Owner operators

May 1, 2008
Historically, the distribution of temperature-controlled commodities is a volatile industry. If business slows because of economic conditions such as

Historically, the distribution of temperature-controlled commodities is a volatile industry. If business slows because of economic conditions such as a recession, trucking contracts may be reduced or even canceled, and this impacts fleet utilization.

Using truck owner operators can be a good way for companies to help manage their fleet and operations. Rather than add their own capital assets (trucks and trailers) when business grows, companies can contract with owner operators.

Owner operators have a vested interest in the company they are leased to. They tend to provide a higher level of service than the typical employee driver because of the pride-in-ownership that goes along with being an owner operator.

In general, if an owner operator has more than three-to-five trucks, he is considered a small fleet. That's because his time is typically taken up with managing his trucks and drivers, complying with regulations, handling billing and paperwork, etc.

Like trucking fleets, owner operators face their own business challenges. They do not have the benefit of running a big fleet, allowing for many contracts and stable business. Additional challenges include competing with larger companies on skyrocketing fuel and insurance costs, and being able to afford new technologies for operating efficiencies.

More options

Five Point Capital, a San Diego, California-based equipment financing company, has developed its custom Long Haul Trucking Program to offer owner operators financial options for leasing trucks, rather than purchasing.

“We saw a need, as many lending institutions have few funding options for owner operators, says Five Point Capital's chief executive officer Dan Feder. “We have leveraged our relationship with certain lenders to alleviate some of the previous restrictions owner operators face because they are historically high-risk borrowers.”

Under the Long Haul Trucking Program, financing options are now open to owner operators looking to replace an existing truck or to increase their fleet, need $75,000 or less in equipment, and have been in business for three or more years.

“With the program, owner operators can now qualify for a leasing program,” Feder says, “allowing them to expand their inventory, ultimately increasing productivity, and freeing up important capital with an affordable monthly payment.”

He notes that there are trucking companies using the program as an incentive to attract owner operators, and as a way for their current ones to expand their fleet.

“Government mandated emission control upgrades and the increasing need for new technologies will inevitably lead to increased costs for new equipment, says Feder. “Owner operators will have to comply as do their larger counterparts.”

Because owner operators often do not have the financial strength and means that large trucking companies do, “equipment leasing can be a competitive alternative for them.”

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