Motor carrier and owner-operator contracts
Question: I’m an owner-operator about to lease on to a carrier. How can I get the best arrangement?
Answer: In order to be truly successful in trucking, owner-operators need to master the art of contracting. The central document that must be understood is the written lease agreement. The federal Truth-in-Leasing Regulations (49 CFR Section 376) require that a written lease agreement be executed by and between carriers and owner-operators, and that such leases address more than 24 separate issues. With respect to those which call for a driver to be paid based on mileage, a good lease agreement will cover issues like what the mileage standard is and whether pay miles apply when deadheading. Few owner-operators know that they have the right under regulation to examine copies of carriers’ tariffs or contract rates; that, if they are paid on a percentage basis, the regulations require that owner-operators be al-lowed to obtain a copy of the final freight bill before or at the time of settlement.
These leasing regulations exist to protect owner-operators. They are also in place to ensure that carriers ultimately remain responsible for liability and claims. You would be wise to make sure that you lease on to a motor carrier that respects the leasing regulations. Perhaps the old adage, as amended here, is the best advice: Caveat Truckor (“Let the trucker beware”). You might also consider getting your own motor carrier authority.
Question: I am a new one-man carrier with my own authority. What kind of contracts will I need in my business?
Answer: For those owner-operators who operate under their own authority (and are really small motor carriers), there are a number of documents that come into play, including bills of lading, rates & rules publications and written carrier-shipper and carrier-broker agreements. Motor carriers should beware of the traps inherent in shipper-produced bills of lading. They should also recognize that even if a Standard Truckload Bill of Lading (“STBOL”) is used, a document which is fair and balanced, a written contract generated by a shipper can trump the terms of the STBOL and the carrier’s rates & rules publication.
An excellent resource regarding the subject of motor carrier contracting is Trans-portation Attorney Hank Seaton’s book “Protecting Motor Carrier Interests in Contracts,” available through www.dotauthority.com. Seaton covers contracts with shippers, brokers, insurers and factors. An-other helpful resource is DOTAuthority.com’s “How to Make Big Money in Trucking” one-day workshop.
The writer, James P. Lamb, a former motor carrier regulator, is now a USDOT-licensed practitioner who helps owner-operators avoid violations and make more money by getting their own authority and applying proven sales and marketing techniques. You can call him at (800) 761-7306 or visit www.dotauthority.com.