The first part in this multipart series, also featured in the March 2019 print edition of Overdrive, detailed the freight relationships that often propel an owner-operator’s expansion to a small fleet. Find it via this link:
Small leased fleet owner-operator Dave Marti and Midnight Xpress owner-operator Andre Jackson, based near Jackson, Mississippi, both employed a common practice as they expanded: limited personal income, separated from business income, from which profits were reinvested. Or, as the case may be, used to cover the unforeseen.
Marti pays himself a set salary that amounts to a “pay cut” from when he ran as a one-truck owner-operator. The remainder of the profit he now separates out in a business account.
Jackson, partnering with Atlanta-based owner-operator Donte Ogletree, launched his authority with more than one truck for the first time in 2017. He learned a valuable lesson when he and Ogletree bought a 2007 Volvo for a third driver last fall.
Before the driver had delivered his second load, a breakdown resulted in an in-frame engine overhaul. Combined with the driver’s departure a couple months later, the experience prompted re-evaluation of their plan for aggressive growth.
Jackson and Ogletree started out paying themselves just $500 weekly each as they ran full-time. They worked with brokers for freight, intending to reinvest profits in extra power units. Even though they were setting aside the equivalent of about 8 cents per mile for a maintenance account, the breakdown tapped out that reserve. They’ve since boosted that escrow rate significantly and begun talks with owner-operators to lease on instead of buying equipment for drivers.
La Crosse, Wisconsin-based owner-operator Rob Hallahan, too, has experienced setbacks. He’s had his authority for about three years but not quite long enough to avoid being considered an “unproven risk” to many insurers.
