Dec. 18th 2017 the trucking industry shifts for the better.


December 18th is now in sight! It’s no longer a distant date in the future that we can put off thinking about. The ELD mandate has brought a lot of anxiety to truckers around the country and understandably so. It is a big deal and it is happening soon.
Companies big and small brace for the December deadline, dreading over the expected loss of productivity and decreased bottom lines. There are a number of challenges associated with the switch to electronic logs. Equipment costs, driver and dispatcher training as well as problems surrounding meeting and managing customer expectations.
Many fleets are scrambling to make and implement these changes while others are still holding out in hopes for a last moment miracle. Lots of truckers we spoke to are planning to play it by ear. They intend to stay on paper logs until the very last moment and then lay low over the holidays to see how things go next year.
There is a myriad of articles in print and online detailing the regulations and how to stay compliant. We will not be discussing these here. Logiflex has been utilizing the latest in ELD technology for the past 5 years and we would like to use our expertise to shed light on an issue that is being widely overlooked.
Electronic logs are good. They are good for drivers, good for companies and overall good for the entire industry.
Nothing about the ELD mandate changes the current hours of service regulations. It simply ensures that motor carriers and individual drivers stay compliant and do not cheat. It really is that simple. If you are raising hell about the DOT taking away your livelihood, you are in reality simply being upset you will no longer be allowed to cheat.
Putting an end to paper logs does not hinder drivers from earning good paychecks. It does however prevent unscrupulous employers from exploiting drivers and coercing them to drive beyond the regulated hours of service. Forcing truckers to drive around the clock in order to make up for the “bad rates” imposed by “unfair” freight brokers and customers will come to an end. In recent years, numerous companies have”taught” their drivers they need to drive more in order to earn a decent living. Well, here’s a question — why not drive less and get paid more per mile?
This is where ELDs level the playing field. Drivers will no longer be exploited and expected to deliver freight in record times with minimal or no sleep. When faced with the reality of enforced hours of service regulations, shippers and brokers will naturally adjust rates to address the issue of truckers refusing their freight.
Free markets adjust themselves based on the levels of supply and demand. Trucking companies will be forced to refuse low paying freight as they will find it increasingly harder to fill the revenue gap simply by making it up in volume. More miles will now equal increased overhead in terms of additional equipment and manpower. Rates will have to go up and they will because freight needs to keep moving. Freight brokers and shippers will pay higher rates or they will not move their freight. Even bottom feeder carriers will be unable to provide transportation at rates below cost.
Higher revenues will create the opportunity for motor carriers to increase driver salaries and thus make up the difference in pay they would otherwise experience under “shortened” hours. In essence drivers will greatly benefit by the mandate. They will earn more and drive less.
Critics will undoubtedly offer that employers will not necessarily offer pay increases to their drivers and possibly pocket the extra cash, but those same basic economic principles of supply and demand will be in full play here as well. Drivers will simply leave companies unable or unwilling to offer competitive pay.
When it comes to motor carriers, the benefit of increased rates goes without explanation. There are however further benefits to consider. Decreased rates of equipment amortization will result in considerable fleet savings. Companies will also enjoy lower insurance premiums to reflect increased driver safety scores. Automated and electronically recorded geo-tagged timestamps will prevent detention and layover arguments and expedite loading and unloading times.
Driver performance will be easily calculated, compared and quantified. Seasoned drivers will enjoy better pay and job security, as quality will finally take precedent over quantity.
The trucking industry will indeed change December 18th. It will be safer, smarter and a better place to work.
America is making trucking great again!
Article is written by Mike Ivanov — Vice President of Logiflex Inc.

How to become an owner operator Part 1

How To Become An Owner Operator – Part 1

Many company drivers are dreaming of having their own truck and drive for themselves. After all America is the land of opportunity and good trucking service is always in demand, so there is money to be made by working for oneself. Most of the drivers that fail in owning a truck, do that because they are not prepared for all that will come towards them. I have seen very good drivers losing their savings and owing money because they were surprised with some of the expenses that come with buying and operating a truck. I wrote that, so future owner operators read it now, instead of paying the high price of learning it down the road.

1. First things first – you need a truck. There are two ways – you can buy or lease a truck.
• Buying a truck is easy. Walk in the first truck dealer you see and the salesman will do everything possible to sell you one and help you finance it, if you have any credit history. You should consider how much the monthly payment will be for that truck. A long time ago a friend of mine told me that a truck without a monthly payment does not exist. If you buy a brand-new truck you will have the obvious loan payment, then immediately after you pay it off, there will be a new payment in the form of higher maintenance expenses.
• Leasing a truck – you can lease a truck from Penske/Ryder, as well as most of the big dealers like Freightliner, Volvo, Peterbilt/Kenworth and International, or even most of the truck financing companies. The first two companies would charge certain amount per month + charge per mile. They will cover most of the maintenance, however, they will not cover damages due to driver’s fault, which includes anything from a flat tire due to nail, cracked windshield or even if someone cracks your mirror at the truck stop and runs away, etc.
The other type of lease is called “Lease to buy” by lenders. It works similarly to a loan, but the truck is owned by the bank until you “pay it off”. Essentially, you are paying rent (lease payment) to the bank, which in the end transfers/sells it to you for $1. The sales pitch for such loans is that you can write off the payments as expense and pay less taxes. If that is the only reason to choose it – don’t. It is true that a lease payment of $2000 a month can be written off at the end of the year and a loan payment of $2000 cannot in the same way. However, when you have a lease payment the maximum that you can write off (in the case with the $2000 a month) is $24000, compared to the loan type, where you can write off not only the whole interest, but also you can deduct depreciation expenses.
Next time when you have to talk with a loan officer for financing a trailer for example, they will look at your financials or tax returns. It is much better to have depreciation expense than lease expense, if you want to get a better loan rate.
A few things that the financing agency will ask you are – how much experience you have as a truck driver, how much (if any) experience you have as an owner operator and for which company you will be driving for. The first question is so they determine whether you can drive a truck. The second is to determine if you can operate a business, and the third one is for them to know that you will be doing actual work with the truck.

After all the paperwork is done and you are ready to drive off the parking lot, you must show the dealer and the lender proof of insurance.

2. Registration and insurance.
To haul any type of load on public highways, you need to have a truck registration. This is the next very expensive part of owning a truck. The registration can be a state registration or IRP (International Registration Plan). The first would give you permission to drive only in the state where the truck is registered. It is usually more expensive than the other, but you don’t need to pay IFTA (International Fuel Tax Agreement). The second gives you permission to haul freight in North America (hence International Registration Plan) with the exception of the Mexican and Canadian provinces that don’t border with the US.

For different insurance types, you can read more here.

3. Pick up the right freight segment
There are four main freight types and everything else we will put in the group of Other Freight.
a. Dry Freight – this is the most common freight out there and the easiest to haul. Most of the TL carriers include this type of service in their business model. Dry Vans are the cheapest trailer to buy, maintain and load. Most of the time you spend on the road. Almost all companies that pay per mile pull exclusively dry vans. However, they are the cheapest type of loads compared to other types for the given lane.
b. Refrigerated or temperature controlled – for this type of freight you need a reefer trailer. It costs twice as much as a dry van trailer and you need to maintain the reefer unit. It is like having another car attached to the trailer all the time. Oil changes, belts, AC compressor etc., are things that you need to be aware and concerned about. Majority of the loads are foods, which means long pickups, deliveries and unusual appointment hours. Reefer is easy to load like dry van, but you must sleep with the unit on most nights. Some drivers are ok with it, others hate it. You make more money with the reefer loads, but you also have more expenses.
c. Flatbed loads – these loaded with a crane or forklift from the side of the trailer. The most commonly used trailers are Flat Beds (obviously), Step Decks and Conestoga. Flatbeds are almost the same price as dry vans, where step decks and Conestoga are around 10k more expensive. However, you must buy more supporting equipment for them – chains, straps, tarps, just to name few. You must also use the equipment, when you are getting loaded. Chains are heavy and you should move them around when you are securing steel coils. Tarping is not fun for many drivers as well. However, you are getting paid better for the loads.
d. Hazmat – the 3 previous load types can be Hazmat as well. That means that they need to follow the Hazardous Material Transportation Regulations. Most of the time this type of freight is loaded in dry van and reefers, but occasionally you will see a flatbed with such freight. It pays more than other freight for the given lane, but you must be more careful.
e. Other Freight – these include tankers, auto carriers, livestock trailers, dump trailer etc. This is a highly specialized freight for which you will know, if you have worked as a driver for one of the companies that transports it. People usually do not come from driving school and start hauling Livestock or Tankers. They come with their specifications. Livestock is handled different than oversize load or a car hauling trailer.

4. Choose the right trucking company for you!
This is the hard part. How do you decide which trucking companies are good and which one are bad?!
Trucking companies pay their owner operators in a couple different ways:
a. Pay per mile – most of the big trucking companies pay per mile to owner operators. They usually have a base rate per mile + fuel surcharge(fsc) and you don’t have to have a trailer in general. Signing with such company relieves you from the burden of thinking about other charges that you will have – liability insurance, trailer rent, permits, trailer maintenance etc. The fuel surcharge changes with the average price of fuel in the US, so it is the same for everyone. However, the base rate changes with the different companies. Some will pay you one rate for loaded miles and another (lower and often without fsc) for empty miles. Other will pay seemingly higher rate for all miles, but you must pay for IFTA, KY permit, NM permit etc. And in general, these companies will have stricter rules for you to obey. Good examples for such companies are FedEx, UPS, XPO and Amazon.
b. Pay percentage of the freight – this type of trucking companies pays the owner operator percentage of the freight that they book for the truck. Usually the FCS is included in the gross rate. Smaller companies pay 86-90% of the freight revenue, where Landstar (the biggest owner operator company) and most of the other big companies (when they pay percentage) pay you around 70%.
The companies that pay around 86-90% will not cover any of your expenses related to permits, insurance, trailer etc. However, you have the most freedom being owner operator with them. Some drivers misinterpreted that freedom with changing their company once a month. Yes, you can do that, but it is a bad idea in the long run. When companies do a background check (as required by DOT), they see that and will not take you seriously because they will know that you will work only for a limited time. There are bad companies out there (Chicago has a bad reputation), but if you must change 3 in 6 months think about the way you choose them or the way you work. Maybe the problem is with you.
You will be charged usually $700-1000 for “cargo” insurance which is liability and cargo insurance in one. On top of that you will have the option to choose to be charged an additional 5% from your revenue or $500-800 a month for trailer rent, insurance and brake/tires wear. The new owner operator can purchase its own trailer, which will save him a couple dollars a month. An additional charge would be for IFTA and state permits. We have seen drivers that take money from IFTA, but for the most part it is around $100-200 per quarter. State permits depend on how much you drive through OR, KY, NM and NY. Oregon charges you $0.1638 per mile driven in the state. You can offset the extra charge by fueling there, since fuel is cheap. NM, NY and KY charge around $0.05 per mile driven in the state. Other states don’t have such charges, but they do have toll roads, so one way or another you pay.
These charges should be in the back of your mind when you pick a load, but should not be your main criteria.

Part 2 will include different strategies of picking up loads, working habits and maintaining the equipment.

4 types of insurance associated with owning an eighteen-wheeler

I found out that many owner operators who want to lease with us, don’t know how different types of insurance coverage work. There are four main types of insurance that trucking companies and owner operators should be familiar with.

1. Liability Insurance is the most important from a legal standpoint. Without it, a trucking company would not be authorized to haul freight on public highways, making the company MC (motor carrier number) unusable.
This type of insurance, as the name implies, covers liability in a potential accident. When drivers with bad records apply for work, it is this type of insurance that prohibits the company from hiring them. From their standpoint, putting unsafe drivers in the truck is too big of a liability and the risk of potential accidents with such drivers is too high. Once denied coverage it is illegal to put these unapproved drivers behind the wheel.
Liability insurance covers only the accidents that happen under dispatch. That means that the driver is either driving empty towards a pick up, or is loaded and going towards the delivery. Little trips, such as from the truck stop to a nearby store while waiting for a load, are not covered under auto-liability insurance.
The price varies among carriers, but for the most part starts at $500 per month and goes up, depending on the safety profile of the company. We, at Logiflex, implemented eLogs 2 years ago, which resulted in a significant revenue cut (you know paper logs are more “elastic”), but our safety scores improved dramatically and our claims decreased. I will get into more detail about the pros and cons of eLogs in a future post.
In a nutshell, when it comes to liability insurance,the safer the company the lower the premium.
Trucking companies that are mostly owner operated have higher insurance premiums, because it is really difficult to control their driving habits.
2. Physical Damage covers the damages on the insured equipment. If the bobtail is insured, but the trailer is not, in a potential accident the insurance company will pay only for the bobtail and deny the claim for the trailer.
It is calculated as percentage of the value for which the equipment is insured. The formula is as follows: truck value x (policy percentage) / 12 = monthly physical damage payment. If we put in some numbers it would look like this: truck valued for $50,000 with insurance rate of 3%, in the formula, we get 50,000 x 0.03 / 12 = $125 monthly payment. Sometimes you can bargain a lower percentage and get into an insurance plan where you would pay 25% upfront and the rest of the amount will be divided into 9 equal payments with the last three months not paying anything.
Some drivers are tempted to insure their equipment for a price higher than the actual value, so in case of a total loss accident they get more money than the truck is worth. Don’t do that!!! Insurance companies would only pay for the market value of the equipment.(You know when something happens with the batteries and the truck burns down). On the other hand, if the truck is insured below market value the insurance company will only use the reported value amount instead the actual market value amount.
3. Cargo Coverage – as the name implies, this type of insurance covers the cargo that is transported in the trailer. It is usually very cheap – about $50-100 a month. If you are an owner operator leased to Chicagoland carrier, most likely you have heard that you are charged $700 “cargo” insurance per month(or $170 or so per week). This is actually combined Cargo and Liability Insurance, but everybody calls it “the cargo insurance”.
4. Bobtail Liability – when owner operators purchase physical damage insurance, they are also asked to add bobtail liability coverage. It usually costs just a few dollars per month. It covers potential accidents when the driver is using the truck as a personal vehicle – driving bobtail to and from the repair shop, buying groceries, etc.
Many trucking companies would require owner operators to show proof of such coverage before leasing with them. This way carriers protect their liability policy from potential claims that would happen during non-dispatched driving.

These 4 types are associated with the equipment alone. There are a couple more different policies to address that relate to the people working in the industry. I will explain them in a different blog.

5 Rules of sending a truck to Alaska and back in January

At the beginning of 2016 we got a load for the Military Base in Fairbanks, AK. We had to bring some parts for Apache along with some tool cases. I was trying to research how to prepare and what to expect. Most of the information I found in the forums was for commercial trucks. I did find some YouTube videos of truck drivers that are driving through North British Columbia, Yukon and Alaska, but nothing that described the whole process, so I decided to write about our experience: How we sent a truck to Alaska in January.

  1. Driver– The most important thing that you need is a good driver. I mean a very good driver. That part was easy for our dispatchers as we have a lot of good ones.

After picking up the load, our driver Marc sent a message to his dispatcher – “Thanks for the fun”.

IMG_8846

  1. Equipment– The truck and trailer need to be well maintained and reliable. We run Volvo trucks and Wabash trailers. We did a regular PM service in Edmonton, AB and greased the trailer. One extra thing that we put was the winter guard on the front grill, which is good idea to have not only for an Alaska trip, but for all Winter trips.

Volvo trucks have a very good cooling system, which helps in the hot months, but also does the opposite in the Winter. A cheap and ugly option is to put a piece of cardboard in front, which will do the same job.

  • We added the Deer Catcher just because.
  1. Route Planning– There is only one possible highway that you can take. What you need to plan is where to stop for food, rest and fuel. Truck stops are common along interstate highways in the US and along the more populated highways in Canada, but once you pass Fort St. John, BC you have to plan where to stop for fuel.
    We made some mistakes in the planning process.
    We use FleetOne fuel cards and it did not work at the gas stations in BC and Yukon.
    We had to wire money to the driver, which is expensive. Another thing that needs to be done is to check if the receiving place (Money Gram in our case) has the cash available. We sent $900 via Money Gram in Fort Nelson and they did not have enough cash to give to our driver. I am not sure how did that happen.
Wildlife Encounter
Wildlife Encounter
  1. Permits– We had a permit to drive transit trough Canada. It is part of the paperwork for the load similar to the. It is basically a piece of paper that says that we will not be unloading anything from the truck in Canada. We did not need Pars clearing or the new eManifest that Canada requires now.
    Single Trip permit for British Columbia – you can call The Ministry of Transportation and Infrastructure at (800)559 9688 and get one. If you don’t have IFTA you can buy fuel permit from them also. It won’t take more than 10 minutes from the initial phone call to faxing the actual permit to the driver. We paid $84 for it.
    Trough Freighter Permit for Yukon – you can’t call anyone for that one. The driver needs to pull over in the port of entry and purchase it from there. We paid $60 for it.
    Fuel Permit Yukon – Yukon is not part of the IFTA, so in order to drive through you need to have a fuel permit. It cost $71.30 in our case. It gave us permission to purchase the very expensive fuel in Yukon. You can purchase it from the port of entry along with the Trough Freighter Permit.
    5. Prepare for eventual problems– the trailer brakes froze on the way back. We took the truck to a truck wash where it was washed with hot water, so all the ice melted. Then one of the brake chambers was replaced. Two of the tires needed to be replaced, so we got a set from a shop nearby. The best part was that the price was in Canadian dollars and they ended up being $100 cheaper per tire compared to the US prices. It compensated us for the difference in the fuel price a little bit.
The route to Alaska has amazing beauty
The route to Alaska has amazing beauty

And this is how we sent a truck to Alaska in January. We did have some hiccups along the way, but we were able to take care of them right away and we’ll be better prepared for next time.