This question has popped up in the mind of every truck driver at least once in their career. The grass is always greener on the other side. Both owner operators and company drivers tend to think that the other one is more rewarding, but neither get it right. Both positions have their advantages and disadvantages. Choose wisely, and you should be able to find an option that suits your particular situation. Read on to find out the difference between an owner operator and company driver.
- What Is an Owner Operator?
- How Does an Owner Operator Work?
- How Much Do Owner Operators Make?
- Pros of Owner Operator Trucking
- Cons of Owner Operator Trucking
- What Is a Company Driver?
- How Does a Company Driver Work?
- How Much Do Company Drivers Make?
- The Pros of Company Driver Trucking
- The Cons of Company Driver Trucking
- Owner Operator and Company Driver Comparison: Which Is Better?
What Is an Owner Operator?
A person who chooses owner operator trucking is an independent entity that possesses a vehicle and performs loads hauling for a trucking company. This entity is represented by a driver who has purchased or leased a truck to work with a company as a partner or individual contractor.
How Does an Owner Operator Work?
As an owner operator truck driver, you have to undertake several steps before you can start doing business. It is not just about getting a CDL. You will have to register a legitimate business, get a USDOT number, file for trucking authority, purchase or lease a truck and insurance, and finally invest some effort into finding reliable clients. You have to observe certain legal requirements of the FMCSA like participation in the DOT Drug & Alcohol Testing Program.
There are several ways to find new business. One of the most popular ones is digital load boards: public websites where shippers post jobs and truckers bid for these. You can check out dat.com, truckstop.com, or getloaded.com.
Another option is freight brokers, also known as third-party logistics providers (3PLs). These brokers serve as mediators who connect those who need a shipment with freight operators. They can serve as your partner in negotiating rates and optimizing routes.
Finally, you can build relationships with regular customers for a stable flow of orders. Applying for big and high-paying companies can be worth a try as it may eventually save you hours of searching for smaller orders.
How Much Do Owner Operators Make?
In 2022, the average gross annual income of those in the owner operator trucking business was around $242,000. It typically sits in the range of $148,000–$341,000, according to ZipRecruiter. Operators indeed have higher rates per mile than company drivers, but bear in mind that they also have to allocate money for truck maintenance, operations, taxes, etc., to keep the business running, so the owner operator salary is reasonable rather than extremely high.
Pros of Owner Operator Trucking
This is one of the key factors that tempt drivers into entrepreneurship. Owner operators are free to turn down unwanted offers and select only the most preferable ones. They are protected from forced dispatch and have more control over routes and deliveries. Thus, they have the right to pick the best route-rate combinations and benefit more from easier-to-deliver orders.
They avoid various negative phenomena connected with company driver jobs, like slip seating (sharing a truck with several other drivers) and the inability to set up a comfortable work environment.
As mentioned before, owner operator trucking rates are much higher in comparison to driver rates. They can be either fixed or come in the form of percent-of-load. While the majority of most highly paid company drivers receive up to ¢70–¢75 per mile, independent contractors can bill up to 85-88% of the load cost. Meaning they can make up to $1.5 - 1.7 off a load valued at $2.
Owner operators do not operate their own authority, but still are fairly free in their decision-making. They can book loads, select routes, and schedule work and vacation days as they wish. They drive their own trucks, so they can adjust their workplace to their liking. Truck owners are free in choosing the best equipment for their needs and comfort. Trucking can be securer and more comfortable when everything about your truck works exactly as you want it to.
Cons of Owner Operator Trucking
While operators owning their own truck indeed have an opportunity to decide on their time off, they have to be prepared to spend less time resting. Apart from the driving itself, running a business requires a substantial amount of time and patience. Normally, you have to allocate some of your time and efforts toward truck maintenance, paperwork, etc., without much external support.
A dedicated HMD employee can handle most of the paperwork, making it possible for an operator to fully concentrate on their core duties. This is also quite different from an own authority, where you do not have that option. Nevertheless the job of truck maintenance remains. You are the only one responsible for the adequate condition of your rig.
Running a business is always stressful. Everything depends on you, and it takes its toll on your mental state. No one will be there to help in case of emergency, illness, crisis, or other contingencies. The risks are high indeed.
Very often, doing business as an owner operator means that you have to forget about steady paychecks and a light-hearted life, as the entire burden of maintenance, marketing, financial, legal, regulatory, and administrative tasks rests with you. Most companies pay an owner operator a certain percentage of the profit generated by an order, which means that in times of recession, owner operators will be affected by declining rates. That is, again, different when working with HMD, which pays fixed rates per mile independent of market fluctuations.
Owner operators need substantial startup capital to jump into the trade. The most essential part is buying or leasing a truck. HMD offers a lease purchase option as the first step to becoming the operator of your own rig.
The next important item is paying all administration and maintenance costs with your own funds until you reach a stable cash flow.
And even that is not all. Before going into entrepreneurship, make sure that your accounts are in order. Reduce your debts and build a better credit rating. Calculate precisely your family expenses and learn to spend wisely. Be realistic in developing your business plan. The profits will not rain down on you immediately, so be consistent and patient. Set up a separate account for emergencies, crises, and downtime.
That is how this business works for owner operators. They enjoy certain perks, such as higher rates, greater independence, and more comfortable trucks. At the same time, all of that comes at a cost of greater responsibility, risks, and pressure. Which is why only knowledgeable, patient, and disciplined people can be successful in this business. Moreover, you are responsible for organization of our time and accounts efficiently to keep things running smoothly. If you think you are that kind of person, then entrepreneurship will become a rewarding occupation for you.
If, however, your top values are security and stability, you might be better off applying for the job of a company driver. Let’s look at this type of opportunity in more detail.
What Is a Company Driver?
The definition of a company driver is a staff member employed to haul freight using a vehicle provided by the employer. Employers may be small companies of varying sizes that guarantee a steady weekly salary and certain benefits, such as health insurance.
How Does a Company Driver Work?
A CDL and a clean driving record are everything you need to jump into trucking for a company. The major company driver duties and responsibilities are mostly the same as for owner operators: timely and accurate delivery of the goods to the point of destination. However, the difference is that a company driver does not need to worry about getting enough miles to cover the bills. Their days are planned for them and they need only meet the expectations of the company in order to get the best possible compensation.
While owner operators determine their careers for themselves, company drivers enjoy various opportunities for promotion. You can change companies and eventually work for the best and biggest ones and build up your professional skills. The best-qualified truckers become leads responsible for teaching newcomers. If you feel that you are losing your passion for driving, you can switch to being a transportation coordinator or dispatch manager — career opportunities abound.
How Much Do Company Drivers Make?
An average company driver salary is approximately $65,000 per year, while the bottom and top figures are $45,000 and $100,000 respectively. They can take all of that money home: no need to pay for maintenance or administration, as both are covered by the company.
The key benefits of working as a company driver are:
- steady income,
- absence of extra paperwork or maintenance costs,
- you get a semi from the company you work for.
The common perception is that owner operators earn more, but this is not always the case. Being an owner operator is more about personal independence and taking a bigger risk seeking for better profits, however this is a win-or-lose game. Becoming a company driver is a way to fully focus on driving, knowing exactly how much you are making; it is about stability and peace of mind.
The Pros of Company Driver Trucking
You Do Not Need Money to Get Started
The occupation of a company driver requires no financial investment. You start working and earn steady pay. You are free from the worries of running a business, and you can enjoy the money you make down to the last penny. You feel safer even in times of recession, as the company will always provide you with work or relief payments.
The Company Pays for Maintenance
A company driver does not own the truck they drive for the company. Drivers can also switch between trucks. Maintenance and all related activities are solely the responsibility of the company. The same goes for insurance and any documents required for delivering cargo. Although, if a driver causes an accident or breaks a truck, a financial penalty may be imposed. Still, the company will deal with the headaches of repairing the damaged property.
One of the main requirements for truck drivers is a cool head and composure when on the road. One of the best ways to maintain mental wellbeing is making sure you get quality time off. Company drivers are lucky as they can leave all work-related problems at the terminal and have their free time all to themselves. The business will keep running even without their engagement during the weekends. The level of stress among company drivers is significantly lower than among owner operators who have so much to think about even while they are away from the wheel.
The Cons of Company Driver Trucking
Company drivers' rates per mile are typically lower than those of owner operators. However, if we take into account the business costs of owner operators, the net rate may be roughly the same.
Remember, too, the extra hours that owner operators spend on truck maintenance and administrative work.
The company driver is not free to choose options, trucks, or hours of operation. Schedules are built by the company, so drivers have less control over their time off or vacations. In addition to that, trucking companies tend to dispatch longer routes to their employees rather than owner operators as this is sometimes cheaper. This is why it is so important to check the company from the inside before applying for a job. Choosing the right company may decrease the risks of being under extreme pressure.
Driving Someone Else’s Truck
Slip seating could be another drawback. A comfortable environment is a basic human need. We all strive to make the place around us more convenient, especially if we spend long hours there.
Changing trucks means that you will have to put up with the feeling of not being at ease, in an environment that is not up to your standards. As soon as you adapt a truck for yourself, you may have to change trucks once again.
It might carry certain risks, too, as you may not know all the kinks of a particular truck. Owner operators can buy the best equipment, but you as a company driver have to be content with whatever the company offers you. However, some companies like HMD assign trucks to drivers so they can feel more comfortable. In this way, you’re free to make all necessary adjustments to your workplace and do your job more efficiently.
Owner Operator and Company Driver Comparison: Which Is Better?
The choice between joining the ranks of owner operators or company drivers depends mainly on your personality type and ability to run a business. In any case, becoming an entrepreneur demands thorough preparation. If your motivation stems only from negative feelings towards a certain company, try finding a different employer first. Company drivers who work for reputable companies, can make close to what owner operators make per year, if you deduct all taxes and expenses. At the same time, they are free from the worries and stress that arise from a life in business and have their free time all to themselves. They do have to live with forced dispatches and seat slipping, but a well-maintained fleet can alleviate some of the latter.
Still, if you think that driving for a company is not your path, then follow the advice above to be as well-prepared as possible. Strong discipline combined with a profound knowledge of the industry and management can result in some serious success. If you are sturdy and persistent, and you like the idea of spending a good chunk of your life behind the wheel of a truck, then do not hesitate to try this occupation.
To those who prefer stability, teamwork, and company bonuses, we suggest checking the list of job offers at HMD. We are a strong company that values every driver. If you are coming off a bad experience, we would be happy to change your perception of the job and show you that driving for a company can be rewarding and a positive influence on your life. Be sure to contact us for any details. We will be waiting for you to reach out.
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