Starting a Co-Ops company of owner/operator

L

loadbeaver

Member
Sep 5, 2018
60
6
8
5
I have been long in the trucking, most of times as Owner/operator working for many other companies, now run my own Dispatch and company, but i believe there is need of independent owner/operators coming behind one umbrella, forming co-ops like how Taxi companies running. Will have one system, dispatch, support but independent small companies under one roof(umbrella). We will make call as CO-OPS brand, but invoice, communicate with individual company, with UMBRELLA body has also the name out, taking some responsibility. What do you guys think?
 
If each Independent Owner operator has their own Authorities, Insurance, WSIB and name of the door you can call it whatever you want but at that point you are a Load Broker and will be spending most of your time explaining to other brokers that you are not double brokering. Every time you are asked for your carrier package you will have to send the package of which ever "CO-OP Member" you are sending in to move the load. Sounds like it will be very confusing to your customers and will create a lot of extra work for you. By using the current owner operator model you have the control over compliance since it is your authorities and insurance they are running on.
 
  • Like
Reactions: chica123, Falert and Freight Broker
So long as each owner-operator bills for his own services under his own company name and authority, this scenario might work. I take it you would then bill each owner-operator a "membership fee" for belonging to the co-op. So ABC Trucking would bill shipper X for services rendered.. and each month ABC Trucking would send you XYZ dollars to belong to the co-op. You would have to define exactly what the co-op provides each owner-op.. i.e. do you provide loads.. volume discount on fuel,tires etc.. driver reference checking? If your "value added" is compelling this might indeed work.
 
I guess I missed the part earlier where the carrier would invoice the customer directly and your role is more of a compensated sales agent and truck finder for the customer. That solves some regulatory issues but opens up a can of worms administratively. Is carrier going to take your word that a credit check is not necessary? Does carrier have recourse against you if customer does not pay? If customer gives you 10 loads and you use 10 different carriers is the customer going to want to set up 10 carriers in their AP system? If a claim arises, does the customer deal directly with the carrier? Once the carrier is set up in the customers system, what is stopping them from dealing direct and cutting you out of the picture. Yes, it could work but sounds like a lot of extra work and potential problems for not much extra return.
 
  • Like
Reactions: markhamboy
OMG you think running owner ops on your plate when you have some control is fun, get a bunch with independent authorities and watch the sparks fly. Great idea but I think it's called Uber Freight.
 
  • Like
Reactions: loadbeaver
It’s called a synthetic fleet and with insurance it’s a dead stop.
It has to do with the lack of control and oversight everyone has for one another.

Imagine the administrative nightmare with loads, confirmation, allocation of dispatch hours, confirming truck records etc.... and who is regulating these people? Making sure one persons actions aren’t going to shut down the company’s. Then there’s the liability issues...

Sorry to be a dream crusher, won’t happen.
 
  • Like
Reactions: loadbeaver, chica123 and Igor Galanter
If I am reading between the lines correctly, what you are proposing has already been done. It's called Landstar.
So in a sense it's doable, but it takes an awful lot of background work :) .
 
One of the inherent problems with this type of idea, is how do you get a group of independent business guys to keep their egos in check and work together for the greater good? Sure the benefits are probably worth it, but it has been my experience that anyone with the gumption to start their own enterprise, usually wants to steer the ship all by themselves.
 
  • Like
Reactions: KeyFactor and Freight Broker
Exactly.. if you've got the right people involved with you then it will fly.. otherwise I can see this turning into an asshole stew real fast..
 
  • Like
Reactions: TRKINSURE
Is it best to use owner ops under their authorities or under a companies?
Are there legalities for double brokerage if companies use owner ops under their own authorities?
 
Its not double brokerage but a lot of work we have to book it under their own authorities and answer calls and reply emails under them so you can imagine.
 
^^^
So, as a customer I do not have a true, accurate, and honest picture of where my freight is, or who really has it?
I guess, if the shipper is comfortable with that. You do tell them that their messages and updates are not really coming from the driver/authority holder, but are actually coming from someone pretending to be the driver/authority holder ... right ???
 
  • Like
Reactions: TRKINSURE, Shakey and MikeJr
I think I know where you're going with this. Let me see if I have this correct ...

Let's call your company "Shiprodeep". I don't know if that's what it's really called, but for these purposes, that will suffice.
The first part of Shiprodeep, a transportation force, has gathered a number of one truck companies together, ABC Transportation, DEF Trucking, etc., etc.
A second part of Shiprodeep, a sales force, has gained access to freight. Whether by loadboard or direct customer contact is immaterial at this point.
A third part of Shiprodeep, a dispatch force, a sub-division of the sales force, doles out the loads to the carriers signed to the first part of Shiprodeep, the transportation force.
A fourth part of Shiprodeep, a tracking force, monitors the freight progress of the first part of Shiprodeep's company, the transportation force, through the third part of Shiprodeep's company, the dispatch force, and keeps the shipper abreast of progress through the second part of Shiprodeep's company, the sales force.
A fifth part of Shiprodeep, a management force, keeps the whole thing ticking along.
Correct so far? I bet if I am not right on, I am awfully darn close. The reason I think I am correct is because that's about the only way I can fathom that it works. The only other way I see it working is parts one through four are third parties, using contract labour, contracted to the fifth part, management.

Subsequently, I, and others maybe as well, am/are left with a few questions. The biggest I suppose is how does the truck get paid, and by extension, how does the driver get paid? My thoughts are in this direction; The truck gets a pay statement with percentage deductions off the gross pay for each of the following:
A deduction for the sales force for finding the load.
A deduction for the dispatch force for coordinating the load.
A deduction for the tracking force for tracking the load and maintaining customer confidence.
Each deduction would have to be at least 10% of the gross. You could not possibly pay wages, source deductions, WSIB, etc., and keep the lights on for anything less.
I can see where there are some tax implications here. Each of these services is HST applicable since (presumably) both the sellers (Shiprodeep operating parts) and the buyer (ABC Transportation) are Canadian entities, and the transactions are completed within Canada. Destination of the freight has absolutely nothing to do with these transactions, and there is no possible way to wash it otherwise.
The next question is about liabilities. Tax liabilities, insurance liabilities, wage liabilities ... the list is almost endless. Who is responsible for what and how? We could delve into this further, but truthfully it would be like writing a thesis for a PhD.
What if the actual transportation companies like ABC Transportation were using contract drivers ... Driver, Inc., if you will? What sort of dog's breakfast of trouble would that reveal?

I would expect the cost of accounting alone would negate any possible savings over other, pre-existing business models so that brings us to the ultimate question: What possible savings or advantages could there be to giving birth to such an entity?

@Shiprodeep - what am I missing here? I will truly be pissed at myself if I have been doing business one way for 50+ years, and have missed the advantages of this business model.
 
  • Like
Reactions: Lokesh, Shiprodeep and KeyFactor
It sounds to me like it could be interpreted as double brokerage if your driver decides to go rogue even though you may have a contract in place.
 
What does the HST have to do with it?

Isn't HST charged( if applicable) at the destination provinces HST rate? If you operate in Ontario, but the delivery is in BC, you charge the BC hst rate.( if applicable).....Or am i wrong?
 
The HST referred to, applies to the charges for accounting services, dispatch services and sales services used in Michael’s example, not for the transportation performed by the co-op. If I have a salesperson working for me, set up as an independent contractor, they must charge me HST for the services they provide. Same for an accountant or a dispatcher.
 
  • Like
Reactions: Henry
You must log in or register to reply here.
Top Bottom