What is an Owner-Operator?

What is an owner-operator?

An owner-operator is a self-employed truck driver who owns and operates their own commercial trucking rig. Owner-operators are independent contractors who can be their own boss and set their own hours. Most owner-operators start as company drivers for trucking companies first to gain experience. Then, they branch out by becoming small business owners.

Owner-operators are free to select the loads they want or enter into a lease agreement to contract with one customer or product.

What’s needed to become an owner-operator?

To become an owner-operator, a driver will need to obtain:

• A commercial driver’s license (CDL). A commercial driver’s license is required to operate large, heavy, or placarded hazardous material vehicles.

• USDOT number. The  Federal Motor Carrier Safety Administration (FMCSA) assigns a unique identifier when collecting and monitoring a company's safety information. 

• Motor carrier or MC number. The FMCSA’s operating authority to haul regulated commodities.

• Insurance. The FMCSA requires owner-operators with authority to have liability coverage.

Once owner-operators have the above requirements, they need to decide whether to buy or lease a truck based on the kind of business they want to operate. They also need to start building a customer base, which is often the hardest part. To alleviate the initial challenge of finding loads, drivers might join a load board to find loads to move. Once a driver makes connections and builds their business and reputation, it becomes easier to find contracts and work independently.

What do owner-operators do?

Since owner-operators also act as fleet managers, they’re responsible for purchasing their own vehicle insurance, maintaining electronic logging device (ELD) regulation compliance, and coordinating loads themselves. This can make income more variable than in larger fleets with a dispatch office.

Some large fleets will also partner with owner-operators. Similar to franchising, fleet owner-operators become free agents under the umbrella of a larger fleet. The fleet provides the load requests and insurance, and the driver takes home the vast majority of the gross pay per load.

Owner-operator vs. company truck driver

An owner-operator has many more responsibilities than a company driver employed by a motor carrier. These responsibilities include setting up a business, maintaining vehicles and licenses, and accounting. They also need to stay in compliance with FMCSA regulations.

Company drivers:

• Drive in a vehicle provided by the company they are employed by.

• Pick up and deliver loads assigned by dispatch.

• Don’t need to pay for fuel, maintenance, or insurance on the truck.

• Are paid by the mile and sometimes receive pay related to loading/unloading, detention, and performance pay.

Owner-operators:

• Own and operate a small business, using either used trucks, new trucks, or lease purchase.

• Can select their freight from either the spot market (if they have their own Department of Transportation (DOT) operating authority or through leasing with another motor carrier and using freight load boards.

• Are responsible for the entire business, including finding loads, managing operating expenses, employing other staff, hauling,  maintaining their own truck and making earnings decisions.

• Set payment terms with shippers, often by a written contract. They get paid through mileage pay or a flat rate from each load they haul.