Driving a truck used to mean freedom. Now, it means a mountain of debt.
The trucking business used to stand for a path toward a middle-class life—the open road stretched out in front of you, the freedom to make more money and do with it what you wanted, and the opportunity to (in some ways) be your own boss.
That’s not really the case anymore. The trucking industry is offering less freedom to its employees and contractors than ever before, keeping them from advancing, making money, or ever getting out from under the weight of crushing debt.
Traditionally, people have seen the trucking industry as an investment opportunity, no matter how non-conventional the lifestyle might be. Trucking used to promise freedom, money, and opportunity. But now, being a part of the trucking industry (at least, being a truck driver, that is) means a lot of debt—like, a truckload—and it’s leaving many of those in the industry overwhelmed, underpaid, and desperate for a new solution.
In our first article in this series, we offered an overview of what the trucking industry promises, what it looks like now, and how those workers end up cashing out that American dream because of mounting debt. Today, we want to take a deep dive into why and how this happens. Because ultimately, it is not one that just happens on its own. It happens largely because of the manipulation of the trucking industry.
Let’s Talk About Debt: Diving Even Deeper Into Lease Operator Agreements
In our first post, we briefly talked about something called lease operator agreements—but that’s something we’re going to dive into even deeper to give you a better idea of where insurmountable debt in the trucking industry comes from.
It all starts with a truck. As a truck driver, you cannot be in the industry without a truck—makes sense, right? You need that vehicle to go from Point A to Point B to Point C and so on. But as we mentioned before, trucks are very expensive—in fact, even the most basic semi-trucks can cost anywhere from $130,000 to $200,000 new. Sure, there are used options out there and plenty of deals to find, but even so, it’s highly unlikely you’ll be paying anywhere under $90,000 for your truck.
In other words, that’s a steep price to pay for entry to that new life you want.
But here’s where things get tricky. For people who can’t just up and buy a $200,000 rig, the dream of being a truck driver isn’t necessarily over. The trucking industry is there to ‘help.’
Or so it seems, anyway. The trucking industry is strategically designed to aid those who want to be in the business, and they do this in a few different ways.
One of the first methods is to become a company driver that works for a specific trucking company. This method makes you an employee of that company—therefore, you use their trucks, you don’t own your own truck. There are some pros and cons to this. On the plus side, you’re not responsible for paying for a massively expensive vehicle. On the downside, you don’t own that asset and you’re paid a lower, standard rate for each mile that you drive. This means that, while you won’t be paying off a truck payment, you also won’t be making nearly as much money as if you’d owned your own truck.
The second option is the one that a majority of truck drivers sign onto something called a lease owner-operator agreement. With these types of agreements, the driver leases a truck from a company, agreeing to gradually pay off that truck as they work—essentially, they lease a truck directly from the carrier. This results in the driver being paid more per mile (eventually, once they own the truck), in many cases a down payment not being required (which is huge), and the promise of the freedom to run your own business once the truck is paid off.
On the surface, this appears to be the superior option—you get to pay off a vehicle gradually that eventually will be your personal asset, you’ll end up making more money, and you can ultimately operate like you own your own business.
So, this could be an option. Ultimately, it sets you up to own a valuable asset (your truck), allows you the owning-your-own-business flexibility you might be craving, and in the end, pays more per mile—but this only applies if trucking is something you stick with. And as most people find out a few weeks, months, and even years into their career, it’s not a lifestyle that makes sense for them.
And that’s normal, right? Trucking means long hours on the road, away from your family, making minimal money (at first), and never being in the same place. It’s harder to live a healthy lifestyle, harder to be happy, and harder to make money you need to put toward the life you want.
Tied into that issue is that investing in a lease owner-operator agreement means you’ll be responsible for all the expenses of the vehicle in addition to the monthly payments to cover the cost of the vehicle—in the long-run, the combination of the tough lifestyle and the payments means truck drivers are stuck in an endless loop—paying unforgivable amounts of money for their vehicles, living miserable lifestyles, and still not being able to pay their bills as a result.
More than that, there are a few more issues that are typically associated with lease owner-operator agreements that make the lifestyle that much harder and often put drivers even further into debt.
- There’s no guarantee you receive a premium leased truck—it could be a less-than-desirable set up and it could make your job that much harder.
- You cannot move from company to company and keep your truck if it’s not paid off—ultimately, you’re stuck in an endless loop until you pay it off.
- It’s highly likely you’ll never own the truck you set out to own. In many cases, the truck driver is responsible for paying for all the expenses of the truck. That, coupled with paying off the initial cost of the truck, could result in years (and years) of expenses that never get paid off. The truck might never truly be yours.
- Typically, there’s a giant buyout fee at the end of the contract. So, even if you make it to the end of the contract and pay off your truck, you’re expected to shell out even more money—money you might not have.
The Dark Side of the Industry & The Legal Battles That Follow
It goes without saying, but with this setup, trucking companies have all the leverage. Because so many have fallen victim to the trucking industry, so many have sought out help and options to make their situations right. Naturally, this has led to an uphill legal battle to rectify the imbalance. Several lawsuits have been filed and won, but drivers are receiving pennies on the dollar for the abuse and sacrifice they endured.
If you have experienced a similar situation where a trucking company has taken advantage of you and exploited your service, you could very well have a legitimate legal case; you just need to connect with the right professionals to guide you through the process.
The team at Butler Law Firm cares for you. Contact us today through our website or by phone at 678-940-1444 to discuss your situation and possible solutions.