The Mason & Dixon lines is a 100% owner operator and agent based company. As an owner operator company it is very important for us to keep our rates as high as possible because we pay our operators a percentage of the load. If our operators are not profitable we do not stay in business. It is also advantageous for our agents to maintain a high rate structure since they are paid a percentage of the load. In fact, the Mason & Dixon lines as part of Universal Truckload Services was previously recognized in Transport Topics as having one of the highest rates per mile for a truck load carrier.

I think you will find that large company fleets are more likely to compete based on rates. Large company fleets will sometimes lower rates to get a larger volume of the freight. Brokerage only companies will also do this because of their low overhead expenses. In fact, we recently completed a bid with over 3400 lanes for a major U.S. shipper. The Mason & Dixon lines was awarded 7 lanes out of a possible 3400. The other lanes went to a variety of companies many of which were large company fleets, brokerages, and logistics companies.

The Mason & Dixon lines does operate a successful brokerage department. We require that our agents maintain our rate structure whether they are loading a broker truck or one of our owner operators. The advantage to us operating a brokerage department is that it allows us to introduce more freight into our network that our operators can choose from and it better helps us to meet our customers shipping needs.

One item not mentioned is aligning yourself with a company that treats the owner operator as a partner and not a company driver with his own truck. Read the contract, be sure you are comfortable with the compensation, interview current drivers to get their take. Look at turnover and longevity of driver fleet. All good indicators of whether the company leasing trucks is truly beneficial to the independant contractor model.

Mr. Dawson’s expenses are pretty much accurate. In regards to item #2…Trucking model is evolving and carriers are benefiting from reduced overhead by paying the driver to be his own business. In regards to brokers. No love for them at all.

Trucking needs to be regulated on the brokerage side, this way everyone can Capitalize including the guy who owns the equipment…instead of brokerages and big bankers…controlling the market…and rates…..which by the way is breaking the laws of the land…in a capitialistic world…..Rate fixing to the trucks…..

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1) What does it mean when a business is described as a “Commodity-type business” and how should that affect my decision to enter that business for myself?

Here’s a simple beginner’s explanation from about.com:

“It’s usually easy to spot a commodity-type business. From a financial standpoint, they are normally characterized by high asset-intensity, significant capital expenditures in relation to equipment, low profit margins, and intense competition. They are usually easier to spot in down-cycles, when things are getting tough (indeed, investors should be wary of the illusive prosperity these companies seem to posses during boom times). Often, it takes little more than common sense to realize a business is operating in a commodity environment. For a quick check, pose the following question to yourself and a few friends: “Am I willing to pay more for (insert product name here)?”

If you were in charge of shipping for a factory or warehouse, would you be willing to pay more for Company A’s shipping service than Company B’s shipping service if the end result was the same – getting the product from point A to point B in X amount of time? No. You base your decision on price. Trucking is a commodity business and you should truly understand the implications of competing in this type of business before getting into it or you will quickly find out the hard way.

2. If owning a truck and hauling freight is so profitable, then why are so many companies choosing not to own their own trucks but are encouraging me to do so instead?

This should throw a major red flag. The real money in trucking is not in owning trucks and hauling freight, it’s in providing services to those who own the trucks – brokerage services, repair and parts services, logistics services, reselling insurance, and reselling bulk discount services.

I do not know Mr Dawson and I offer my opinions with all due respect to him. Since we’re educating people on the prospects of becoming an owner operator we should give them both sides of the story so they can make an informed and educated opinion. I’m not saying you should avoid becoming an owner operator. I’m just saying you should do mountains of research before diving in – it’s a tough world to survive in.