills of lading. optimized access to loads via scription, DAT offers the DAT regulations as well as pending • Keep in touch with family, smartphone apps or custom Trucker app for nearby load • The free Chase Mobile app allows Chase account holders to snap a photo rulemakings. friends and dispatch. mobile sites. These typically searches. of a check with an iPhone or Trucking associations such as • Manage bank accounts and are offered via a monthly sub- In recent years, as operators Android phone and deposit it the Owner-Operator Indepen- finances. scription or a nominal fee. view a load board, it’s often directly. dent Drivers Association (www. • Stay up to date on trucking Some of the major load been difficult to be certain • Create a central space for ooida.com) and the American news and conduct research. services: whether the load is a good one tracking account balances and Trucking Associations (www. bill payment due dates with the • Plan routes. • TRUCKSTOP.COM, the first or not. Consequently, they’ve trucking.org), as well as state Mint app, available on iPhone, • Send receipts and settle- load-matching service on the in- trucking associations, provide had to check broker credit Android and Windows Mobile ternet. Formerly known as Inter- ment statements to business scores and call for load details platforms, as well as for laptop many useful resources for own- services providers and organize net Truckstop, at www.truckstop. such as pickup-and-delivery web browsers. er-operators and fleets. tax records. com, you can access real-time points and rates. • Create and track budgets with Mint.com and Ace Budget’s iPhone or For a complete list of web- In addition to those already searches, credit reports, weather That’s been changing. More Android apps. sites and telephone numbers mentioned, here is a closer look information, road conditions, automation and transparency • Need cash? The ATM Hunter app by MasterCard for iPhone, Android and for trucking-related agencies at some of the most helpful fuel optimization and mileage is gained with the marketplace Blackberry phones locates the nearest ATM. and trade groups, see Appen- owner-operator applications: and routing information. Plus, model offered via websites and dix 2: Resources (page 90).

64 | In partnership with Overdrive and ATBS Questions? Call ATBS: (888) 640-4829 | 65

PIB19_CH13-15.indd 64 8/15/18 11:59 AMPIB19_CH13-15.indd 65 8/14/18 4:59 PM custom-designed software from Overdrive’s Facebook page (face- smartphone apps linking users companies Convoy, Uber Freight book.com/OverdriveTrucking) with dealers and service loca- and others. also provide forums for thou- tions for warrantable and other Traditional freight brokers also sands of truck drivers through repairs and roadside assistance. have made strides in technology dozens of specialized bulletin Search the apps market on with in-house load matching ser- boards and sharing venues, your phone to download the vices of their own, with some of including those for owner- apps, most available for iPhone the larger ones, including names operators and others dedicated and Android. such as C.H. Robinson, Land- to topics important to them. Companies such as ProMiles star and others, also moving into Through these discussions, (www.promiles.com) provide more automation of the freight truckers and industry experts truckers with accurate routes transaction process. share vital information and of- and mileage. fer solutions to problems. For market data, keep an TRUCKING INFORMATION Truck stop chains such as eye on rate and lane stats via Dozens of sites provide Pilot Flying J (www.pilotfly- DAT Solutions’ website, www. other information tailored to ingj.com | MyPilot app), TA dat.com. Its “Trendlines” truckers. Overdrive’s website, Petro (www.ta-petro.com | weekly reports track aver- OverdriveOnline.com, offers TruckSmart app) and Love’s age spot and contract freight a constantly updated mix of (www.loves.com | Love’s Con- rates, with analyses of the news, interactive forums and nect app) list their amenities best and worst lanes in Amer- blogs from Overdrive editors, and offer locating services, ica – important if you’re self- video, features, a reader trucks parking and updated fuel prices dispatching. Truckstop.com’s photo gallery and more. The via their smartphone apps. Trans4Cast reports offer mar- Overdrive Radio podcast, also All major truck and engine ket analyses on a weekly basis found on Overdrive’s website, is makers have websites where via Trans4Cast.com. a resource for tips from expe- visitors can see the latest prod- Federal and state govern- rienced owner-operators and ucts, look up warranty infor- ments have websites that al- fleet owners. mation and find service and re- low you to pay taxes online, Social sites such as Let’s pair facilities. Many equipment research regulations and report Truck (www.letstruck.com) and makers also have developed possible violations. The Federal Motor Carrier Safety Admin- istration (www.fmcsa.dot.gov) MONEY MANAGEMENT APPS site has links to all trucking regulations as well as pending • The free Chase Mobile app allows Chase account holders to snap a photo rulemakings. of a check with an iPhone or Trucking associations such as Android phone and deposit it the Owner-Operator Indepen- directly. dent Drivers Association (www. • Create a central space for ooida.com) and the American tracking account balances and Trucking Associations (www. bill payment due dates with the trucking.org), as well as state Mint app, available on iPhone, trucking associations, provide Android and Windows Mobile platforms, as well as for laptop many useful resources for own- web browsers. er-operators and fleets. • Create and track budgets with Mint.com and Ace Budget’s iPhone or For a complete list of web- Android apps. sites and telephone numbers • Need cash? The ATM Hunter app by MasterCard for iPhone, Android and for trucking-related agencies Blackberry phones locates the nearest ATM. and trade groups, see Appen- dix 2: Resources (page 90).

Questions? Call ATBS: (888) 640-4829 | 65

PIB19_CH13-15.indd 65 8/14/18 4:59 PM 15 CHAPTER

STAYING COMPLIANT AND SAFE PROTECT YOUR CAREER BY FOLLOWING REGULATIONS, PRACTICING SAFE DRIVING AND USING DATA TO YOUR ADVANTAGE

he 2015 debut of the questions about its implica- wheel. When there is a need for Freightliner Inspira- tions for where the industry is changing lanes, parking or other tion, the industry’s headed. Perhaps the biggest circumstances that require com- T first road-legal au- question for drivers concerns mon sense and quick judgment, tonomous truck, raised many job security. For vehicles such the truck screams for help and as the Inspiration, operating at turns control over to the driver. a moderate level of autonomy, That driver needs the same level a driver is required behind the of driving experience as today’s

66 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 66 8/14/18 4:59 PM owner-operators. base state will require you to tions: responsibilities, annual So there are many develop- pay the federal heavy-vehicle review, records, road tests. ments yet to come before we see use tax. Also, if you don’t reg- • Part 392. Driving commer- a safe network of completely ister your truck within 60 days cial motor vehicles: safe load- autonomous vehicles. These de- of purchase, your base state ing and fueling practices, safety velopments are needed in regu- will require proof of payment, at railroad crossings, seatbelt lations, highway infrastructure usually a copy of Internal Rev- use, emergency signals, emer- and integration of autonomous enue Service Form 2290 (heavy gency equipment use, passen- technology in other vehicles. vehicle use tax return) and a gers, illness and fatigue, drug Even as these things evolve, canceled check. and alcohol use. technology will still require a Your truck must be registered • Part 393. Parts and acces- driver behind the wheel. in every state through which sories: proper lights and reflec- you travel. Years ago, you had tors, wiring, batteries, brakes, TRUCK REGISTRATION to register separately in each windows, fuel systems, coupling Before you legally can operate state, but in 1991 Congress devices, towing methods, tires, a commercial vehicle in inter- created the International Reg- sleeper berths, mirrors, defrost- state or intrastate commerce, istration Plan, a streamlined ers, speedometers, exhaust sys- you must comply with certain nationwide system for truck tems, floors, rear-impact guards, regulations. For the owner- registration. frames, cabs, suspensions, steer- operator, it starts with truck Under IRP, you fill out a form ing systems. registration. and pay your base state. Similar • Part 395. Hours of service: Independents are responsible to the way the International maximum driving time and on- for their own registrations. Fuel Tax Agreement apportions duty time, record of duty status, Leased owner-operators have fuel taxes (see Chapter 5), a per- electronic logging devices, out- the option of doing it them- centage of your fee goes to each of-service declarations. selves or letting the company state you travel through based • Part 396. Inspection, repair they are leased to handle it. on the number of miles you run and maintenance, including re- Generally, the company deducts in that state. When you register, cordkeeping requirements. the cost from the driver’s settle- you need to estimate how many • Part 397. Transporting haz- ments. That might be easier, but miles you will travel in the com- ardous materials, state and local if you get your plate through ing year, state by state. Fees vary laws, driver presence and sur- the carrier, you must leave it be- by each state. veillance, parking, fires, smok- hind if you sever ties. ing, fueling, tires and routing. The cost of registering a truck SAFETY REGULATIONS In 2010, the Federal Motor varies from state to state, but Most trucking safety laws are Carrier Safety Administration you aren’t allowed to shop for found in the Federal Motor began implementing its Com- the cheapest base state. To base- Carrier Safety Regulations. pliance, Safety, Accountability plate in a state, you must: Owner-operators must keep a program. It features a safety • Have an established place copy of the regulations in their rating system for motor carriers, of business in that state, with a trucks. Many truck stops sell including independent owner- street address, a listed telephone inexpensive paperback copies operators, based on roadside number and at least one person of them, and they’re also avail- inspection observations and conducting business at that lo- able online and in digital form crash data. cation. A post office box is not via fmcsa.dot.gov. The FAST Act highway bill, sufficient. The parts that most affect passed in December 2015, re- • Maintain records in that owner-operators include: quired FMCSA to remove CSA location. • Part 390. General overview: scores and its Behavioral Analy- • Accrue miles in that state. violations and penalties. sis and Safety Improvement Before you can register, your • Part 391. Driver qualifica- Categories from public view

Questions? Call ATBS: (888) 640-4829 | 67

PIB19_CH13-15.indd 67 8/14/18 5:00 PM an inspector or safety officer. PRACTICING SAFETY FMCSA has deployed a similar Safety is your biggest responsibil- during any incident. system that tracks individual ity. Every year, some 500 truck DEADLY DISTRACTIONS. It is il- driver performance internally drivers die in highway accidents in legal to talk on a handheld phone or the same way it is ranking mo- the United States, thousands more text while operating a commercial tor carriers. The agency made are injured, and thousands of citi- motor vehicle in interstate com- intentions in the past to take this zens die or are injured in accidents merce. That said, even the best system public to rank individual involving a truck. Avoid becoming drivers find that their attention can part of those statistics by learning be diverted easily. Reading a map, drivers. This system is available safe driving techniques and making talking on a CB, listening to music, in part to carriers checking your them the foundation of how you daydreaming or picking something business’ history for pre-lease operate. up from the floor are all distractions. screening. LOGS. Strict adherence to hours THE MOTORING PUBLIC. Truck You can minimize the impact of service regulations is a good drivers are expected to drive step toward safety — and keeping safely and predictably, and the vast of CSA by being certain your out of trouble. Today’s procedures, majority do. On the other hand, truck is in compliance with all with nearly every stop documented four-wheelers often drive in an equipment regulations and by with date and time, allow DOT and unpredictable fashion, especially following these steps: carriers to closely monitor hours of when they are near trucks. Their • Do everything practical service compliance. Sooner or later, poor driving may display ignorance to avoid inspection violations. anyone violating the regulations of your vehicle’s limitations, their will be caught. own impatience or other conditions. That starts with thorough pre- PARKING AND BACKING. Most mi- Recognize their inexperience, and trip and post-trip inspections nor accidents occur when a driver use extra care. and attention to needed main- is parking or backing, so even at SPECIAL LOADS. Certain types of tenance, and extends to mini- low speeds it’s no time to become hauling, such as with tankers and mizing inspections themselves. complacent. Never begin backing flatbeds, require even more training before first walking to the rear and and care to operate safely. Tankers Some carriers have instituted looking all around, including up and carry liquids that may be flammable cash awards to operators for down, for obstructions. Never rely or toxic. In certain circumstances, inspections with no violations, solely on the opinion of spotters these liquids can push the vehicle which help a carrier’s CSA (especially at truck stops). in unexpected directions just when rankings, so this could pay extra STAY IN YOUR LANE. It is nor- it needs to be stable and predict- dividends. Use PrePass or other mally in your best interest to main- able. Flatbed cargo can become tain a single lane of travel until you dislodged or, in a sudden stop, weigh-station bypass systems to come to a stop. Some reasons for come loose and be projected toward stay out of the inspection sta- leaving your lane may not be under the driver or others. tions as much as possible. Wash your control, such as another driver KNOW YOUR LIMITS. Don’t over- your truck regularly, dress neatly cutting you off. You likely will do estimate your ability, whether driv- and otherwise avoid doing any- less harm to yourself and others ing in substandard conditions or and create less property damage if dealing with fatigue. The only true thing that might draw the atten- you maintain a single lane of travel cure for fatigue is sleep. tion of patrol officers. Highway patrolmen note that up to 90 percent of every until reforms are made to the public view, about a third of carrier’s problems arise from system. However, scores remain Overdrive readers still reported speeding. Slowing down will available for viewing by law a third party (such as a broker, help your carrier’s or your own enforcement and motor carriers shipper or insurance company) ranking, because if you speed themselves. The general public requested visibility into their and are caught, the officer often and shipper/broker customers now-private scores as a condi- will inspect your vehicle, and still can access raw inspection tion of doing business. small violations can mount up. and violation data for any car- Your carrier’s scores are af- Clean inspections are the only rier going back two years. After fected directly by all of your immediate way to improve cat- the scores were pulled from on-road infractions noted by egorical percentile rankings in

68 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 68 8/14/18 5:00 PM INSPECTIONS PER LANE-MILE MOST INTENSE LEAST INTENSE ENFORCEMENT * ENFORCEMENT Maryland 16 1 North Dakota California 16 1 Idaho Texas 10 2 Wyoming New Mexico 10 2 2 Virginia Arizona 8 1 2 Oklahoma Washington 8 1 2 Massachusetts Kentucky 6 3 Wisconsin Indiana 6 8 3 Minnesota Mississippi 6 1 3 Michigan Missouri 6 7 3 Vermont

*Arrows indicate the number of places the state’s truck enforcement unit moved up or down the rankings in 2016.

More than 60 percent of In 2016, total inspections counted by Overdrive sister company RigDig inspections conducted at roadside. Business Intelligence (RigDigBI.com) rose by more than 130,000 to 3,264,342 inspections, a 4.4 percent rise over 2015 totals. As the list illustrates, there was More than 60 percent of inspections considerable variation at the state level. RigDig mines data from all inspections conducted at a fixed location. of trucks and drivers for carriers with an associated U.S. DOT number.

CSA’s Safety Measurement Sys- serious violations could be 2017, when FMCSA’s electronic tem. A clean Level I driver and grounds for terminating a lease. logging device mandate went truck inspection improves carri- The MVR is also a prime into effect, drivers have been er scores in most SMS BASICs determining factor in insurance required to use ELDs for hours of compliance measurement by rates for all owner-operators. of service recordkeeping, with offsetting or diluting the weight If you think you’ve been a few exceptions. The mandate of prior violations. ticketed wrongly, you can either does not apply to drivers of • Protect your MVR. If you represent yourself in traffic pre-2000 model-year vehicles or get a ticket you believe is un- court or hire legal representa- vehicles with pre-2000 model- justified, whether following a tion. Some services such as the year engines. crash incident or other violation Drivers Legal Plan (DriversLe- ELDs can eliminate the ma- on the road or at a scale house, galPlan.com) and Road Law jority of what used to be com- know that payment of the fine (RoadLaw.net) represent truck- mon errors – so-called “form is an admission of guilt. It en- ers for generally small fees. and manner” hours of service sures that the ticket becomes a • Pick your partners wisely. violations. Hours of service is conviction and will follow you A carrier that takes its safety one of seven BASICs in the through at least the next few scoring seriously is going to be CSA system. years of your career — and in increasingly more likely to have Yet ELDs, by virtue of their some states, much longer — on solid customers and its pick of partially automated, detailed your Motor Vehicle Record. freight than the opposite. Treat recordkeeping, can create new Employers are required to your carrier as a partner in your compliance problems in difficult keep on file an annual MVR for business, and look for them to situations, such as when you are every CDL driver they employ. treat you the same way. unable to find a place to park or Depending on the carrier, one • Learn to work with elec- need to move your truck a very or more convictions for safety- tronic logs. Since Dec. 18, short distance during an off-

Questions? Call ATBS: (888) 640-4829 | 69

PIB19_CH13-15.indd 69 8/14/18 5:00 PM FMCSA’S MANDATE FOR ELDS

As required initially by Congress, the Federal Motor Carrier compliant ELDs must be on FMCSA’s registry of devices. The Safety Administration’s electronic logging device mandate agency’s vetting process does not entail testing for compli- has required most motor truck carriers to replace tradition- ance, relying largely on manufacturers to self-certify that al paper logbooks with ELDs. Leased owner-operators gen- they meet the rule’s specifications. That’s prompted worry erally have to use whatever system is required by their car- among motor carriers about what happens if their device is rier, but true independents have a choice to make in terms later found to be noncompliant. of their ELD system. Overdrive has a periodically updated FMCSA addresses that scenario: “FMCSA will work with resource available via OverdriveOnline.com/2015eldchart affected motor carriers to establish a reasonable timeframe that lists a variety of ELDs that are available. The chart in- for replacing noncompliant devices.” For any product, ask dicates whether or not the listed device is FMCSA-compliant the vendor about its plans for maintaining its registration and listed on the agency’s ELD registry. and whether it has a plan for long-term support. As of mid- Fleet-focused onboard devices offer a lot of bells and 2018, already some manufacturers have called it quits, leav- whistles, but independent owner-operators are likely to ing owner-operator customers in a bind. gravitate to a baseline-compliance device. They can benefit According to footnotes in the Commercial Vehicle Safety from additional functions such as IFTA data collection, mak- Alliance’s updated out-of-service criteria handbook, truck- ing mileage tracking automatic and easily reportable. If ing without an ELD is equivalent for law enforcement you manage more than one truck or are poised for growth, purposes to running without a log book for most owner- simplified dispatch tools in back-office programs may help operators, requiring an out-of-service period of at least 10 you scale your operation. As you’re making your decision, hours and an extra hit to your safety rating. consider these issues: SUPPORT. The mandate specifies an eight-day time- Exceptions to the rule frame for repairing/replacing a malfunctioning ELD. Does The ELD mandate exempts all owners of 1999 and older the provider stock the kind of hardware inventory to meet model-year trucks and engines from ELD compliance, such a quick turnaround? How are replacements/repairs based on the engine serial number primarily. Other exemp- handled? For carriers needing more than eight days to tions are out of reach for most owner-operators, including replace any ELD, the rule also spelled out a process for only drivers in drive-away/tow-away operations, where the requesting more time. It involves contacting your state’s vehicle being driven is the commodity being delivered; FMCSA division office and making your case. drivers operating under the timecard exception to the FMCSA REGISTRY AND COMPLIANCE. Technically, hours-recording rules – the 100- and 150-air-mile radius short-haul exceptions – exclusively; and other short-haul drivers who occasionally keep a logbook but do not do so for more than eight days in any 30-day period. Over the last decade, many larger fleets have adopted ELDs chiefly for two reasons: • The advantages – productivity, reduced violations and more – were worth the costs. • The fleets expected a government mandate and other industry pressures, so they decided to convert on their own timetable. Many owner-operators resisted ELD use until the last min- ute, in some cases pinning their hopes on the pre-2000 truck exemption. Remaining a holdout could prove problematic. As Overdrive has reported, carriers leasing owner-operators may be more likely to require leased drivers to run with ELDs, even if the truck’s model year means it’s exempt. In a survey In April 2017, Overdrive published a comprehensive guide to electronic logging device systems detailing what owner-operators of fleet owners taken in the months following the mandate’s can expect from the mandate to replace traditional paper log books. release, 70 percent of fleets of more than 10 trucks indicated Access it and further resources via OverdriveOnline.com/2017-eld- they’d require ELDs on pre-2000 trucks owned by their leased buyers-guide. owner-operators if mechanically feasible.

duty period. Be sure to stay cur- guidelines and, if you’re leased, • Consider using video sys- rent with regulators’ interpreta- your carrier’s policy regarding tems. A video-based driver risk tions of personal conveyance ELD annotations and editing. management system can help

70 | In partnership with Overdrive and ATBS

PIB19_CH13-15.indd 70 8/14/18 5:00 PM determine fault in an accident. Managing the historical in- carrier qualifying processes, a A forward-facing camera can spection information that is pristine PSP report is valuable, prove a driver’s innocence in being collected about you also is as some carriers look to tie an accident and other events, important. driver mileage or percentage key in making challenges to er- • Access your records. In the pay scales to safety perfor- roneous violations and in some view of FMCSA, any owner- mance. Providing an up-to- instances contesting tickets to operator who is leased to a date clean PSP to a prospective protect your MVR. Some fleets carrier and who hasn’t had his carrier before they request are using driver-facing cam- authority for the last two years such is something an owner- eras not only to determine the does not have any safety rank- operator confident in his/her possible cause of an accident ing in the CSA SMS. But a safety performance might do to but also as an ongoing train- leased owner-operator’s data document safety performance ing tool. (Such systems usually profile there is important. Leased history effectively. are offered as opt-ins for leased owner-operators can gain access Whether you’re leased or owner-operators.) to the data the internal measure- independent, you’ll be review- • Mind the small stuff. Pay ment is based on via FMCSA’s ing information contained strict attention to all aspects of Pre-Employment Screening Pro- within the same database. your operation. A frequently gram or PSP (www.psp.fmcsa. Make certain all violations incurred violation contributing dot.gov) for $10. and/or crashes contained to scores in the Unsafe Driving Alternatively, making a Pri- on your PSP, or in your CSA BASIC is the simple seatbelt vacy Act request via FMCSA’s SMS profile if you have your violation, often accrued after a Freedom of Information Act authority, are connected to speeding stop. office will net you the same you correctly. • Build law enforcement re- results for free – but with a For independents, challenging lationships. For independents, turnaround time of several erroneously assigned inspections good relationships with the weeks. If you have a prior or crashes, or violations tied to highway patrol in your area driving and inspection history citations thrown out in a court will enable you to call on and haven’t accessed the in- of law, is your responsibility. them for advice in particular formation yet, it’s important Challenges are conducted situations. It also will increase to do so to make certain it via FMCSA’s DataQs portal the possibility that, should is correct. It will be used by at dataqs.fmcsa.dot.gov. The you need help in the Vehicle carriers evaluating any lease Owner-Operator Independent Maintenance BASIC, they application you make, and it Drivers Association offers its might make themselves avail- could impact your insurance members free assistance with able for terminal inspections, rates. navigating this process, as do conducted at your central For owner-operators apply- some ELD vendors and other place of business. ing for a new lease and facing service providers.

Questions? Call ATBS: (888) 640-4829 | 71

PIB19_CH13-15.indd 71 8/14/18 5:01 PM 16 CHAPTER

TRUCKING INSURANCE UNDERSTAND THE TYPES OF COVERAGE AND WHAT YOUR OPERATION REQUIRES

fter the truck and state requirements all af- you’re not under dispatch. payment, truck fect insurance costs, but an All that insurance totals insurance is one owner-operator with a new almost $13,000 per year, as- A of an independent truck and trailer and his own suming a safe driving record. owner-operator’s biggest fixed authority is likely to pay: Cited speed demons can pay costs, one that must be paid on • $6,000 or more a year for much more. For liability insur- time whether a truck is running $1 million in primary liability ance, newly established owner- hard or parked. Without insurance. This covers damage operator businesses in some adequate insurance, an accident or injury done to others in an cases pay that much for liability or cargo claim could mean accident. alone. financial ruin. • $5,000 a year for physical Leased owner-operators damage insurance. This covers generally carry just as much THE COST OF damage done to your truck and truck insurance but pay for less PROTECTION trailer in an accident. of it themselves. The leased Insurance expenses can add • $1,000 a year for cargo operator should make sure up quickly, which is why many insurance. This covers damage the lease agreement specifies owner-operators budget their to or theft of the load you’re what he is not responsible for, premiums a year ahead. Your hauling. typically primary liability and age, your driving record, the • $630 or more a year for $1 cargo insurance, and what he is age and condition of your million in non-trucking-use li- responsible for, typically physi- equipment, the commodities ability insurance. Often called cal damage and non-trucking you haul, the lanes you run “bobtail insurance,” though liability insurance. Some fleets not necessarily the same, this charge the owner-operator for covers damage or injury to oth- primary liability and cargo ers in case of an accident while insurance, usually by taking a

72 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 72 8/14/18 5:02 PM percentage of all settlements, surance is the law, it’s standard procedures. Bundling different but other fleets absorb it as part in lease agreements. Remember, coverages with one insurance of the cost of doing business. though, that just because your company also can help, since Owner-operators shopping carrier is insured against dam- most insurance providers offer for bobtail (operating without age you cause, it won’t necessar- combined deductibles, mean- the trailer) or nontrucking (per- ily be on your side in case of an ing in the case of an accident, sonal use) liability insurance can accident. For that reason, some the driver will have to pay only look to trucking-specific insur- leased owner-operators opt to the typical $1,000 deductible ance agencies or truck dealers – buy liability insurance indepen- once to cover a damage and or buy direct from the insurance dently of their carriers. liability claim. company itself. Shop around For most, however, having With more fleets adopting in- before you buy, looking for the liability taken care of is one cab video cameras, both road- most coverage at the most rea- of the biggest advantages to facing and driver-facing, it’s pos- sonable cost. leasing. Owner-operators who sible in-cab video systems one Some leased owner-operators switch to their own author- day will become a precondition buy all their insurance indepen- ity often are surprised by how to getting insured – or more dently of the plans offered by costly, complex and time-con- likely a factor that can lead to their fleets. This costs more in suming liability coverage can premium discounts, something most cases, but its advantages be, particularly when starting happening in some quarters to- include more control of your up a first-time business. While day. Some insurance providers, coverage, a closer business a damage policy commits the while not offering such premi- relationship with your agent, insurer to paying only the ums, will offer owner-operators and a speedier reply when you current value of the truck, a a discount on a dashcam pur- have an emergency. Better yet, typical primary liability policy chase or, in rare cases, pick up independently purchased insur- commits the insurer to paying the cost themselves. ance is portable, so if you and as much as $1 million if some- your fleet part ways, you’re still thing goes wrong. Moreover, DAMAGE INSURANCE covered en route to the next the insurance industry consid- The law does not require orientation. Before you can be ers owner-operators to be high- physical damage insurance, assigned a load, you’ll have to er risks than fleets, and that but lenders do. A damage show your carrier proof you earns the insurer only about policy will pay no more than have all the coverage it requires. $6,000 a year in premiums. the value of the equipment Small wonder that the in- at the time of the accident. LIABILITY INSURANCE surer, before signing that con- In other words, you won’t get If you are operating under tract, wants every assurance a new truck out of a damage your own authority, you are re- that nothing will go wrong. claim, even if your present quired by federal law to have a The insurer is likely to quiz an truck is totaled. The insurer’s minimum of $750,000 liability independent about the type preference always is to go the coverage. This is to protect you of freight to be hauled, the cheapest route, which usually in a major accident in which region or operating radius, his is repairing the truck you have. you are at fault. You may want background as a driver and as At best, you’ll get enough to to consider higher coverage a business person, and regular buy another truck of the same since a catastrophic truck acci- safety and security practices. age and mileage. dent can cost many millions of Owner-operators can help A typical damage premium dollars. Many shippers require themselves by demonstrating is anywhere from 3 percent to carriers they use to carry $1 they have a solid business plan 5 percent of the truck value, million in liability to ensure the for the short and long term, or $3,000 to $5,000 for a truck truck and driver. including a daily maintenance worth $100,000. A bad driv- Because primary liability in- schedule and routine safety ing record, however, can bump

Questions? Call ATBS: (888) 640-4829 | 73

PIB19_CH16-19.indd 73 8/14/18 5:02 PM the cost to 8 percent a year or more – if you still can get INSURANCE TO DEFEND AGAINST LITIGATION damage insurance at all. If you buy damage insurance from There is plenty for owner-operators, have no deductible, meaning the a truck dealer financing your especially independents, to learn fleets pay no part of any insurance truck, your truck payments are from bigger carriers that have been claim directly. Insurers, thus, for the higher, and your interest costs targeted in questionable litigation. majority of those smallest fleets are go up. It may be less expensive Making smart choices about where more inclined to settle out of court if to spend your money to ward off they have a sense that a drawn-out to get insurance through an risk, chiefly in the area of liability court case could go awry toward a independent agent. insurance, could be key to your high award. Make sure that damage survival if you collide with a four- Excess liability insurance is at least policies don’t count the cost of wheeler. cheaper than the primary policy for an towing as part of a settlement. Excess liability insurance. The owner-operator with his own authority. If they do, thousands of dollars threat of litigation is ever-present While the first million in coverage of any settlement will go not to in the event of an injury or fatality could run from $5,000 to $10,000 or repairs but to the tow company. accident, and that even goes for more in annual premiums, you’d likely You’re better off getting extra accidents where you might not expect only be looking to add $1,250 to $1,500 coverage for towing. litigation to rear its head. for that extra million in coverage. GAP INSURANCE. Since an Some carriers carry extra liability Camera and ELD evidence. Much owner-operator can owe more insurance – an extra $1 million or more of the monitoring equipment that above the standard $1 million policy. many larger carriers are investing on a truck than it’s actually Doing this will increase your premium, in also gives them a critical edge in worth due to depreciation, a which can be offset with a higher legal disputes. Video cameras, which damage settlement may not be deductible if you have the resources to also are used in ongoing training for enough to make the rest of the pay for most smaller accidents. drivers who exhibit unsafe habits, payments on the totaled rig. If It seems wise to have as much also can prove what really happened you’re driving a new truck or a protection as you can afford. Yet in a crash. Electronic logging devices, used truck not more than five the more you have, the more likely beyond their primary function, can or six years old, gap insurance it is that an abnormally high post- remove a common line of legal attack might be helpful. It covers the jury award ultimately will result in a by encouraging and proving bedrock difference between the actual settlement near or equal to the limits compliance with hours of service book value of the truck and of whatever you carry, increasing costs regulations. what you owe on the truck. If for you and your insurer. Both road-facing and driver-facing Given these dynamics and the cameras can prove helpful in the the market value of your truck minimum $750,000 in government- event of a crash, as the driver-facing is $60,000, but you have a loan mandated required liability coverage, camera can help prove you weren’t on balance of $70,000, you would it’s no wonder trucking businesses are the phone or doing something else to be short $10,000 to pay off the a target for plaintiff’s attorneys. distract your attention from the road loan in the event your truck was Many small fleets’ insurance policies when the accident occurred. totaled. Gap coverage would make up the $10,000 shortfall. H DAMAGE DEDUCTIBLES. Be- sides the premium, the other I don’t know important number in a dam- Following a tow-away crash 6 age formula is the deductible. Following an injury crash No 6 A deductible of $1,000 means Following a fatality crash 3 the policyholder agrees to pay Following more than one of the above the first $1,000 of expenses No, but there was legal action involving the company I drove for or was leased to before the insurance kicks in. In 2016 polling conducted by Overdrive, one in every five readers reported being named The higher the deductible, the directly as a defendant in a civil trial following a crash. lower the premium.

74 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 74 8/14/18 5:02 PM many shippers. Specialty haul- PUT AN INSURANCE AGENT ON YOUR TEAM ers can carry far more. The fine print in some Many owner-operators rely upon a • How quickly can you reach lease agreements charges the dedicated truck-insurance agent, the agent in case of emergency? whether leased or independent. This isn’t just a convenience for the owner-operator for any cargo An agent who knows the trucking policyholder; good insurers want to be losses if he’s at fault in an ac- industry and your business plan can notified as quickly as possible in case cident, cargo insurance or no help assure you’re always covered of an accident. cargo insurance. Some loads and can make your premiums. Get the • Does it have a 24-hour claims have a higher value than an company’s name, and check it out for hotline number? owner-operator’s cargo insur- free at the A.M. Best website (www. • Can you reach your personal ance can cover. Yet owner- ambest.com), which ranks each insurer agent quickly, perhaps through a cell- operators often don’t know according to its financial viability. phone number? who’s liable for the difference Sticking with A-rated insurers is the Don’t call your agent only in an if an expensive load is lost. best policy because they offer better emergency, though. Even drivers with See what your policy covers coverage and faster turnarounds on 2 million safe miles need to check in before an emergency occurs. claims. with their agents regularly. Let your The chief question to ask of an agent know when anything changes NON-TRUCKING-USE insurer is how quickly it can get you – new equipment, new routes or a back on the road. Other questions new driving partner. Call whenever LIABILITY INSURANCE include: you’re considering hauling something The name of this insurance, • Does the policy cover a truck unusual, such as a reefer load if you’re which covers you when you’re rental while your rig is in the shop? typically a dry van hauler. not under dispatch, is a more precise term for what used to be called “bobtail insurance.” Ask your agent for a range age policy likely won’t cover The meaning of “under dis- of prices at various deductibles, the cost of replacing a tank patch” sometimes has to be low to high. Deductibles of full of diesel that spills in an determined in courtrooms. $1,000 are typical. A top-of- accident, or any other fluids Courts have held that even a the-line rig may have deductible that need replacing afterward. bobtail trip home can be con- options as high as $10,000. Low Boilerplate damage policies sidered under dispatch, since to moderate deductibles, how- typically cover only perma- the route is determined by ever, are the best choices for an nent manufacturer-installed where the fleet most recently owner-operator. A high deduct- fixtures on the truck, not any sent the driver. ible is no bargain if an accident extras added later such as sat- Sometimes the fleet’s insur- puts you out of business. If the ellite radio or chrome. All can ance company refuses to pay a deductible in your fleet policy be covered for a small fee, but claim, arguing the owner-opera- is too high for comfort, you the insurance company has to tor was not under dispatch at the can buy insurance that will pay know the items are there. time, and the owner-operator’s that deductible for you. Such insurance company likewise “deductible buyback” insurance CARGO INSURANCE refuses to pay, saying he indeed generally is cheap. The federal government ended was under dispatch. In these cas- COVERAGE OF OTHER EQUIP- its requirement for $5,000 in es, the owner-operator is caught MENT. Any truck equipment cargo coverage for interstate in the middle and probably not covered in a basic dam- carriers in 2011, but shippers needs a good lawyer himself. age policy — such as auxiliary continue to require it of carri- Non-trucking-use liability power units, tarps, binders ers hauling their freight. Fleets coverage is required by the and chains — can be added typically buy $100,000 on the majority of carrier leases. The by the owner-operator at owner-operator’s behalf, which cost is typically $50 or more minimal cost. A basic dam- is the amount mandated by per month.

Questions? Call ATBS: (888) 640-4829 | 75

PIB19_CH16-19.indd 75 8/14/18 5:02 PM 17 CHAPTER

HEALTH AND INCOME INSURANCE PAYING FOR COVERAGE OF PERSONAL RISKS IS A COST OF DOING BUSINESS

ealth is the third Many also lack a disciplined break. Independent contrac- core reason approach to diet and exercise. tors can deduct 100 percent owner-operators Complicating this health pic- of their premiums, provided H fail – behind only ture for many owner-operators a spouse doesn’t qualify for poor truck maintenance and is inadequate health insurance health insurance through an a lack of business skills. Many coverage. employer. Assume you have a over-the-road drivers rarely The average owner-operator family policy with a moderate have the time to see a family who spends money on health, deductible that costs $10,000 physician at home, much less dental and vision insurance a year in premiums. If you’re a doctor while on the road. pays about 8 percent of his av- in the 15 percent tax bracket, erage net income. that knocks $1,500 off your One bright spot among tax bill. the high costs is a sizable tax In spite of all the risks,

76 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 76 8/14/18 5:02 PM many owner-operators go arises from old religious enti- would receive any benefits. without health insurance. Al- ty-based risk-sharing groups, High-deductible plans, many though the Affordable Care and it’s not insurance, exactly, available via the ACA health- Act had penalties in place for but is intended to provide insurance exchanges (see chart those that chose to go with- members with quality medical on the next page), can be more out insurance, that individual services. affordable when they’re as- mandate goes away in 2019. ACA HEALTH-INSURANCE sociated with a Health Savings Because it has remained in ef- EXCHANGES. The Affordable Account. fect for 2018, its penalties will Care Act has solved some be applied to 2018 tax returns owner-operators’ health care HEALTH SAVINGS due April 15, 2019. financing problems. ACCOUNTS The structure of health in- Premiums available on the For some owner-operators, surance exhanges that came health-insurance exchanges tax-exempt medical accounts with the ACA remains in vary widely by plan level, fam- can lessen the hurt of health place. Otherwise, the health ily size, age, income-based tax care costs. Health Savings insurance landscape continues credits and where you live. The Accounts are part of many to change, though there are lower an operator’s taxable in- plans on the health insurance other ways to get at least a come is, the better rates look in exchanges and allow unspent minimum level of health cover- the exchanges. contributions to roll over year age or to reduce the costs for HIGH DEDUCTIBLES. Policies to year. good coverage. that charge lower premiums The major qualifier remains YOUR SPOUSE. If you’re in return for you assuming having a policy with a high married and your spouse is high deductibles, often $2,000 deductible. Of course, this is eligible for family health care to $5,000, are helpful if you also the root of the savings, coverage, take advantage of it. rarely visit the doctor. After because premiums on such YOUR COMPANY. If you’re meeting the deductible, the policies tend to be lower. leased to a carrier, you may policyholder pays a portion, A high deductible means be eligible for its group policy, often 20 percent, of the medi- you’re likely to pay 100 per- though not in the same way as cal bills. cent of your routine health an employee. You’ll pay all of Policies are available care. Should anyone on your the premium — the employer’s with deductibles as high as policy need major care, the share plus what an employee $10,000. However, if you policy kicks in after the de- would pay — plus a fee for raise your deductible too ductible is met. processing. high, you’re in effect paying Advantages include: Check with your business for health care out of your • A wide range of qualifying services provider to make sure pocket and buying only cata- expenses, including chiroprac- the plan doesn’t endanger your strophic coverage, a safety tic services, over-the-counter status as an independent con- net to cover ailments that pain relievers and other items tractor. produce five- or six-figure that traditional insurance ALTERNATIVES TO INSUR- bills, such as a heart attack or wouldn’t approve. ANCE. The National Associa- cancer. • Some health care providers tion of Independent Truck- If you’re older than 40 discounting services for their ers’ partnership with Aliera with a family history of medi- HSA clients. offers members access to cal problems, or if you’re • Your taxable income being AlieraCare, an ACA alterna- someone who is unlikely to reduced by whatever you put tive that combines preventive use health care on an on- into the HSA. care with what’s known as going basis, you might not Unlike money put into an a “health care sharing min- want such a high deductible IRA, which gets taxed upon istry” for hospitalization. It because you probably rarely withdrawal, HSA funds are

Questions? Call ATBS: (888) 640-4829 | 77

PIB19_CH16-19.indd 77 8/14/18 5:02 PM AFFORDABLE CARE ACT COVERAGE Arrangements. made generic medicines are A sole proprietor owner- required to meet the same operator who can establish a standards as their brand-name legitimate employer-employee inspirations, but they’re far relationship with his or her cheaper. spouse, whether team driving Review all medical bills. or not, can set up an employ- You’ve probably asked ques- er-funded spending account tions about line items when Federal exchange states from which to pay medical reviewing a truck purchase HealthCare.gov, (800) 318-2596 bills for both people. The statement. The same policy entire amount can be noted applies to medical bills. States operating their own exchanges on Schedule C as a business Even a simple visit to the deduction, rather than as a doctor can produce multiple California: CoveredCA.com, (800) 300-1506 line item on your 1040. This charges from a lab or X-ray Colorado: ConnectForHealthCO.com, (855) 752-6749 produces tax savings higher technician, and an emergency Connecticut: AccessHealthCT.com, than the standard medical pre- room visit or surgery can (855) 805-4325 mium deduction for the self- produce a stream of bills for District of Columbia: DCHealthLink.com, employed. months. (855) 532-5465 Some companies set up Carefully review any medi- Idaho: YourHealthIdaho.org, (855) 944-3246 Kentucky: KYEnroll.KY.gov, (855) 326-4650 HRAs for a fee, or you can set cal bill before paying it. This Maryland: MarylandHealthConnection.gov, up such a plan yourself, using especially is important if you (855) 642-8572 software and online guides. don’t have an insurance com- Massachusetts: MAHealthConnector.org, pany to vet charges on your (877) 623-6765 TIPS FOR THE behalf. If items are listed as Minnesota: MNSure.org, (855) 366-7873 SHORT HAUL New Mexico: MyNMHC.org, (877) 769-6642 “miscellaneous” or coded, ask New York: NYStateOfHealth.NY.gov, Caring for your body is like for details. Scrutinize state- (855) 355-5777 caring for your truck in that ments from your insurer just Rhode Island: HealthSourceRI.com, both involve assessing products as carefully. (855) 840-4774 and services. The informed Negotiate rates. The Nation- Vermont: HealthConnect.Vermont.gov, (855) 899-9600 consumer knows how to get al Insurance Resource Center’s Washington: WAHBExchange.org, the best value. In the realm of website suggests that negotia- (855) 923-4633 health care, finding those val- tion may work for people with- ues isn’t always obvious. Here out insurance in getting medi- are ways to spend your health cal expenses reduced before never taxed if they’re spent on dollars wisely. the service is rendered. It never health (though there is a 20 Shop around. Ask different hurts to ask. percent penalty for funds not offices how much they charge Get a second opinion. If your used on health). After you turn for similar medical or dental doctor or dentist suggests a ma- 65, you can spend it on things services. While the cheapest jor operation or procedure, get unrelated to health, but such may not always be the best, another opinion. Some insur- spending is taxable. three or four contacts should ance policies require a second give you a good estimate. Con- opinion for major procedures, REIMBURSEMENT sumersUnion.org reports that so you could be liable for a big ARRANGEMENTS stores in the same city often bill if you fail to do so. Some savvy owner-operators have widely different prices Appeal insurance rejections. have been able to take advan- for the same medications. Call Most insurance companies tage of Section 105 of the and ask. You also can buy your have an appeals process if a federal tax code, which allows meds online. billed procedure or medical for Health Reimbursement Buy generic. By law, U.S.- expense is denied. Most insur-

78 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 78 8/14/18 5:03 PM Finding a pharmacy may be ACA COVERAGE LEVELS AVAILABLE another hurdle, but at least you Preventive services are covered in use of such a plan could be benefi- could arrange for medications all exchange plans except those for cial to overall premium costs if your at a convenient exit. catastrophic coverage. Those low-cost household income is near the level at Keep up with tax-deductible plans kick in only after a high annual which you might qualify for premium expenses. Many medical-re- deductible is met. Any nonpreventive reduction. lated items are tax-deductible, medical care costs would be split The subsidy line is drawn at 400 including doctor and dentist between the insurer and insured at percent of the federal poverty level. In fees, false teeth, prescription coinsured percentage rates specified 2018 that was $48,240 for an individual, eyeglasses, laser eye surgery, in the different plan levels after any $64,960 for a family of two, $81,680 hearing aids and crutches. deductible is met. for three and $98,400 for four. If your Such expenditures are deduct- A big part of the Affordable Care Act household modified adjusted gross ible only in excess of 7.5 per- is the standardization of plan levels, income is below that level and no cent of the taxpayer’s adjusted with variations. For instance, there employer-based insurance is in reach, are PPOs and HMOs, the latter more you will qualify for reduced premiums. gross income (the new tax law limited in doctor options but generally Standardized-plan coinsurance levels boosts to floor to 10 percent cheaper. There are plans with varying are as follows: in 2019). Unless you have a deductibles at each standard level, and Platinum plans: 90/10 percent lot of expenses, it is difficult many are set up to pair with a Health Gold plans: 80/20 percent to gain a real advantage in Savings Account for medical spend- Silver plans: 70/30 percent medical expense deductions, ing. Given that access to tax credits Bronze plans: 60/40 percent and it will get more difficult in to reduce premiums is based on your Catastrophic coverage: Available 2019. And don’t create head- income, and money put into an HSA on the exchanges only for aches for your tax preparer by directly reduces your taxable income, applicants under age 30 mixing in receipts for drugs or medical services for which you’ve already been reim- ance companies allow for three cess to therapists and mental bursed through your insurer. appeals on a single issue. health professionals. The Check with your tax preparer Avoid emergency rooms. If NAIT group offers a tele- for details, or visit www.irs. you’re suffering a heart attack medicine service catered to its gov/taxtopics and go to topic or serious injury, use a hospital leased owner-operator mem- 502 for more details. emergency room. Otherwise, bers, too. While these services they’re too expensive and often shouldn’t be used for your TIPS FOR THE have long waits. Many com- overall health care, it’s nice LONG HAUL munities have walk-in clinics to know you can get a quick As an experienced owner-op- that treat common problems consultation without having to erator knows about his truck, such as colds, flu, broken limbs shut down somewhere acces- preventive maintenance works. and cuts. sible to a doctor’s office. The more you keep your body Use telemedicine services. in shape, too, the less down- Although the concept of “tele- time you’ll experience, and the medicine” originated 40 years HSA LEVELS FOR 2018 less you’ll spend getting your- ago, it’s just now becoming a self fixed. reality. The appeal to truckers Individual Family These best practices will, is twofold: low cost and easy Maximum over time, help prevent you access. Sites such as MDLive. contribution $3,450 $6,900 from spinning your wheels in com offer physician “visits” Catch-up for the doctor’s waiting room in- for around $50, sometime less. 55+ years $1,000 $1,000 stead of keeping them turning MDLive also offers behavioral Minimum on the road. deductible $1,350 $2,700 services, with immediate ac- Get regular exercise. You can

Questions? Call ATBS: (888) 640-4829 | 79

PIB19_CH16-19.indd 79 8/14/18 5:03 PM do some things in your cab, road, call your family physi- such as climbing ladders. such as sit-ups, jumping jacks cian or dentist to have medi- Know your medical history. If and stretches. Walk — or jog, cal files and X-rays forwarded one side of the family has heart if you can — around the truck to an on-the-road clinic. Sev- problems, pay careful attention stop lot. Whatever level you’re eral companies offer services to the way you treat your heart. capable of, try to exercise four that store your medical infor- Also attend to family histories or five times a week. mation on USB jump drives of high blood pressure, diabe- Eat healthy. Stay away from or scrolls that can be carried tes, cancer, allergies, etc. the fast food and grease com- on a keychain. mon in truck stop diners and MedicAlert and American INCOME REPLACEMENT on fast-food menus. While Medical ID offer medical INSURANCE an occasional moderate in- jewelry to be worn as a neck- The probability of an income- dulgence is OK, try to mix in lace or bracelet for those with interrupting event is more like- more low-fat meals – heavy on severe conditions, such as an ly than you might think. Three salads, vegetables and fruits. allergy to penicillin. out of every 10 Americans Most truck stops now offer Follow doctor’s orders. between ages 35 and 65 will such choices. Whether it relates to special become disabled for more than Drink more water. Too many diet, daily exercise, sleep or 90 days at some point in their people reach for a Mountain medication, it’s critical to stick lives, according to the Ameri- Dew when they become dehy- with a prescribed regimen. can Council of Life Insurers. drated. But soft drinks, as well Avoid paying by credit card. One in seven will become dis- as beer and other alcoholic Unless you’re paying off your abled for more than five years. beverages, can dehydrate you entire balance every month An owner-operator work- further. Instead, reach for a and know that you can do the ing without adequate income large glass of water. same with additional medical replacement coverage who Shun tobacco products. costs, stay away from credit. If experiences an on-the-job in- They’re life-threatening. The your account charges 18 to 20 jury can be exposed to various sooner you quit, the better. percent, even a $2,000 bill that hardships, including loss of Don’t be a substance abuser. takes months to pay could cost income if unable to work. Any Trucking is a hard job, but if hundreds of dollars more be- given plan will pay a percent- you’re relying on heavy drink- fore you’re done. Pay in cash, age of your income with a flat ing to “unwind,” you’re kid- use savings, or set up a pay- rate maximum and only for a ding yourself. The same goes ment plan with the provider’s fixed period. The typical pay- for using illegal drugs or abus- office. out is 50 to 60 percent with a ing prescription medication. Don’t forget your teeth. cap, though some may run up Get an annual physical. Brush and floss regularly. Lay to 70 percent. Most policies It’s critical for drivers to be off artificial sweeteners and so- will stay in effect as long as checked out at least annu- das. Small dental problems can you stay current on your pre- ally. Your U.S. Department grow into major health prob- miums, even if chronic health of Transportation-mandated lems in time. problems continue after your physical is not the equiva- Know your body’s limits. initial claim. lent of an annual physical Don’t hurt yourself with a Occupational accident and from a doctor. You should be pulled muscle, joint or other disability policies, and in cer- screened for sleep apnea; eye injury by lifting or reaching tain circumstances Social Se- disease; colorectal, prostate or for an item that is out of your curity disability, are the most skin cancers; excess cholester- range. This rule applies not common income replacements ol; and high blood pressure. only to securing a flatbed load available to owner-operators. Ensure your records are ac- or wrestling cargo out of your Occupational accident. Usu- cessible. If you get sick on the van, but also to home projects ally the most inexpensive cov-

80 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 80 8/14/18 5:03 PM choice if your state’s workers’ QUALIFYING FOR DISABILITY comp regulations have an opt- out provision. Shop for a disability policy on the four credits per year) in the past 10 Disability. individual market, and you’ll usually years prior to the onset of disability Disability insurance have to qualify. Factors such as age (normally four credits per full or is offered with short-term and and overall health will determine how partial year); one additional credit is long-term plans that normally much you pay. You may be required required for every year by which the cover accident and illness wheth- to pass a basic physical to determine worker’s age exceeds 42. er they are job-related or not. any existing or potential physical This is not an easy option to pur- Short-term disability typically problem. The better shape you are sue: The filing process takes about will provide benefits for up to 26 in, the lower the premium. Buying four months, and the Social Secu- weeks based on a percentage of into a group policy, such as those rity Administration denies about 60 income, with a fixed cap. Long- administered through membership percent of the initial claims. If you term policies take over where organizations like OOIDA and NAIT, are approved, you have to wait five short-term policies leave off and may offer less-stringent requirements months for the first check. usually pay benefits for two to and lower premiums. It is likely that OTHER RESOURCES. Don’t you will have to declare pre-existing spend so much money on income- five years, but can continue up conditions, which could mean no cov- replacement insurance that you to age 65 when Social Security erage for the first year. starve your emergency or retirement and personal retirement savings SOCIAL SECURITY. If you become fund. Remember, you’ll need that normally begin. unable to work for more than 12 retirement money whatever happens, When it comes to the defini- months, Social Security Disability whereas you may never need the tion of disability, there are two Insurance may be an option. SSDI income-replacement benefits. If you distinct types: own occupation or is not based on income; a person have plenty of savings and are at a any occupation. can qualify for SSDI if he or she is late stage in your career and maybe The former means the dis- younger than 65 and meets these already beginning to cut back on your abling event occurred while on criteria: workload, you may not need income- the job you had — in your case, • A physical or mental condition replacement insurance at all. driving a truck — and that it prevents the individual from engaging Since six months of living in any “substantial gainful activity.” expenses is relatively easy for a left you unable to perform your • The condition is expected to last disciplined saver to sock away into former job. at least 12 months or result in death. a savings, checking, money market Any occupation disability • The person has accumulated 20 or some other account, long-term means that if you are able to Social Security credits (credits are disability policies may be better perform another job, you are based on your earnings with a cap of investments than short-term ones. not disabled. Your normal in- come is not taken into consid- eration. If you can be trained erage for owner-operators is what the policyholder wants. to work at another job — even an occ/acc policy. It provides Many fleets require leased at minimum wage — you prob- benefits to the policyholder owner-operators to obtain ably won’t be able to collect in the case of a work-related either workers’ compensation benefits. Some policies that injury or illness, unlike a tradi- or occ/acc coverage. For this claim to be own-occupation tional accident policy that pays reason, many owner-operators have qualifiers that make them out even if the accident is not don’t view occ/acc as elec- any-occupation, so pay atten- work-related. tive coverage. One thing that tion to the fine print. Benefits are not based on makes occ/acc the top choice True own-occupation dis- income, but rather a menu that is that it’s usually cheaper than ability has become harder to outlines the payment amounts workers’ comp. Also, in most find. It’s generally expensive, for minor to major job-related states, workers’ comp won’t pay especially for occupations such injuries or illnesses. Some carry out to self-employed workers. as trucking that are deemed options or riders depending on This makes occ/acc an easy high-risk.

Questions? Call ATBS: (888) 640-4829 | 81

PIB19_CH16-19.indd 81 8/14/18 5:03 PM 18 CHAPTER

GOING INDEPENDENT GETTING YOUR OWN CARRIER AUTHORITY COMES WITH RISKS AND REWARDS

wo upsides to almost complete freedom level of responsibility. Or in getting your own associated with how you run some cases, industry condi- carrier authority the business. This sounds tions are not favorable. While T are the potential wonderful, but with freedom many things have changed to make more money than comes risk and responsibility. over the years, preparation a leased operator and the Many owner-operators de- still is far more important cline to pursue getting their than shifts in the economy. authority because they realize The preparation starts with they are unprepared for that deciding where you’ll get your

82 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 82 8/14/18 5:04 PM freight, since that no longer customers starting out that this path, you may need your will be a matter of calling can last throughout your broker authority or other driv- dispatch. You’ll have to locate career. Some ways to build a ers employed under you in your own customers or work customer base include hav- order to move enough freight through load boards and bro- ing special equipment, run- to support both partners. kers. ning a part of the country If you decide not to acquire FINDING YOUR OWN CUS- that many others don’t like your own customers, you’ll TOMERS. Soliciting freight to go, or finding your way need a plan for working with from shippers can be a daunt- into a niche market such as brokers or using load boards. ing task for an individual, but hauling cattle or cars. Hav- Don’t make the mistake of it results in the highest freight ing a specialized trailer that looking randomly for freight rate. There is no middleman makes you unique in your every time you need to load. to take a cut. There are sev- area can set you apart from In the beginning, focus on eral ways to find small local other carriers. good back-and-forth lanes or shippers. You can use business Auto hauling is one of the areas with one point being directories online or attend more difficult trucking seg- your home – or use a trian- local business functions such ments to enter and master, gular strategy to find the best as chamber of commerce but it also can be one of the rates. Consider fuel prices in events. One easy way is to most financially rewarding. all of those lanes, weather, drive around industrial parks It’s expensive to get into haul- traffic, road conditions and, and take notes. ing cars — a new nine- or 10- of course, freight rates and List 25 to 50 potential cus- car trailer can cost upwards availability. tomers, then schedule two of $90,000 — and typically, Research load boards weeks off the road to contact a certain amount of truck- daily to see what is avail- the shipping managers unless ing experience is needed be- able in your preferred areas. you have a spouse or other fore hauling such high-value You’ll get an idea of types partner who can handle this. items. of freight, average rates Be ready to hear no many Event hauling is another and which brokers have the times. If you generate just niche that can be lucrative if freight. one customer, consider it a you can get a foot in the door. Once satisfied with an area success. The challenge to hauling for or lanes, contact brokers who As a one-man show, you concerts and other events is control freight there and ex- may find this task awfully you follow a certain artist’s plain what you have to offer. time-consuming and difficult. tour, so you can be on the Your goal is to create a strong If you’ve never worked in road without going home for working relationship and sales, prepare yourself. There months at a time. provide outstanding customer are hundreds of great au- Find more on a variety of service. diobooks on sales and nego- niche hhauls at OverdriveOn- Always be sure to double- tiation. Listen to some while line.com/tag/niche-hauls. check mileage quoted from a working on your plan. GETTING HELP. If personal broker or load board. Some- In any bid to secure a solicitation sounds too over- times the mileage you see is contract with a shipper, whelming, consider other op- from city-to-city rather than make sure you can answer tions: address-to-address. Addition- this question: Why you? Why • Hire a freight broker ally, watch out for double-bro- should any particular ship- to work as your direct sales kered and co-brokered loads, per entrust its freight to agent. which add more middlemen you? Setting yourself apart • Find a business partner to the equation. from the crowd, however with experience in freight Once your business model you do it, will help you find sales. If you choose to follow is established, you’ll be ready

Questions? Call ATBS: (888) 640-4829 | 83

PIB19_CH16-19.indd 83 8/14/18 5:04 PM HOW TO FILE FOR YOUR AUTHORITY

After establishing your business entity you’re viewed as risky, and you’ll pay Do truck signage. Federal (see Chapter 9 for more about the accordingly. Operators have reported regulations require any truck to have choices of business type), follow these primary liability rates falling to the following on both sides in a highly filing steps to obtain your authority. between $5,000 and $7,000 annually as contrasting color: 1) The legal name of Federal filing information and forms their businesses became established. the motor carrier operating the truck are available via FMCSA.DOT.gov. Once insurance is secured, have the as listed on form MCS-150. 2) The DOT Get USDOT number. Traditionally, agent file the appropriate BMC-91 form number issued by FMCSA, preceded by there has been no fee to register with FMCSA as proof of insurance. the letters “USDOT.” for your U.S. Department of Designate process agent. The If you want to include your name Transportation number. As of Sept. process agent you select will be the or any other name that differs from 30, 2016, when MC numbers were entity upon whom court papers may the exact business name, the words phased out as part of FMCSA’s new be served in any proceeding against “operated by” must precede the legal Unified Registration System, the $300 your business. Use FMCSA’s form BOC- name and identifying DOT number. filing fee previously associated with 3 to designate your process agent. OTHER NEEDED FILINGS MC numbers transferred to the DOT Make certain the process agent is Heavy Highway Vehicle Use Tax number. For this filing, FMCSA’s online authorized to cover you in every (Form 2290) and International system will guide you through the state in which you operate. OOIDA Registration Plan (IRP). If you are process. For those filing paper, use functions as the process agent for obtaining plates in your base state, the MCS-150 form. many of its members; some factoring you’ll need proof of payment of the Get insurance. Pricing primary companies also offer this service. annual federal HHVUT, which varies liability insurance can be done at Process agents may charge a startup according to weight under load. any point. After filing your business fee and cost around $100 annually. State fuel taxes. See Chapter 5 for type with your state, a general rule of FMCSA maintains a list of process more on the IFTA program. thumb is to get quotes from different agents, organized by the state where State use taxes. Oregon, Kentucky, insurance companies to assess they’re based, on the Registration and New Mexico and New York also levy affordability. (See Chapter 16.) Licensing portion of its website. separate use taxes you’ll need to Owner-operators who’ve made Complete UCR. Complete your track. Oregon requires monthly in- the move relatively recently toward Unified Carrier Registration via the state mileage reporting, Kentucky and their own authority report wildly central hub at UCR.in.gov. The fee is New Mexico quarterly. All three levy varying quotes — from $8,000 to $76 annually for carriers with one or so-called “weight-distance” taxes. $20,000 annually. Regardless of your two trucks, rising from there for more New York’s is similar but with more driving record, as a new business power units. complicated calculation.

to jump through the adminis- • Cash and credit: Your ul- about a fast-pay option that, trative and regulatory hoops timate goal should be to have for a fee, guarantees your for going independent. enough cash in reserve to op- money in a certain number The financial and technical erate without borrowing. This of days. preparations for going inde- may take months to accrue. • Factoring loads: The pendent are not easy. If you don’t have that kind of ability to control cash flow MANAGING CASH FLOW. It’s money, consider a revolving will make or break a truck- not unusual for a carrier to line of credit with your bank. ing business. Using factoring wait 30, 60 or even 90 days You also can use a home eq- companies such as TBS to to get paid in traditional pay uity line of credit, but under- handle your receivables gives structures. Work in a bro- stand that if you’ve borrowed quick access to cash to fund ker with bad credit and you too much and your business day-to-day operations. (See might never get paid. An ini- goes belly-up, you could lose Chapter 7.) tial cash flow lull can make it your home. GETTING INSURANCE. A extremely difficult to launch • Broker quick-pay: If carrier by law must have li- your business. you plan to use brokers, ask ability insurance. Most freight

84 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 84 8/14/18 5:04 PM DO-OR-DIE PREPARATIONS FOR THE NEW ENTRANT AUDIT

After filing for authority maintenance programs, • Using a driver who cargo ($5,000 per vehicle and successfully, you are a filed and up-to-date has refused to submit to $10,000 per occurrence) and responsible for buttoning accident register and an alcohol or controlled- $750,000 primary liability. up your business. Recent written drug and alcohol substances test. • Knowingly using a FMCSA stats show more policies and procedures. • Using a driver known physically unqualified driver. than 80 percent of new Any of the following to have tested positive for a • Failing to require a entrant audits have violations will result in an controlled substance. driver to keep record of duty been conducted on time, automatic failure of the audit: • Driving or using a driver status current. within the carrier’s first • Failing to implement without a CDL. • Running a vehicle 18 months of business. an alcohol and/or controlled • Driving or using a driver declared out of service before It’s critical you put into substances testing program. with a suspended, revoked or repairs are made. place evidence of your • Failing to implement a canceled license or a federal • Failing to correct out- attention to compliance random controlled substance disqualification. of-service defects listed on and safety management. testing program. • Allowing a disqualified vehicle inspection reports Critical areas of focus for • Driving or using a driver driver to drive. before further operation. new entrant audits include with an alcohol content of • Not carrying appropriate • Running a truck not driver qualifications, logs, 0.04 or greater. insurance, including minimum inspected periodically.

partners will require cargo Consider these areas and alcohol testing program, as insurance. A $1 million li- decide if you are going to well as one for keeping hours ability policy and a $100,000 handle them yourself or pay of service and vehicle mainte- cargo policy is recommended. somebody else: nance records. (See Chapter 16.) Obtain • Rates and lanes A carrier often handles tax insurance within the first two • Compliance filings for its leased owner-op- weeks of the DOT number • Safety erators, but now you are the being filed to avoid delays in • Drug testing carrier. You are responsible authority processing or hav- • Hours of service for accounting for income ing it dismissed. • Accounting and revenue for federal and • Fuel tax state tax purposes, fuel tax, PLAN COMPLIANCE • Mileage tax mileage tax and heavy vehicle DUTIES BEFORE GOING Compliance, safety, drug use tax. INDEPENDENT testing and hours of service Also, it’s possible that you One major mistake many fall under FMCSA regula- would be better off forming owner-operators make when tions. Addressing these can a limited liability company considering the move to run cause a lot of stress and con- (LLC) or an S Corp for tax under their own authority fusion. Also under FMCSA is reasons before getting your is to underestimate the total the new entrant safety audit. own operating authority. cost of operations. It’s easy New entrants to trucking face Explore the question of tax to look at a load board and a shortened deadline for cor- structure with your business dream about getting those recting problems in their ap- services provider or accoun- rates posted and not sharing plications. tant before starting the appli- them with any carrier. It’s Applicants must submit a cation process. another matter entirely to end corrective action plan within When you are operating as up making less than you do 15 days of the audit or, in a carrier, you won’t always now because of all of the ad- some cases, 10 days. receive 1099s for the revenue ditional costs. Have in place a drug and you generate. You’ll need an

Questions? Call ATBS: (888) 640-4829 | 85

PIB19_CH16-19.indd 85 8/14/18 5:04 PM SMALL FLEET EXPANSION

The long-term goal of many a solid customer base and having HIRING QUALIFIED DRIVERS independent owner-operators with good relationships with brokers, you Overdrive research has found that their own authority is to expand can keep rates higher than average. small fleets have had success in beyond one truck. Often, the prime Offering safety bonuses and other advertising on their own equipment — focus is to raise capital to invest in performance-based pay boosts can giving would-be drivers an idea of the additional trucks, but some veterans help attract drivers to your operation equipment they can expect before they have discovered that such an — and keep them there. ever make a phone call. approach could be faulty in that it Incentives such as vacation and Leveraging social media, such as puts the equipment before the most holiday pay also can help keep drivers Facebook and Twitter, to reach out to important part of the equation — the around. Increasingly guaranteed trucking friends is another option. driver. minimums for compensation to Some things small fleets have tried For a small fleet operator who still backstop miles or percentage pay are with some success include: drives, finding a self-starter with a common. Overdrive research found • Putting company contact passion for trucking is key. Absent in 2018 that 20 percent of small-fleet information on the back of a trailer. employed dispatch and in-house readers have such a guarantee in This can put the idea in another maintenance personnel, and given place, often structured as a certain driver’s head to reach out and inquire the time constraint placed on a small amount per week the driver is about your company. fleet operator who still drives, the available to work ($1,000 weekly is • Avoiding restrictive employed driver will need to be able common). qualifications. If you’re having trouble to manage his time, loads and truck Equipment. The opportunity finding a pool of drivers, and if you have maintenance. These considerations to operate top-shelf equipment a certain requirement, such as a hazmat could be the lynchpins in long-term encourages longevity with your endorsement or the ability to drive into profitability. company. Give drivers with tenured Canada, consider rethinking that as a In 2016 polling of Overdrive seniority the first choice when it requirement . That may not be an option readers, the largest share of comes time to buy new equipment. for your business, but if it is, it can respondents (43 percent) reported Home time. It’s a common small- expand the pool of candidates. belief that the driver was the most fleet practice to hire out of the area in • Ramping up social media and important part of the expansion which the company is headquartered. other online efforts. If you haven’t equation. Many operate on an out-and-back already, create a Facebook page and a Three principle areas of focus can model that gets drivers home for the website for your company, and begin to help an owner-operator expand into a weekend, if not even more frequently. advertise with both. Interacting on social multi-truck business: A system like this also can help you media may require more of a weeding- Pay. The average income for get equipment back in one place out process than you want, but it can company drivers is between $40,000 for routine maintenance. Drivers’ garner a lot of attention. Drivers can and $60,000, depending on which needs should take precedence over message you from your company’s page, statistics you’re studying. By finding equipment decisions. which can begin a conversation.

accounting system that tracks need to track all miles and of work, and it is. Don’t make all income and expenses. gallons of fuel purchased in this decision lightly. It can be Other crucial preparations each state in order to file your a great opportunity if done include developing a system IFTA forms. You also may right, but it can be your worst for invoicing, accounts receiv- need to file mileage tax forms nightmare if you fail to plan able and tracking fuel and in New York, Kentucky, New and execute properly. If your mileage taxes. The latter two Mexico and Oregon if you goal is go independent, cre- require filing the appropriate travel in those states in any ate your plan, figure out the forms. You or a third-party given quarter. costs, create your budget, and specialist in this area will This may sound like a lot follow through.

86 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 86 8/14/18 5:04 PM 19 CHAPTER

SAVING FOR YOURSELF THE HABIT OF SAVING FOR PERSONAL GOALS WILL PAY BIG DIVIDENDS LATER

s your business gets retire comfortably? A U.S. De- would be income from invest- established and partment of Labor study found ments during retirement. you can predict that Social Security will replace Although it’s never too late A decent earnings on only about 40 percent of pre- to start saving for retirement, a regular basis, establish long- retirement income for the aver- the sooner you begin, the bet- term personal savings plans age American. Yet experts say ter, even if it’s only $25 a week. and work a weekly or monthly that after you retire, you’ll need The biggest reason is that in- savings contribution, however about 70 percent of the income vested money compounds. The modest, into your budget. you earned before retirement to earlier you invest, the more Retirement saving is critical maintain your lifestyle. time your money has to grow. for you as an owner-operator At 70 percent, a trucker who If a 25-year-old puts $400 because you’re self-employed. earns $60,000 annually will into a retirement fund every Saving for children’s education, need about $42,000 a year month until he reaches age vacations or other personal after he retires. When that 65, and his money grows 10 goals also is important. figure is multiplied by 20 years percent a year, he will retire — the average post-retirement with almost $2.5 million. If a PLANNING longevity — that trucker 35-year-old invests the same FOR RETIREMENT will need about $840,000 to amount each month and If you maintain your current live comfortably. That entire spending and savings habits, amount doesn’t have to be will you have enough money to saved in advance. Some of it

Questions? Call ATBS: (888) 640-4829 | 87

PIB19_CH16-19.indd 87 8/15/18 8:19 AM RETIREMENT AND OTHER SAVINGS

The basic principles of retirement in any one particular area. retirement portfolios. Some advisers savings also apply to any other savings Certain mutual funds constantly work on a flat yearly fee. Others charge you do. The major differences involve do this sort of reallocation. But most a commission based on investment taxes. individual investors don’t, which is transactions. Ask prospective advisers Your accountant or financial adviser why many investors earn less than the if they have passed the Series 7 can explain the options for savings for stock market’s historical average of exam administered by the National children’s education. Some of them, 10 percent (or 7 percent, adjusted for Association of Securities Dealers. Also like qualified retirement plans, are tax- inflation). ask to see their official bio — a detailed exempt. There are no tax advantages Too many investors are motivated resume that includes information for shorter-term personal savings, to buy and sell by market trends. When mandated by the U.S. Securities and such as for a vacation, a holiday fund stock prices double, that expensive Exchange Commission, including or your next vehicle. stock is the one that novices want education and any skirmishes with the Nevertheless, it’s wise to anticipate to buy. And when the market has SEC. such spending and save for it. You’ll a sudden drop, novices are more HOW MUCH SAVING IS ENOUGH? spend less for those things by paying likely to dump those same stocks at To get an idea of your “magic number” cash (and gaining a small accumulation rock-bottom prices, only to see them for a retirement saving goal, begin of short-term interest or dividends) rebound in a couple of months. by calculating your current annual than you will by putting them on a ESTIMATE INCOME. Projecting your nonbusiness spending, such as credit card or by taking a consumer retirement income can be complicated. housing, food, personal vehicles and loan and paying double-digit interest. You should expect some interest and entertainment. Keep in mind that in LEARN TO TAKE STOCK OF dividends from investments. Social retirement, you ideally will spend less THE MARKET. Think of your stock Security and perhaps other sources, on some things (such as mortgages) investments as a loaded trailer: The like a part-time job or a pension and more on others (such as travel). more evenly distributed the weight, from a prior employer, need to be Then assume a 4 percent inflation rate the more stable the ride. When you considered. every year. spread your money among multiple HELP IS OUT THERE. Basic financial Now do the really scary thing and investments, at least one of those advice also can be found online for calculate your life expectancy. Various investments is almost sure to grow. free. Owner-operators who already online calculators will ask for your age, When it does, experts say, resist the have accountants or business services sex, height, weight, blood pressure and temptation to move all your money providers should enlist them in their cholesterol level, as well as your family into that growth investment. Instead, retirement planning. Those serious history and other variables. Don’t be redistribute the gains so that your about saving also may want to hire surprised if you’re looking at 20-plus portfolio never becomes too top-heavy a financial adviser to handle their years of retirement.

earns 10 percent, he will have ers frown on such an eggs-in- ment program, you’ll pay taxes a little more than $900,000 at one-basket approach. If your on earnings, such as interest age 65. trucking business faces financial from a savings account or It’s hard to save on a regular difficulties, then your retirement profit from a stock sale. With basis. Yet average owner-opera- savings can be decreased sub- qualified retirement accounts, tor clients of ATBS earn about stantially – or even wiped out. you don’t pay a penny in taxes $60,000 a year. At that level, Think of your trucking business on the earnings until you retire the main difficulty is more as only part of your portfolio – and begin withdrawing money. about controlling spending. and a high-risk part at that. Not only are taxes delayed for Many owner-operators who many years, but by then you don’t save say they’re investing QUALIFIED should be in a lower tax brack- their money in their business, RETIREMENT PLANS et, so you’ll pay less in taxes. with plans to sell it and retire on When you make investments In addition, most retirement the proceeds. Financial advis- that are not part of a retire- plans allow you to deduct con-

88 | In partnership with Overdrive and ATBS

PIB19_CH16-19.indd 88 8/15/18 8:19 AM tributions from your reported income. That means if you TAKE SOCIAL SECURITY EARLY OR LATE? make $40,000 and contribute You have a choice whether to begin you’ll need to live through age 78 and $2,000 to a qualified plan, you receiving Social Security benefits early a half to make up for those missed report only $38,000 on your (age 62), at full retirement age (at 66 if benefits; beyond that, the higher income tax return. you were born between 1943 and 1959, payments would be to your advantage. The most popular qualified at 67 if 1960 and later), or later. You also have the option to take plans for owner-operators are Say you’re 62, with a working Social Security after age 67 to receive Individual Retirement Ac- income of about $51,000 averaged a higher monthly percentage until age counts. Contributions can be over enough years to qualify; you 70. At 67, you’ll get 108 percent of your put into certificates of deposit, would be eligible for $1,050 a month monthly benefit; at 68, 116 percent; at money-market accounts, sav- now or $1,393 a month at age 66. If 69, 124 percent; and at 70, 132 percent. ings accounts, mutual funds, you start now, you’ll have collected The increases stop after age 70 even if stocks, bonds and U.S. Trea- $50,400 by age 66. If you start at 66, you continue to delay taking benefits. sury securities. A banker, stockbroker or mutual fund company can help you set up tax-free when withdrawn. tive. Since 2001, however, in- an IRA. SIMPLE IRA. The SIMPLE dividuals have been free to set TRADITIONAL IRA. You are (Savings Incentive Match up solo 401(k)s, which have an allowed to contribute $5,500 a Plan for Employees) IRA was annual contribution limit of year, tax-deferred, to an IRA, designed for companies with up to 25 percent of income or through tax year 2018 with a fewer than 100 employees. If $18,500, whichever is lower, in catch-up contribution limit of you employ others, you and 2018, as long as you are clas- $1,000 for individuals age 50 your employees qualify. Under sified as an employee of your and older. As long as you’re a SIMPLE IRA arrangement, own business (such as in an S not covered by an employer- an employee of your busi- Corp structure) and are pay- sponsored retirement plan, ness can contribute to and be ing yourself a salary. If you’re all contributions to an IRA matched by you up to $12,500 self-employed, the rules are reduce your taxable income in 2018, with a $3,000 catch- more complicated. See IRS and are tax-deferred. If you or up contribution limit for those publication 560’s rate table your spouse contributes to an 50 and older. and worksheets for determin- employer-sponsored plan such SEP IRA. A Simplified Em- ing your contribution limits. as a 401(k), only a portion of ployee Pension plan allows an ROTH 401(k). A newer your contribution to an IRA employer to contribute up to retirement plan option is a is deductible. Your IRA funds 25 percent of net income (up combination of the Roth IRA cannot be withdrawn before to $55,000 total) to an IRA and the solo 401(k) called the you reach age 59.5 — except set up for himself or his or her Roth 401(k): Money you put under special circumstances employees. After money is put into it is taxed in the year you — without incurring a hefty into the plan, it must stay there earned it, but never again. penalty. until the owner turns 59.5. Many financial advisers be- ROTH IRA. The differences Early withdrawals are subject lieve a Roth 401(k) is by far between a traditional IRA and to federal income taxes and a the best deal for an owner- a Roth IRA are the terms of possible 10 percent penalty. operator. contributions and payout. With INDIVIDUAL 401(k). For Assuming that taxes will a Roth IRA, contributions are years, 401(k) retirement plans, go up in the long term is the not deducted from income, so another form of tax-deferred safest of bets, so paying now they are taxable for the year savings, were limited to em- locks in the lower rate. The they’re earned. But they do ac- ployees, often with an employ- more taxes you can pay while cumulate tax-deferred, and are er match as a savings incen- you’re younger, the better.

Questions? Call ATBS: (888) 640-4829 | 89

PIB19_CH16-19.indd 89 8/15/18 8:20 AM APPENDIX 1 VEHICLE REGISTRATION

Alabama, Indiana, Montana, dojmt.gov/driving/ Pennsylvania, dmv.state. revenue.alabama.gov/ in.gov/bmv, (888) 692-6841 vehicle-title-and-registration, pa.us, (800) 932-4600 motorvehicle, (334) 242-1170 Iowa, (406) 444-3933 Rhode Island, Alaska, doa.alaska.gov/dmv, iowadot.gov/mvd, (515) 237-3110 Nebraska, dmv.ne.gov/mcs, www.dmv.ri.gov/registrations/, (855) 269-5551 Kansas, (402) 471-4435 (401) 462-4368 Arizona, azdot.gov/mvd, ksrevenue.org/vehicle.html, Nevada, South Carolina, (602) 255-0072 (785) 295-6541 dmvnv.com/mchome.html, scdmvonline.com, Arkansas, dfa.arkansas.gov/ Kentucky, (775) 684-4786 (803) 896-5000 offices/motorvehicle, transportation.ky.gov/motor- New Hampshire, South Dakota, dor.sd.gov/ (501) 682-4692 vehicle-licensing, nh.gov/safety/divisions/dmv, motor_vehicles, (605) 773-3541 California, (502) 564-1257 (603) 227-4000 Tennessee, dmv.ca.gov/portal/dmv/dmv/vr, Louisiana, dps.expresslane. New Jersey, www.state. tn.gov/revenue/topic/vehicle- (800) 777-0133 org/vehicleregistration, nj.us/mvc/Vehicle/Registration. registration, (615) 253-0600 Colorado, colorado.gov/ (225) 925-6146 htm, (609) 292-6500 Texas, txdmv.gov/motor- renewplates, (303) 205-5600 Maine, maine.gov/sos/bmv/ New Mexico, carriers, (888) 368-4689 Connecticut, registration/, mvd.newmexico.gov, Utah, dmv.utah.gov/register, ct.gov/dmv, (860) 263-5700 (207) 624-9000 ext. 52149 (888) 683-4636 (801) 297-7780 Delaware, Maryland, New York, dmv.ny.gov, Vermont, dmv.vermont.gov/ dmv.de.gov, (302) 326-5000 mva.maryland.gov/vehicles/ (518) 457-6503 registrations, (802) 828-2000 Florida, registration, (410) 768-7000 North Carolina, Virginia, dmv.virginia.gov/ flhsmv.gov, (850) 617-2000 Massachusetts, ncdot.gov/dmv/vehicle, vehicles, (804) 497-7100 Georgia, dor.georgia.gov/ massrmv.com, (857) 368-8000 (919) 715-7000 Washington, vehicle-registration, Michigan, michigan.gov/sos, North Dakota, dot.nd.gov, dol.wa.gov/vehicleregistration, (855) 406-5221 (888) 767-6424 (701) 328-2500 (360) 664-1222 Hawaii, mvr.ehawaii.gov, Minnesota, Ohio, bmv.ohio.gov, West Virginia, (808) 532-7700 dps.mn.gov/divisions/dvs, (614) 752-7500 transportation.wv.gov/dmv, Idaho, itd.idaho.gov/dmv, (651) 297-2126 Oklahoma, ok.gov/tax/ (304) 558-3900 (208) 334-8611 Mississippi, dor.ms.gov, Individuals/Motor_Vehicle, Wisconsin, wisconsindot.gov, Illinois, (601) 923-7000 (405) 521-3160 (608) 266-9900 cyberdriveillinois.com, Missouri, dor.mo.gov/motorv, Oregon, oregon.gov/odot/ Wyoming, dot.state.wy.us, (800) 252-8980 (573) 526-3669 dmv, (503) 378-6699 (307) 777-4825

APPENDIX 2 www.irs.gov Consumer Credit www.icfe.info Small Business Counseling Service National Association of RESOURCES Administration (800) 873-2227 Enrolled [tax] Agents (800) 827-5722 www.credit.org/cccs/ (202) 822-6232 www.sba.gov Financial Planning www.naea.org Social Security Association National Association of U.S. GOVERNMENT Administration (800) 322-4237 Personal Finance Advisors Federal Motor Carrier (800) 772-1213 www.fpanet.org (800) 366-2732 or Safety Administration www.ssa.gov Free Credit Report (847) 483-5400 (800) 832-5660 (877) 322-8228 www.napfa.org www.fmcsa.dot.gov BUSINESS www.annualcreditreport.com National Association for the Internal Revenue Service ATBS Institute of Consumer Self-Employed (800) 829-1040 or (888) 640-4829 Financial Education (800) 232-6273 (800) 829-4933 www.atbs.com (619) 239-1401 www.nase.org

90 | In partnership with Overdrive and ATBS

PIB19_Appendix_1-4.indd 90 8/14/18 4:39 PM FUEL PRICES Alaska Trucking Association Maine Motor Transport Ohio Trucking Association Love’s (907) 276-1149 Association (614) 221-5375 www.loves.com/en/location- www.aktrucks.org (207) 623-4128 www.ohiotrucking.org and-fuel-price-search Arizona Trucking www.mmta.com Oklahoma Trucking Pilot Flying J Association Maryland Motor Truck Association www.pilotflyingj.com/ (602) 252-7559 Association (405) 843-9488 fuel-prices www.arizonatrucking.com (410) 644-4600 www.oktrucking.org TA Petro Arkansas Trucking www.mmtanet.com Oregon Trucking www.ta-petro.com/location Association Massachusetts Motor Associations Trucker Tools (501) 372-3462 Transportation Association (503) 513-0005 or www.truckertools.com www.arkansastrucking.com (617) 695-3512 (888) 293-0005 Truck Master Fuel Finder California Trucking www.mass-trucking.org www.ortrucking.org http://www.findfuelstops.com/ Association Michigan Trucking Pennsylvania Motor (916) 373-3500 Association (517) 321-1951 Truck Association LOADS www.caltrux.org www.mitrucking.org (717) 761-7122 DAT Load Board Colorado Motor Carriers Minnesota Trucking www.pmta.org www.dat.com Association Association Rhode Island Trucking Truckstop.com (303) 433-3375 (651) 646-7351 Association www.truckstop.com www.cmca.com www.mntruck.org (401) 729-5210 Motor Transport Mississippi Trucking www.ritrucking.org NATIONAL TRUCKING Association of Connecticut Association South Carolina ASSOCIATIONS (860) 520-4455 (601) 354-0616 Trucking Association American Trucking www.mtac.us www.mstrucking.org (803) 799-4306 Associations Delaware Motor Transport Missouri Motor Carriers www.sctrucking.org (703) 838-1700 Association Association South Dakota www.trucking.org (302) 672-7763 (573) 634-3388 Trucking Association Commercial Vehicle www.delawaretrucking.org www.motrucking.org (605) 334-8871 Safety Alliance Florida Trucking Montana Motor Carriers www.southdakotatrucking.com (202) 775-1623 Association (850) 222-9900 Association Tennessee Trucking www.cvsa.org www.fltrucking.org (406) 442-6600 Association National Association of Georgia Motor Trucking www.mttrucking.org (615) 777-2882 Independent Truckers Association Nebraska Trucking www.tntrucking.org (800) 821-8014 or (770) 444-9771 Association Texas Trucking Association (816) 891-7997 www.gmta.org (402) 476-8504 (800) 727-7135 or www.naitusa.com Hawaii Transportation www.nebtrucking.com (800) 478-2541 National Association of Association Nevada Motor www.texastrucking.com Small Trucking Companies (808) 833-6628 Transport Association Utah Trucking Association (800) 264-8580 www.htahawaii.org (775) 673-6111 (801) 973-9370 www.nastc.com Idaho Trucking Association www.nevadatrucking.com www.utahtrucking.com Owner-Operator (208) 342-3521 New Hampshire Motor Vermont Truck & Bus Independent Drivers www.idtrucking.org Transport Association Association (802) 479-1778 Association (800) 444-5791 or Illinois Trucking Association (603) 224-7337 www.vtba.org (816) 229-5791 www.ooida.com (630) 654-0884 www.nhmta.org Virginia Trucking Technology & www.iltrucking.org New Jersey Motor Truck Association Maintenance Council of ATA Indiana Motor Truck Association (732) 254-5000 (804) 355-5371 (703) 838-1763 Association (317) 630-4682 www.njmta.org www.vatrucking.org www.trucking.org/Technology_ www.intrucking.org New Mexico Trucking Washington Trucking Council.aspx Iowa Motor Truck Association Associations (800) 732-9019 or Transportation Association (505) 884-5575 (253) 838-1650 Intermediaries Association (515) 244-5193 www.nmtrucking.org www.wtatrucking.com (703) 299-5700 www.iowamotortruck.com New York State Motor West Virginia www.tianet.org Kansas Motor Carriers Truck Association Trucking Association Truckload Carriers Association (518) 458-9696 (304) 345-2800 Association (703) 838-1950 (785) 267-1641 www.nytrucks.org www.wvtrucking.com www.truckload.org www.kmca.org North Carolina Trucking Wisconsin Motor Carriers Kentucky Motor Transport Association Association STATE TRUCKING Association (502) 227-0848 (919) 834-0387 (608) 833-8200 ASSOCIATIONS www.kmta.net www.nctrucking.com www.witruck.org Alabama Trucking Louisiana Motor Transport North Dakota Motor Wyoming Trucking Association Association Carriers Association Association (877) 277-8785 (225) 928-5682 (701) 223-2700 (307) 234-1579 www.alabamatrucking.org www.louisianatrucking.com www.ndmca.org www.wytruck.org

Questions? Call ATBS: (888) 640-4829 | 91

PIB19_Appendix_1-4.indd 91 8/14/18 4:39 PM APPENDIX 3 OWNER-OPERATOR GLOSSARY

Trucking industry and business terms

A in a carrier’s contract with a BROKER CASH FLOW STATEMENT. A document ACCOUNTS PAYABLE. Amounts owed by prohibiting the carrier’s direct solicitation of that shows the difference between cash a business to its creditors. the broker’s shipper customers for freight. brought in and cash paid out during a specific ACCOUNTS RECEIVABLE. Amounts owed BACKHAUL. Return trip, or the freight period. A negative cash flow is unsustainable. to a business by customers. secured for the return trip. CASING. The tire structure, excepting ADDITIVE. Solutions added to diesel BALANCE SHEET. A document that lists tread and sidewall rubber. fuel during cold weather to reduce waxing all the assets and liabilities of a person or CHARGEBACK. Items for which the and gelling or in all weathers to enhance business. carrier pays but then later charges back lubricity. BILL OF LADING (BOL). A written to the leased owner-operator, usually as a ADJUSTED GROSS INCOME (AGI). The contract between a shipper and a carrier deduction from pay. income on which an individual calculates that identifies the freight, its origin and CHASSIS. The part of a vehicle that income tax. For a sole proprietorship, AGI destination, its receiver and the terms of the includes the frame, suspension system, minus deductible business expenses equals agreement, including freight charges. Same wheels, steering mechanism, etc., but not amount taxed. as freight bill; not the same as manifest. the body and engine. ADVANCE. Money paid to an owner- BILL OF SALE. A contract for the sale of CLEAT. A strip of wood or metal used for operator before he hauls a load. This money goods. additional strength, to prevent warping, or to typically is used to cover some of the BOBTAIL. A tractor without a trailer hold something in place. expenses involved in the trip (e.g., fuel, tolls, attached. CMV. Commercial motor vehicle. lumpers, gate fees) and is subtracted from BOBTAIL INSURANCE. Valid insurance COLLATERAL. A pledge of security for the owner-operator’s next settlement. when a trucker has an accident while running borrowing money; something that a lender ADVANCED DRIVER ASSISTANCE without a trailer. Not the same as NON- can seize if the borrower defaults on the loan SYSTEMS (ADAS). Systems designed to aid TRUCKING USE INSURANCE. agreement. the driver, from cruise control at their most BROKER. A federally regulated entity COMMODITY. Generally, any goods basic to adaptive cruise, lane-departure serving as a middleman between carriers and shipped; most often used to refer to general control, active braking, platooning and more, shippers, often enabled by technology. See commodities, a loose term for a wide variety including technologies aimed at assuming full TECH-ENABLED BROKER. of unpackaged freight such as grain and ore. control of the vehicle. BUDGET. A document that lists income COMMON CARRIER. A business that AERODYNAMICS. The action of air on and expenses, enabling a person or business engages in for-hire transportation of goods a moving object. The more aerodynamic a to allocate available cash among various across the entire universe of shippers; a truck, the more it is designed for minimal air expenses. See CASH FLOW STATEMENT. trucking company with services available to resistance. All other factors being equal, this all. For interstate operations, only the U.S. should translate into better fuel economy. C DOT can issue common carrier authority. See AGENT. A person or organization “C” CORPORATION. A legal structure CONTRACT CARRIER. authorized to conduct business on behalf designed for large, complex businesses. See CONSIGNEE. The person or firm to which of another person or organization; also, a CORPORATION and “S” CORPORATION. freight is shipped; the receiver. common carrier that appoints agents to CAB CARD. A certificate of registration CONTAINERIZED SHIPPING. Transport of secure freight on behalf of the carrier. In issued to a vehicle. A cab card reflects the cargo containers that are transferred easily some cases, an agent also works directly base plate issued to that vehicle and the among trucks, trains and ships. with the owner-operator to match available vehicle’s year, make and VIN, as well as the CORE. On a radiator, a tubular fin freight with his truck. Agents typically are jurisdiction and weight class that the motor structure acting as a heat exchanger for independent contractors, not employees of carrier has apportioned in. engine cooling fluids. the carrier. A leased owner-operator also can CAPITAL. Net worth; money available to CORPORATION. A business structure be considered an agent of his carrier. invest in equipment that will produce more in which the company is separate from its ASSET. Any type of property, personal or money over time. owners. A corporation enjoys tax benefits real, that can be sold within one year. CARGO INSURANCE. Insurance designed and legal protections not available to other AUTHORITY. See OPERATING AUTHORITY. to cover lost or damaged freight. Carriers forms of business. See “C” CORPORATION AUTONOMOUS TRUCKS. See ADVANCED typically provide cargo insurance for leased and “S” CORPORATION. DRIVER ASSISTANCE SYSTEMS. operators, but owner-operators with their COST PER DAY. Business expenses you own operating authority must provide their incur daily, whether you drive or not. It is B own. Federal regulations set the minimum calculated by dividing your weekly fixed and BACK SOLICITATION. A line item often levels required. variable expenses by seven.

92 | In partnership with Overdrive and ATBS

PIB19_Appendix_1-4.indd 92 8/14/18 4:39 PM COST PER MILE (CPM). The cost of coordinates freight pickup and delivery. the owner-operator’s use in an emergency; operating a trucking business per mile DOT. U.S. Department of Transportation. or to reimburse the carrier for items bought traveled. CPM is calculated by dividing cost DRAYAGE. The charge made for carting, by the company on the owner-operator’s by the number of miles driven. Usually draying or trucking freight, often at a port or behalf. expressed in cents, it sometimes is called the Mexican border. ESTIMATED TAX. Taxes paid in advance cents per mile. DRIVE AXLE. An axle that transmits by self-employed people. The IRS requires COWL. Metal structure supporting dash power to the wheels. owner-operators to guess how much tax they and windshield. DRIVE LINE. Refers to the driveshaft will owe each year based on the previous CRANKCASE. Engine part that houses the and universal joints, etc., that connect the year’s income or projections and to make crankshaft and other moving parts. transmission to the differential gears on a quarterly payments based on that estimate. CRANKSHAFT. A shaft within the engine drive axle. ETHER. Substance used as a starting aid having one or more cranks for transmitting DRIVER’S DUTY STATUS RECORD for diesel engines in freezing or subfreezing motion; the connecting rods transmit motion BOOK. Log book. weather. between the pistons and crankshaft. DRIVERS. (Slang) The drive wheels of a EXEMPT CARRIER. A carrier that hauls CSA. The Compliance, Safety, tractor. commodities exempt from DOT regulations. Accountability safety ranking and DRIVESHAFT. A heavy-duty tube that EXEMPT COMMODITIES. Freight exempt enforcement program of the Federal Motor connects the transmission to the rear-end from DOT regulations, most commonly fresh Carrier Safety Administration. assembly of the tractor. fruits and vegetables. CUSTOM HOUSE. The government office DRIVETRAIN. A series of connected EXHAUST MANIFOLD. That part of the where duties, tolls and import or export mechanical parts for transmitting motion. exhaust system that carries the exhaust taxes are paid. The drivetrain includes all of the parts used gases from the cylinders to the exhaust pipe. CYLINDER. A chamber in the engine block to supply motion, including the transmission, EXPANDABLE (TRAILER). Flatbed trailer that contains a piston. driveshaft, universal joints, differentials, that can be expanded beyond its regular inter-axle differential and axles. length to carry larger shipments. D DUTY. A tax levied by a government on DEADHEADING. Running without cargo. imports and exports. F DEDICATED RUN. A run that involves DYNAMOMETER (DYNO). A device used FEDERAL HIGHWAY ADMINISTRATION hauling the same type of freight to and from to measure the performance of the engine (FHWA). A subdivision of the U.S. DOT. the same locations on a regular schedule; and drivetrain. FEDERAL HIGHWAY USE TAX. One of also, hauling freight to and from the same the main sources of funds for the national shipper and receiver on a regular basis, E highway construction program, paid by all regardless of location. EIN. Employer Identification Number, also carriers for each heavy vehicle that runs in DEDUCTIBLE. Money paid out of pocket known as a federal tax identification number. interstate transport, including trucks and by an insured person before the insurance It is used to identify a business entity for buses, and based on the size and weight of company pays a claim. tax purposes. An EIN is required only if you the vehicle. All independent owner-operators DEDUCTIBLE EXPENSES. Business are operating as a corporation or LLP or if and most leased owner-operators are expenses that are allowable deductions from you file your own 2290 Federal Highway Use responsible for paying their own Federal adjusted gross income, thus reducing taxable Tax form. Highway Use Tax, which is reported on IRS income. Deductible business expenses are ELECTRONIC CONTROL MODULE (ECM). Form 2290. reported on IRS Schedule C. A device that monitors engine performance FEDERAL MOTOR CARRIER SAFETY DELIVERY RECEIPT. The record to show and records diagnostics. Also called an ADMINISTRATION (FMCSA). DOT division that goods were delivered. Drivers usually electronic control unit (ECU). responsible for administering and enforcing have delivery receipts signed by receivers to ELECTRONIC LOGGING DEVICE (ELD). the Federal Motor Carrier Safety Regulations show that the delivery was made. Current terminology for an electronic device and hazardous materials regulations. DEPARTMENT OF TRANSPORTATION connected to a truck’s ECM, paired with a FEDERAL MOTOR CARRIER SAFETY (DOT). The federal agency whose driver input device, that allows for electronic REGULATIONS. The regulations that responsibilities include administration of the logging of duty status records and hours of govern the operation of trucks and buses in Federal Motor Carrier Safety Administration. service monitoring. interstate or foreign commerce by common, DEPRECIATION. An expense allowance ELEVATOR. (Slang) A hydraulic or contract and private motor carriers. The made on your taxes for wear and tear on an electrically powered end gate on a truck or FMCSRs specify insurance requirements, asset over its estimated useful life. trailer. driver qualifications, hours of service, DIESEL EXHAUST FLUID (DEF). A ENDORSEMENT. Special qualification accident reporting procedures, proper solution of water and urea used with required of CDL holders for hauling a specific vehicle inspection and repair procedures, selective catalytic reduction to lower NOx in type of commodity, such as hazardous and proper parts and accessories for safe diesel exhaust. materials, or for operating a specific type of operation. DISABILITY INSURANCE. Insurance equipment. FIRST COME FIRST SERVED (FCFS). that pays a weekly benefit plus medical ESCROW. Money held in reserve. It can Used in reference to a shipper or consignee expenses if illness or injury prevents the be money held by a carrier in the name of facility’s pickup/delivery scheduling policy. insured person from working. Not the same a leased owner-operator to protect the FISHY-BACK. (Slang) Transportation of as occupational-accident insurance. company in case the contractor quits while truck trailers or highway freight containers DISPATCH. A service that schedules and in debt to the company; to provide money for on ships or barges.

Questions? Call ATBS: (888) 640-4829 | 93

PIB19_Appendix_1-4.indd 93 8/14/18 4:39 PM FIXED COSTS. Predictable, consistent has his own operating authority and is not it is disconnected from a tractor. costs that do not vary by the number of miles leased to a carrier, generally relying on LAYOVER. Non-driving time between run – for example, tractor payments and no one but himself to find and transport loads while under dispatch, whether it’s a insurance payments. See VARIABLE COSTS. freight. scheduled rest or time spent waiting for FLOAT. Flatbed semi-trailer. INDIVIDUAL RETIREMENT ACCOUNT instructions. FORM 2290. See FEDERAL HIGHWAY USE (IRA). A retirement savings vehicle that LEASE. The contract between an owner- TAX. allows an individual to make tax-deferred operator and a motor carrier for the purpose FREIGHT BILL. See BILL OF LADING. contributions. Contributions are tax- of hauling freight booked by the carrier. FREIGHT CHARGE. Payment due for deductible, but the payout is taxed at the Leases spell out the responsibilities of each freight transportation. prevailing rate at the time of payout. See party. FUEL INJECTOR. The device that injects ROTH IRA. LEASING. An alternative to traditional a mist of fuel into the combustion chamber. INJECTOR. See FUEL INJECTOR. equipment financing, whereby the lessee FUEL PUMP. Pump that moves fuel from INSURANCE AGENT. A representative pays rent on the equipment and makes the fuel tank to the engine. of one or more insurance companies. An monthly payments. See TRAC LEASE. FUEL SURCHARGE. Extra charges independent agent represents more than one LESS THAN TRUCKLOAD (LTL). Type of included on the carrier’s invoice for company; a captive agent represents only hauling in which multiple shipments share excessive fuel costs. one company. one trailer. FUEL TAX. Any federal or state tax levied INTEREST. The cost of borrowing money LESSEE. The party to a leasing on fuel to pay for the use and maintenance of expressed as a percentage, usually an annual agreement who has possession and control highways and roads. percentage rate (APR). of a vehicle owned by another. INTERMODAL TRANSPORTATION. LESSOR. The party to a leasing G Movement of goods involving more than one agreement who grants possession and GBL. Government bill of lading. mode of shipment on a single freight bill – for control of a vehicle to another. GELLING. Tendency of diesel fuel to example, both rail and truck. LIABILITY. Outstanding debt. harden or gel as it gets cold. IRONS. (Slang) Tire chains. LIABILITY INSURANCE. Insurance that GEORGIA OVERDRIVE. (Slang) Driving a covers property damage and bodily injury to truck down a hill with the transmission out of J another party. Includes bobtail, non-trucking gear (an unsafe and illegal practice). JACKING. (Slang) Turning a tractor while use and unladen. See PRIMARY LIABILITY GLADHANDS. Connectors mounted on the backing so as to cause the trailer to assume INSURANCE. front of a trailer for connecting airlines from a jackknife position. Combines with chasing LIMITED LIABILITY COMPANY (LLC). the tractor. to allow the trailer to be steered along the Business structure that offers limited GOOSENECK. The curved section of a prescribed path. protection for the owners. Profits pass trailer frame that includes the kingpin and JACKRABBIT START. (Slang) A sudden through the owners’ personal income tax the fifth wheel apron. start. returns. GROSS VEHICLE WEIGHT RATING JAKE BRAKE. (Slang) Specifically refers (GVWR). Combined weight of the tractor, to the original engine brake made by Jacobs M trailer and cargo. Vehicle Systems. An engine brake is an MANIFEST. A document describing the GUSSETS. The part of the frame where the auxiliary braking device on a tractor. It builds contents of a shipment. Often incorrectly crossmembers are bolted to the frame rails. up back pressure in the engine by preventing used interchangeably with “bill of lading,” the exhaust from escaping so that the engine which is a much more comprehensive H slows. document. HAZMAT. Hazardous material; any JOINTS. (Slang) Refers to double and MISCELLANEOUS PAY. Pay you receive substance the U.S. government has triple trailer combinations. in addition to your pay per mile or load. determined to be dangerous to public health JUST-IN-TIME DELIVERY (JIT). It could include your fuel surcharge, stop when packaged or transported improperly. An inventory control system in which pay or detention pay. Often referred to as HEADACHE RACK. (Slang) Heavy freight is used as soon as it arrives at its “accessorial” pay. bulkhead mounted behind the cab to protect destination. To work, just-in-time delivery MPG. Miles per gallon. it from a shifting load. mandates that freight not arrive early. MUTUAL FUND. An investment pool whose HHG. Household goods. Usually refers Sometimes called “rolling inventory” money is in stocks, bonds or other assets. to the calculation of miles on which freight when the freight is left on trailers due to Buying shares of the fund gives you a stake in rates are based, sometimes used as a delayed unloading. those assets. standard in the trucking industry. HI-LOW. Nickname for a forklift truck. K N HIGHWAY USE TAX. See FEDERAL KINGPIN. The bolt-like device on the NET CASH. The cash you have left after HIGHWAY USE TAX. underside of the front of a semi-trailer that all your business and personal expenses have fits into the tractor’s fifth wheel to couple been covered. I the tractor and the trailer together. NET INCOME. The amount left over INBOUND FREIGHT. Freight moving after expenses have been subtracted toward the speaker’s point from another L from revenue. Also called earnings or net point. LANDING GEAR. The support legs that earnings. INDEPENDENT. An owner-operator who hold up the front end of a semi-trailer when NET PROFIT. Same as net income or

94 | In partnership with Overdrive and ATBS

PIB19_Appendix_1-4.indd 94 8/14/18 4:39 PM profit. OWNER-OPERATOR. A small-business Insurance required by law to protect the NET TON. 2,000 pounds (also called a owner involved in for-hire transportation insured in case of harm against another short ton). who owns one or more commercial vehicles person, such as property damage or injury. NET WORTH. The difference between a and still drives. The owner can be leased Carriers are required to have such insurance person’s assets and liabilities. Also called to a motor carrier or, if holding operating and may deduct the premiums from an owner’s equity. authority, is a carrier. owner-operator’s settlement. NO. 1 DIESEL. Cold-weather fuel. OWNER-OPERATOR INDEPENDENT PRIVATE CARRIER. A company that NO. 2 DIESEL. Normal-weather fuel. DRIVERS ASSOCIATION (OOIDA). An transports only its own goods over the road NON-TRUCKING USE INSURANCE. association primarily for leased owner- without contracting with another company. Liability insurance that covers an owner- operators and independents. Many grocery, retail and restaurant chains operator not under dispatch. Not the same as are private carriers. BOBTAIL INSURANCE. P PRO NUMBER. The identifying number NOS. Not Otherwise Specified, a term PAJAMA WAGON. (Slang) Sleeper on a bill of lading for invoicing and tracking used in describing hazardous materials. tractor. purposes. NOZZLE. Same as INJECTOR. PARTNERSHIP. A business owned by PROFIT AND LOSS STATEMENT (P&L). two or more people, each of whom is taxed A detailed report of how much money a O individually. business made or lost during a specific OCCUPATIONAL-ACCIDENT PAYABLES. Accounts payable. period. INSURANCE. Insurance that pays a weekly PAYLOAD. The weight of the cargo as PROGRESSIVE SHIFTING. A fuel- benefit plus medical expenses if injury the basis for the revenue to be paid for that efficient method of shifting gears by on the job prevents the insured person shipment. accelerating just enough to gain the from working. Not the same as disability PER DIEM. Latin for “per day.” In tax minimum rpms to shift into the next insurance. law, those business expenses a person gear. This also saves wear on the truck’s OFF-DUTY TIME. Time specified in the can claim each work day without that mechanical components. hours of service regulations and on a log money being subject to income tax. PROOF OF DELIVERY (POD). A book page where the driver is relieved of all For professional drivers, the per diem document to show that delivery was made, work duties and has no responsibilities to commonly means the daily tax allowance such as a bill of lading or delivery receipt the truck. for meals on the road. signed by the consignee/receiver. OIL SEAL. A device used to retain PERCENTAGE OF REVENUE (COSTS). PSP. The Pre-Employment Screening lubricant in the wheel’s bearing area. The portion of your revenue each cost Program of the Federal Motor Carrier Safety ON-DUTY TIME. Time specified in the represents. It is calculated by dividing the Administration, making driver inspection and hours of service regulations and on a log individual cost by the total revenue. crash histories available to motor carriers for book page where the driver is working or is PERCENTAGE OF REVENUE (PAY). A pre-hire/-lease screening purposes. in readiness to work. form of compensation where the owner- PULL THE PIN. (Slang) Release the fifth OPERATING AUTHORITY. Permission operator receives a percentage of the gross wheel lock. to operate granted to interstate common revenue paid to the carrier. PUP. (Slang) A short four-wheel trailer carriers by the U.S. Department of PERSONAL CONVEYANCE. Allowed pulled behind a semi-trailer or a straight Transportation. When an owner-operator unladen, not-under-dispatch use of truck. leases on with a company, that company’s a tractor or combination truck in the PUT ON THE AIR. (Slang) Apply the authority automatically extends to the hours of service rule. In regulated brakes. owner-operator. Independent owner- ELECTRONIC LOGGING DEVICES, a special PUT ON THE IRONS. (Slang) Put on the operators, however, must establish their driving category enabled from the device tire chains. own authority. administrator’s account. OPERATIONS. The department of PHYSICAL DAMAGE INSURANCE. Q a carrier responsible for finding loads, Insurance that covers damage to an QUALIFIED RETIREMENT ACCOUNT. dispatching trucks and handling customer owner-operator’s equipment from an A bank account set up by an individual as service. accident involving another vehicle. The a retirement plan according to IRS rules. OTR. See OVER-THE-ROAD OPERATIONS. law does not require a truck owner to have In most such plans, contributions are tax- OVER, SHORT AND DAMAGED (OS&D). physical damage insurance, but the lien deductible, but payouts are taxed at the Discrepancies between freight on hand holder usually does. Not the same as cargo prevailing tax rate at the time of payout. and freight shown on the bill. Freight insurance. not covered by billing is over. If some is PIG TRAILER. Transported on flat rail car. R missing, it is short. Freight received in bad PIGTAIL. (Slang) Electrical cable used to RADIATOR. A device comprised of tubes condition is damaged. transmit power from the tractor to trailer. and fins through which circulating water OVER-THE-ROAD OPERATIONS (OTR). PINTLE HOOK. Coupling device at rear of passes to give off excess heat and thus cool The interstate transporting of freight for long truck for the purpose of towing trailers. the engine. distances, whether nationally or regionally. PREVENTIVE MAINTENANCE (PM). RATE. The tariff or charges for hauling Also referred to as long-haul trucking. Checking and servicing equipment according freight. OVERDIMENSIONAL FREIGHT. Freight to a planned schedule – for example, each RECEIVABLES. See ACCOUNTS that is legally too heavy, too long or too tall, haul or each 10,000 miles. RECEIVABLE. thus requiring a special permit. PRIMARY LIABILITY INSURANCE. REGULATOR. Voltage regulator.

Questions? Call ATBS: (888) 640-4829 | 95

PIB19_Appendix_1-4.indd 95 8/14/18 4:40 PM RESIDUAL VALUE. The amount owed to SNELLEN CHART. An eye examination ratios. the lessor at the end of a TRAC LEASE. chart usually used during a DOT physical TRUCKLOAD. The maximum legal weight RETIREMENT ACCOUNT. An account to determine if a person meets visual of a trailer; or, when used to describe freight that allows you to make tax-deductible requirements. rates, the minimum weight of a shipment contributions that only can be withdrawn, SOLE PROPRIETORSHIP. Business necessary to qualify for the cheaper rate; or, a penalty-free, after a certain age. structure in which one person is the owner. full trailer-load shipment described by a single REVENUE. The total amount of money an This is the simplest way to structure a bill of lading. See LESS THAN TRUCKLOAD. owner-operator earns before accounting for business and the method recommended for TURN. (Slang) A round-trip freight run. expenses. Also known as gross income. most owner-operators. RIDE SHOTGUN. (Slang) To ride as co- SPECIALIZED CARRIER. A carrier that U driver in the passenger seat of the tractor. transports only a particular type of freight, U-BOLT. A horseshoe-shaped bolt, RIG. (Slang) Truck; tractor/semi-trailer; such as trade exhibits or construction threaded on both ends, used to hold springs truck and full trailer; other combination equipment. together in a spring suspension. vehicle. SPECS, SPEC’ING. Specs are a detailed UNDER DISPATCH. Insurance term RISK MANAGEMENT. The department description of a truck’s standard components meaning an owner-operator is operating of a carrier that monitors and controls the and optional features. Spec’ing is the act of on instructions received by the carrier and carrier’s exposure to risk, usually from truck specifying such components. therefore is covered by a carrier’s liability accidents. SPOT THE TRAILER. (Slang) To park and insurance. Whether an owner-operator was ROTH IRA. An Individual Retirement uncouple a trailer at a designated location. under dispatch at the time of an accident is Account with a tax status that works STRAIGHT TRUCK. A truck with the body of crucial importance in determining whether in reverse to that of a traditional IRA. and engine mounted on the same chassis. the carrier or the owner-operator should be Contributions are taxed, and eventual STRIP THE TRAILER. (Slang) Unload the held liable. payouts are tax-free. trailer. UNLADEN INSURANCE. Liability SURCHARGE. A charge in excess of what insurance that covers the owner-operator S is usual or customary. It can apply to freight when he is pulling an empty trailer, “S” CORPORATION. A structure rates, fuel prices or fuel taxes, but usually is regardless of dispatch status. designed for small businesses with 35 or assumed to be temporary. fewer shareholders. SUSPENSION. The system of springs, V SAE. The Society of Automotive shocks, etc., supporting a vehicle upon its VALVE. A device that opens and closes Engineers. Establishes standards for parts undercarriage or axles. openings in a pipe, tube or cylinder. and components on motor vehicles. SWAMPER. (Slang) A helper who rides VARIABLE COSTS. Costs that vary by the SATELLITE SYSTEM. A method of with the driver. number of miles run, including fuel, repairs tracking the exact location of a truck by and tolls. Sometimes called running costs. means of satellite tracking devices. T See FIXED COSTS. SATELLITE TERMINALS. Refers to truck TANDEMS. The two drive axles on a VCR. Driver’s daily vehicle condition terminals. tractor; also, one trailer directly behind the report. SCHEDULE C. The IRS form that lists other and working together. VOLTAGE REGULATOR. A device that all business income and expenses. The TECH-ENABLED BROKERAGE. A controls the voltage output of a generator. difference, whether profit or loss, is reported brokerage that uses technology, such as on Form 1040. All sole proprietors must a phone app, to allow access to approved W submit a Schedule C, “Profit or Loss Business carriers to its shippers’ freight. WATER PUMP. Pump that circulates the Sole Proprietorship,” with their 1040. TOFC. See TRAILER ON FLATCAR. coolant through the engine cooling system. SELECTIVE CATALYTIC REDUCTION TRAC LEASE. Terminal Rental Adjustment WEIGH-IN-MOTION SCALE. A device (SCR). An emissions control system that Clause lease. A vehicle lease that enables designed to capture and record axle weight injects diesel exhaust fluid, continaing the lessee to keep the vehicle at the end of and gross vehicle weight as a vehicle drives urea, through a catalyst into the exhaust the lease, provided he pays the lessor the over a measurement site. stream of a diesel engine. The DEF sets off a vehicle’s residual value. WHEELBASE. The distance in inches reaction that converts nitrogen oxides into TRADE CYCLE. The length of time from the center of a truck’s front hub nitrogen, water and tiny amounts of carbon between purchase and trade of a truck or to the center of the space between its dioxide, which is then emitted. trailer. tandems. SELF-EMPLOYMENT TAX. Social Security TRAFFIC. Department of a shipper and Medicare tax paid by the self-employed. responsible for coordinating the Y SEMI. (Slang) A tractor-trailer transportation of goods. YARD MOVE. A special driving category combination. TRAILER ON FLATCAR (TOFC). Refers enabled in ELECTRONIC LOGGING DEVICE SETTLEMENT. The record of an owner- to piggyback intermodal operation of administrator accounts for shuttling trailers operator’s net revenue for a certain period, transporting trailers on railroad flatcars. in a fleet’s terminal yard. See also PERSONAL prepared by the trucking company he leases TRANSFER PUMP. A pump used to move CONVEYANCE. to. A settlement shows total revenue earned fuel from the fuel tank and injectors or the YARDBIRD. (Slang) A driver who connects minus company charges. carburetor. and disconnects tractor/semi-trailer SMOKER. (Slang) Tractor emitting TRANSMISSION. Selective gear box combinations and moves vehicles around the excessive exhaust smoke. providing various combinations of gear terminal yard.

96 | In partnership with Overdrive and ATBS

PIB19_Appendix_1-4.indd 96 8/14/18 4:40 PM I’m going to let you in on a little secret. TBS is processing authorities for FREE.

No Application Fee • No Processing Fee No Factoring Contract 866-913-9892 • freeauthority.com

TBS_Ads.indd 5 8/14/18 5:12 PM This is my office. This is my assistant.

This is my financial team.

We’re ready to be your factor. Fuel Advances • No Set Up Fees • Steep Fuel Discounts 888-627-2034 • tbsfactoring.com

TBS_Ads.indd 6 8/21/18 9:15 AM