Owner-Operators (O/Os) provide an interesting challenge. In a simple comparative analysis, O/Os are usually found to be more profitable to operate than Company Trucks. O/Os provide the company with a much lower operating cost by supplying the tractor and fuel and paying their own benefits and taxes. Also, being business owners their respective operating costs are usually lower than what Company Trucks can operate at because O/Os take better care of their equipment and work harder.

However, that same business owner mentality often hurts Company Truck operations and distorts the financial impact of using owner-operators. Being independent contractors, they can refuse loads that don’t pay well or don’t empty out into backhaul corridors. Those loads then end up being hauled by Company Trucks. Do a performance analysis of O/O vs. Company Trucks at any carrier operating a mixed fleet and you’ll find significantly higher laden percentages and total mile counts for the O/O group.

Back to the interesting challenge. O/Os need to make a profit or they won’t stay with you yet if they are allowed to always take the best freight, it will be at the detriment of Company Truck operations. Therefore, they should be placed in locations where they will do the least harm to Company Truck operations yet are still able to run profitably. As an example, terminals with moderate to good rate structures but little backhaul potential are often good candidates for O/O staffing.

When making the O/O placement decisions, which begin with signing them on only at the best fit terminals, keep in mind that the benefit they provide – reduced operating costs – is often overstated due to the negative financial impact they have on your Company Truck fleet.

Rotating fleet in and out of terminals creates a couple of concerns, perhaps the largest of which is driver dissatisfaction.

Most drivers appreciate and take good care of their trucks. When told that they are losing their truck to another terminal because it is more cost effective at the other location, drivers become justifiably dissatisfied with the company and may stop taking care of their assigned truck as well as they use to.

Another concern is maintenance. If, for example, a truck is due to be transferred out to a lower ‘average length of haul’ location because its odometer mileage is too high, the transferring terminal may forgo some of the maintenance and let the receiving terminal bear the expense. Deferring maintenance often ends up costing more and sometimes can result in safety issues.

To minimize the frequency of rotations, place new equipment to its best fit location from day one. Unless business conditions change at that location, it should be able to spend most of its useful life there. Also, use attrition and layoffs as opportunities to rotate unmanned equipment when possible, minimizing the influence on driver dissatisfaction.

Union operations could very well add influences that should be included in your rotation strategy.

Work rules are a good example. Different terminals within the same company may have very different work rules based on what was negotiated locally. For example, some locations may have restrictions against day-night runs and therefore might not be good candidates to receive new equipment that ideally should be placed in multi-shift operations.

Union shops are another example. If the average repair cost of your union shop is higher than what you can get from outside vendors, place newer equipment at those locations to minimize the amount of major repairs required.

On the other side of the coin, new equipment could possibly be used as a bargaining chip with unions. Returning to our first work rule example, you may be able to negotiate the ability to have Day-Night operations at a location where it is currently restricted if you promise that terminal a specific number of new trucks.