Truck Topics

Having your own authority - Is it worth it?

It would be difficult to find an expediting owner-operator who, at one time or another, hasn't thought to himself, "I'm sick of waiting for my carrier to get me a load!  I'm going to get my own authority and find my own freight!"

This frustration with the carrier may be as described above - insufficient freight or revenue, or it could be the carrier's management style, incompetent dispatchers or a host of other problems that have driven the owner-operator to seek an alternative.

It's a tempting idea, alright.  No more of those low-paying runs, just get your own premium accounts or find those high-value loads on the Internet.  No more hearing about your low-acceptance rate, just the independence to haul the freight that you want.

It seems like a good idea.  After all, general trucking owner-operators have been running on their own authority for decades and they do alright. And, with the computer revolution, it's even easier to find loads everywhere, so why be tied to one carrier and have to play by their rules and haul their freight?

First things first

What is "authority?"
Formerly called ICC Authority, operating authority (actually registration) is now granted by the Federal Motor Carrier Safety Administration(FMCSA). Trucking and expediting companies that operate for hire and haul interstate are required under federal law to have operating authority.

The FMCSA acts as a clearinghouse which ensures that applicants have met the standards set by the Department of Transportation and have the proper insurance coverage.

Three types of authority are available:

Common authority - This authority is necessary to haul directly for most shippers. This is the type of authority required for expediters.

Contract authority - This type of authority is required to work through brokers.

Property Broker authority - Necessary to operate in a freight broker capacity.

The DOT has it's own set of guidelines for compliance that must be met completely before the FMCSA will grant authority. These DOT requirements are extensive, covering areas such as driver safety training, driver orientation, hazardous materials qualification, vehicle maintenance and other topics.

Securing your operating authority, particularly since the advent of the Internet, is a relatively easy process and there are now a number of authority practitioner services available to the owner-operator.

Gary Green of the Owner Operators Independent Drivers Association (OOIDA) adds, "Use of an experienced professional to secure the authority can be very beneficial, such as the services which OOIDA provides to it's members. The professionals in this area can expedite the whole regulatory process and eliminate many of the mistakes the driver might make if he tried it on his own."

Green says that the price of errors on the paperwork and applications couldbe costly for the O/O trying it on his own, "The fee for each type of authority, is  non-refundable. It's easy to see that mistakes on the applications which will result in re-application could add up to some serious money."

Some owner-operators believe that securing their own authority and establishing their independence means less work for more money; actually the he is trading paid miles for the administrative duties of the business; Fuel taxes, sales work, administrating driver's files and maintaining compliance with DOT regs, such as drug testing.

It means that the owner-operator is responsible for all the paperwork, permitting, insurance - in short, anything that the expediting company takes their percentage for doing.  It also puts the truck owner in what may be an uncomfortable and unaccustomed role, that of the salesperson.

The freight accounts have to come from somewhere, and it's up to the independent owner/operator to find that freight to fill his truck(s). In developing his sales skills, the expediter with own authority may discover that those accounts are harder to find than he expected, and that it's difficult to compete on matters of price and availability, especially with a one-truck fleet.

In conventional trucking, the practice of an owner-operator with own authority has been around for many years and is a standard method of doing business. In full truckload shipping however, there are literally millions of loads being shipped on any given day, all across North America.

Given the time-sensitive nature of the just-in-time freight in expediting, the daily load count of "hot" freight is only a small fraction of tractor-trailer trucking.  With fewer loads and fewer shippers with a need to pay the usually higher tariffs of expediting, finding the accounts and maintaining them can be problematic.

Dave Corfman is a fleet owner of over twenty years experience in expediting and trucking who has long held his own authority. He questions the value of possessing operating authority when leased to an expedited carrier.

"I feel a viable option is to get with a carrier and run under their authority if available. Panther II, for example, has a program already for this. With that, you could haul their loads, yet find your own, and take advantage of fleet prices on insurance, etc.

He feels that load boards might not be for everyone -  "Most of what I have seen on there as far as backhauls, are usually for straight trucks and tractor trailer. Most are LTL loads. Seldom do you see loads that are lighter than 5,000 lbs."

For the expediter searching for freight on Internet load-matching boards, it can be a frustrating practice.  The cargo van owner-operator will typically find few loads that will fit on his truck and it's been reported that the loads that are available are of the low-paying variety.

Leo Bricker answers a question regarding finding loads for a Sprinter - "You can use www.landstarbroker.com for free. I don't know if you'll find much that fits in a Sprinter but they do have an option for LTL and some are small. I've used www.getloaded.com also but it's $35 a month so it may not be worth it."

"The biggest problems are that most loads online are too large for a Sprinter and they don't pay really well in most cases. I've picked up a couple that took me where I needed to go and made a fairly decent profit. Most have taken me where I wanted to go and paid my truck expenses plus bought one or maybe two burgers on the way."

"When you need to get home or elsewhere that's still a lot better than doing it d/h but you can't depend on the internet to earn a living, at least not that I've found."

Having said that, there are expediters who have found success by securing their own authority and operating their business completely independent of expediting companies, or in some cases, in conjunction with the companies. The first step towards this is securing the authority, or determining if this is the route the entrepreneurial expediter wishes to take.

Greg Siciliano is an expediting cargo van owner-operator leased to a carrier.  On a recent Expediters Online Forum post, he relates what he was told:
"I ran into three different ‘independent’ expediters running cargo vans at three different places in a span of two weeks. I listened to their stories and still can’t believe their luck."

"Each said they are averaging 2000 miles a week so far since July with one saying it has been so busy he has averaged 3000 miles a week in the past few weeks. Each also said that they are getting anywhere from $1.25 to $1.50 consistently (not including FSC), (which I doubt) but would be great if true. They book their own loads and of course have their own authority/insurance, etc..." 

Tony Celender is the owner of a Pittsburgh-based expedited carrier and he says that it's possible for the owner-operator to secure his own accounts, but...

"It is possible, but not likely for an average person. It takes work! Unless you can find a niche service, or customers who are willing to invest in you the possibility is slim."

"Say you find a customer, who is willing to talk, and you give the customer a lower price, they still may not change carriers.

WHY?

The familiarity and blending of the organizations give a natural bias against change, and the cost of disruption within that company can be very costly. The customer will use your lower price to beat up/threaten their existing carrier and get a service up grade, price reduction or both."

"I started the very same way, in 1987 only I took it a step further, and started hiring owner-operators to drive my other vans and even their own vans for me. I now have an office and warehouse, running 12+1 vans and box trucks. The 12 are drivers and the +1 is me wearing every other hat needed to make it work."