Understanding the car hauling industry

So you want to be a car hauler.

You have looked at different parts of the trucking industry, you might even have your CDL. But you have settled on hauling cars: maybe because it’s profitable or because car hauling has the least red tape. It is a hard niche to get established in. But it is worth it, if you can hack it.

Industry overview:

Physically hauling cars is not the only job option in this industry. There are a variety of occupations in car hauling. Super Dispatch’s customers cover the entire industry, which is broken into three categories: shipper, broker, and carrier.

The supply of cars that need moving comes from “Shippers” and the car-movers are “Carriers.” Between these two are “Brokers.”

The Shipper:

A shipper’s primary job involves cars, but not the transport aspect. OEMs like Jeep, Mercedes, Audi are considered shippers, but dealerships and auto auctions like Manheim and Adesa are as well. While car dealerships and OEMs are huge shipping customers, “shipper” also applies to individuals shipping personal vehicles (like military families or college students.)

The Broker:

Brokers are the middle-men between shippers and carriers. Because shippers are not in auto-hauling, finding carriers is a challenge for them. Often this means shippers hand over load offers to brokers instead, who then find carriers for a “finder’s fee.” This is usually a percentage of the load price. These fees are why carriers hate brokers; they see brokerages as a necessary and expensive evil to find loads. “Brokers make car haulers broke” is one of the least colorful phrases a new car hauler will find in this industry.

There are absolutely dishonest brokerages that prey on unsuspecting carriers. But brokers need relationships just like carriers do; if a broker messes up a good relationship, his entire business is in the toilet.

Regardless, it’s common for OO’s to start out by booking any load for themselves on load boards until they find three or four trusted brokers.

Even with good brokers in the game, the goal for many carriers is to avoid them entirely. This requires a lot of planning and work, but it can be done.

Big car hauling brokers: A1 Auto Transport, Metrogistics, United Road, Montway.

The Carrier

If you’re here, you know who a carrier is and what he does. But you might not know that not all car-carrying is created equal! There are about three job options for drivers:

Company drivers –

Company drivers are employees, usually of larger companies with anywhere from 10 – 500 trucks. You may have heard of big companies like Swift. Companies like Swift employ a majority of drivers in the industry. This form of employment is ideal for new drivers; the pay and benefits are okay but the work is consistent and drivers are not liable for damages. Sometimes, these companies will pay for CDL schooling and driving practice in exchange for work contracts or payment programs.

Fleets: Jack Cooper, United Road

Sub-ContractorsSuper Dispatch Car Hauler Transportation Management System Business

Contract work is a step above fleet driving in terms of freedom, but it is not necessarily the same thing as owning your own trucking company.

A common situation today is a driver leases his truck from a huge company like A1 Auto Transport and Ready Logistics. That same company will employ him as a “contract” or “sub-contract” worker (1099 IRS form.) Technically, this driver should be able to refuse load offers without any troubles from his leasing company. He also should be able to run loads from any other company or load board (within reason.) This is another way car haulers lose money.

On paper, 1099 workers get paid a higher dollar per mile than W-2 employees, but they get none of the benefits awarded to company drivers. This means that after expenses (gas, maintenance, health insurance, liability insurance, trailer lease payment, self-employment tax) the pay-per-mile decreases significantly. In many cases, 1099 contract workers end up with significantly lower take home pay than an employee driver.

This is profitable for huge companies to make rental money off of their equipment (much like a landlord with a rental property) while also getting drivers to move freight without paying employment taxes, health insurance or liability insurance.

Much like other professions, contract truck driving rarely benefits new and inexperienced workers. This type of work is only meant for an expert driver who can effectively run a business.

Common contracting companies: Accelerated Services

Owner Operators

Having your own authority is the driving life to which many car haulers aspire. You act as a dispatcher and a driver, find your own loads and drive wherever you choose. You choose what rates to accept on whichever load boards you want and what freight to haul.

How is being an owner operator different from contract work? Mostly, there is no 1099 contract with a company. This is the ultimate goal for drivers because it requires you to be a 100% independent business. Many companies will call their contractors “owner operators.” Though it might be technically true, owner operators and contractors have small but important differences. In this industry, owning your truck outright or leasing it from a company that is different than your load contract is the primary difference between OO’s and Contractors.

Owner Operators: Alpha Elite Transport, EM Logistics / Exotic Cars Midwest, Dailey Transport  are just a few of the Owner Operators that use Super Dispatch’s car hauling dispatch software to run their small businesses

Anything we forgot? Let us know in the comments!

Tune in for our next “New To Car Hauling” articles:

  • Car Hauling Certifications and Driving School
  • Deciding on a trailer type
  • Trailer insurance quotes
  • Making a car hauling business plan
  • Getting your own authority
  • Deciding on an ELD
  • Maintenance considerations
  • How to find loads

 

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[…] everyone agrees with Rutherford, especially about Brokering, and he knows that. Often, Owner Operators don’t trust Brokers and vice versa. Many haulers don’t view the Broker as a customer at all, but simply a […]