Trucking Authority vs Leasing On A Comprehensive Comparison for New Owner Operators

American Truckers
Jul 30
5 min read

Updated: Oct 7

Starting a Trucking Career: Authority vs. Leasing Options

==========================================================

Starting a trucking career can feel overwhelming, especially for new owner-operators deciding between acquiring their own trucking authority or leasing onto an existing carrier. This choice affects not only your day-to-day operations but also your overall success. In this post, we will break down the differences between trucking authority and leasing options while helping you figure out which path might best align with your goals and circumstances.

Understanding Trucking Authority

Before exploring the comparison, let’s clarify what trucking authority means. Having your own trucking authority gives you the freedom to operate independently. You can choose your clients, set your own pricing, and manage every aspect of your business without following a carrier’s rules.

However, securing your own authority requires a lot of groundwork. You need to file for multiple licenses, pay for insurance, and comply with regulations from the Federal Motor Carrier Safety Administration (FMCSA). While this process can be burdensome, it often leads to greater opportunities for negotiating contracts and potentially increasing your income. For example, owner-operators with their own authority might see earnings ranging from $1.50 to $3.00 per mile, depending on the market and freight type.

The Lease-On Option

Leasing onto a carrier can simplify your entry into the trucking industry. As an independent contractor for a carrier, you offload many administrative tasks such as regulatory compliance and freight recruitment. Many carriers even offer perks like fuel discounts or maintenance support.

Leasing on can provide a sense of security and reduce the stress of navigating the trucking business alone. However, this route typically offers less flexibility than owning your authority. You may find your income limited by the carrier’s policies and assigned loads. For example, while some lease-on drivers earn a set percentage (commonly around 70% of the load revenue), they often miss out on higher-paying loads available to those with their own authority.

Trucking Business Model Comparison

To help you weigh your options, let’s analyze the business models of trucking authority versus leasing on. The following comparisons highlight crucial aspects to consider:

Control and Independence

Authority: You are in full control of your trucking operation, allowing you to select routes, clients, and strategies. This independence can be rewarding, especially as you grow your business.
Lease-On: You have limited control, as many key decisions are influenced by the carrier’s rules and needs. This arrangement can restrict your income and operational choices.

Cost and Expenses

Authority: Costs can pile up quickly. For instance, you might spend anywhere from $5,000 to $10,000 on licensing and permits in your first year, along with additional expenses for insurance, truck maintenance, and unexpected downtime.
Lease-On: While you’ll incur costs like lease fees, many carriers assist with operating costs, making your upfront investment lower. This can be a great way to get started without overwhelming financial pressure.

Potential Earnings

Authority: Owner-operators usually have the potential to earn more. By selecting your own freight and rates, many see profits that exceed $200,000 annually, provided they have established relationships and experience.
Lease-On: Earnings tend to be steady but might be capped based on the carrier's payment structure. A lot of lease-on drivers report earning between $60,000 and $100,000 annually, significantly influenced by the carrier’s commission percentage.

Time to Get Started

Authority: The process of securing your authority can be lengthy. You typically need to allow several weeks to months for filing and setting up your business.
Lease-On: Leasing onto a carrier is a faster route, letting you start working and earning income within days to weeks.

Independent Trucking Pros and Cons

As you consider your options, here are some pros and cons for both authority and leasing.

Advantages of Having Your Own Authority

Complete Control: You decide how to run your business, including contracts and freight options.
Higher Earnings Potential: By eliminating the middleman, you may see better pay per load.
Brand Development: Building your own brand can lead to more significant client relationships and business opportunities.

Disadvantages of Having Your Own Authority

Increased Risk: Operating under your authority means taking on all business risks, from accidents to financial downturns.
More Responsibilities: You must manage everything from marketing to compliance and finances.
Significant Startup Costs: Initial costs can be high, which might be a deterrent for new operators.

Advantages of Leasing On to a Carrier

Lower Risk: Leasing provides a safety net, especially crucial for those new to the industry.
Quicker Start: You can get on the road more swiftly, minimizing downtime before you start earning.
Support and Resources: Accessing a carrier’s resources can help facilitate a smoother start during your transition into trucking.

Disadvantages of Leasing On to a Carrier

Less Freedom: Your options are limited as you work within the carrier’s framework.
Possible Lower Pay: Since carriers take a commission, your overall income could be significantly lower than that of owner-operators.
Limited Branding Opportunities: Your marketing options may be restricted under a carrier’s name.

Choosing the Best Path for You

The choice between trucking authority and leasing on ultimately hinges on your personal preferences, finances, and career aspirations. Here are some essential questions to ask yourself:

Am I equipped to handle the responsibilities that come with operating my authority?
Do I value stability and support over the potential for higher risks and rewards?
What are my short-term and long-term goals for my trucking business?

It’s wise to reach out to experienced trucking professionals and conduct thorough research. Taking the time to evaluate each option can lead to a more fulfilling and prosperous trucking career.

Additional Considerations for New Owner-Operators

Understanding Market Dynamics

Understanding the trucking market is crucial for success. The demand for freight transportation fluctuates based on economic conditions, seasonal trends, and industry developments. Keeping an eye on these factors can help you make informed decisions about when to take on more loads or when to hold back.

Building Relationships

Networking is vital in the trucking industry. Establishing strong relationships with shippers, brokers, and other truckers can lead to better opportunities. Attend industry events, join trucking associations, and engage with others in the field to expand your contacts.

Investing in Technology

Utilizing technology can streamline your operations. From GPS tracking to load boards and accounting software, investing in the right tools can enhance efficiency and profitability. Consider what technology best suits your business model and budget.

Safety and Compliance

Safety should always be a priority. Ensure that you are compliant with all regulations and maintain your vehicle in top condition. This not only protects you but also enhances your reputation in the industry.

Final Thoughts

Your decision as a new owner-operator can dramatically impact your trucking career. Both obtaining your own authority and leasing onto a carrier come with unique benefits and challenges. Carefully weighing the pros and cons while considering your individual circumstances will empower you to make an informed choice. Whether you decide to lead your own business or benefit from the support of a carrier, your journey in the trucking industry can be rewarding with the right approach and determination.

Need help running your trucking business?

At American Truckers LLC, we offer reliable dispatching to keep your trucks moving, expert bookkeeping to keep your finances organized, and trusted freight factoring referrals so you can get paid fast.

Click *here to learn more and get started today.*