You’re perusing new trucking companies to drive for when you see the following information about pay from different companies:
It’s pretty obvious which one you’re going to choose, right? You want to make the most money possible.
Even though your natural inclination might be to choose the company that will pay you 80 percent of the linehaul, that may not be the best decision.
That’s because — typically speaking — the higher the percentage pay a company offers, the more you’ll pay for things like trailer fees, permits, and insurance in the form of pay deductions. That can ultimately lower the percentage you actually take home.
Here at Anderson Trucking Service (ATS), we pay our independent contracts using percentage-pay contracts. In this article, we’ll help you understand what percentage pay is, how companies do it differently, and what to ask about percentage pay.
Percentage pay is exactly what it sounds like: A percentage of the pay a customer pays the carrier for hauling a load.
Carriers charge customers a specific amount for each load and drivers earn a percentage of that total rate.
The percentage carriers keep depends on several factors. Let’s say a company pays you, the driver, 60 percent of the linehaul. You’re wondering what happens to the other 40 percent. Is it just given to the carriers to line their pockets?
The answer is no.
Carriers keep a percentage depending on how much or how little capital they have in it, and then the rest is subject to be paid out to the driver. More on that in the next section!
You should be aware of different ways carriers pay out percentage pay, including straight percentage pay (when carriers pay a percentage for everything) or split percentage pay.
Split percentage pay is when the carrier pays percentage pay and a flat rate, meaning you get a percentage of the linehaul, but then a flat rate for other things.
Let's go through an example.
ATS has a percentage contract. However, depending on the fleet you drive for, you could see a cents per mile (CPM) payout for fuel instead of being paid a percentage. On your settlements, you’ll see both a pay percentage and CPM mileage pay.
Every carrier has its own spin on percentage pay, which makes it hard to compare apples to apples in a competitive market where carriers are constantly trying to recruit.
Percentage pay depends largely on overhead costs. Much like any business, carriers have a long list of expenses for employees in office and out.
Percentage pay can depend on how much money the company needs to make to pay its employees and drivers. ATS and many other trucking companies within the industry are very much alike, where they have both drivers who are driving and not in the office, but they also have an office team to support them.
Setting a percentage is a complicated matter of looking at business costs and determining the bottom line on what they need to capture from each load to gain and maintain success and stability.
In addition to ensuring everyone in the company is paid and the carrier can keep the lights on, so to speak, carriers have to consider the cost to maintain and operate the fleet. Carriers take a look at everything to do with the truck.
Carriers have to think about the cost of insurance on both the trailer and the load. Every load a carrier hauls is subject to a minimum amount of insurance to haul that load.
Trailer maintenance is also a consideration. Nowadays, we have computerized equipment trailers, so they require an increased level of maintenance and ongoing work to maintain.
There are other costs too, such as what it takes to keep the company afloat or to pay off debts. They could take more off the linehaul percentage to cover bills. Other companies — ATS being one of them — are debt-free and don’t have to worry about paying off bank loans.
It’s not uncommon, as mentioned earlier, for a driver to think carriers take more to allow the rich to keep getting richer. However, you should be cautioned to think that way. It’s not about the company getting richer; it’s about the business gaining stability.
Stability allows for longevity and the ability to grow and capture all of the different freight markets. If the business doesn't have stability, the driver will see a direct impact. Drivers may not know when or where their next load is coming from, the company may not be able to fix your truck, or you might get a late paycheck.
Percentage pay for independent contractors at ATS starts at 65 percent for all divisions (vans, flatbeds, heavy haul, and Department of Defense).
This percentage increases based on the specific contract that you sign with your particular division.
In each division, we cover the cost of:
For you, this means you never have to worry about paying for trailer rental fees or the cost to fix a trailer if a tire blows or a brake line fails. This gives you the freedom to pick up and deliver freight without a trailer rental component.
ATS also covers a long list of legal permits — which means you, the driver, don’t have to worry about it. Those costs are never passed down to you.
At some carriers, you have to pay a start-up fee or a down payment of some sort to pay for these permits upon starting at the company. ATS takes on that cost to ensure that we're able to haul a wide array of freight; we don’t have to say no to a customer because we don’t have the proper permits.
To give you a good perspective of how much it costs to fully license a vehicle, it's upwards of $5,500 a year.
You have two things to consider when it comes to percentage pay and choosing the program that’s right for you:
So while one company may pay you 80 percent of the linehaul, you may have to pay for some things yourself, such as trailer maintenance. While the percentage may be high, the items you’re financially responsible for can end up lowering your overall pay percentage. It may look very appealing to go to a company that’s offering a higher percentage, but there’s a trade-off.
On the other hand, a company may pay a lower percentage, but the company will cover other expenses — like trailer fees.
When you’re considering these companies, ask about the costs you’ll take on. Empower yourself by asking the right questions and understanding what sort of contract you’re getting yourself into. Approach the situation with curiosity. Ask, for example:
Be sure you get these answers in writing!
Then, determine your average pay per week and then subtract all the deductions. You may find that the company that pays a lower percentage will earn you more money in the end.
While percentage pay may seem straightforward, there’s more to it than just picking the company offering the highest percentage.
The key to making the right decision lies in understanding the costs you may be responsible for, as these can significantly impact your overall earnings. It’s crucial to ask detailed questions about deductions, coverage, and additional costs like trailer fees, permits, and maintenance.
By carefully weighing your options and asking the right questions, you can find a pay program that truly maximizes your earnings — not just on paper, but in your pocket.
At ATS, we aim to provide a balanced percentage pay structure that minimizes your out-of-pocket expenses — allowing you to focus on driving while we handle the rest.
Learn more about our different pay programs.