The Pros & Cons of Subcontracting to Independent Drivers for Students in Dispatcher Training
March 8, 2017
The trucking industry is growing in Canada. As trucking companies continue to compete for business and shipments under tight profit margins, trucking business owners need to get creative with finding ways to save money and streamline company operations. One of the ways companies across Canada and the world are doing this is by forgoing traditional employees in favour of subcontracting independent drivers to deliver shipments.
If you’re interested in pursuing a career in dispatching, read on to learn more about why the trucking industry is subcontracting to independent drivers.
What Students in Dispatcher Training Need to Know About Independent Drivers
What does it mean when a trucking transportation company turns to an independent driver? It means they are contracting an individual who is not an employee of the company. This individual is contracted on the basis of completing a shipment and nothing else. The independent driver uses their own truck and supplies and doesn’t receive any of the perks a salaried employee would.
Independent drivers don’t receive benefits, meal reimbursements, or any employee support. They simply provide shipping services on behalf of the trucking company that hires them and gets a cut of the profits. The question remains: why are more and more companies taking this approach rather than hiring employees? Here’s what students in dispatcher training need to know.
The Pros of Subcontracting Drivers: What Students in Dispatcher Training Should Know
As professionals who have graduated from a transportation operations program might know, profit margins in the trucking industry can be small. This is in part due to high fixed and variable costs such as wages, unpredictable fuel costs, worn-down tires, truck maintenance, employee benefits—the list goes on. However, if companies subcontract to independent drivers, they can cut down on many of these expenses. Here are the main financial advantages of subcontracting to independent drivers:
- Trucking companies don’t have to pay for employee benefits
- Trucking companies don’t have to pay for or be concerned with truck maintenance
- Payroll costs are lower
- Trucking companies don’t pay for fuel costs
- The independent driver pays their own liability insurance
In addition to these money-saving benefits, owners of trucking companies can also use independent drivers to service customers who are outside of their typical pickup area. Time spent on the road getting to the pickup location of a shipment costs companies valuable time and money. But if a company subcontracts a driver already in the area, they can greatly reduce those costs and reach even more customers.
The Cons of Subcontracting Drivers: What Students in Dispatcher Training Should Know
When it comes to subcontracting drivers, there aren’t many drawbacks in terms of financials. Trucking companies that own their own trucks and directly employ drivers are making a significant financial investment. With that being said, there are some important drawbacks to subcontracting independent drivers. The first is brand recognition. If a company hires an independent driver with their own truck, they have no input into how that driver interacts with the customer and represents the brand. The independent driver is much less likely to buy into the wellbeing of the company than an actual employee. In addition, independent drivers’ trucks won’t be branded with the company logo. Therefore, independent drivers can be a bit of a risk when it comes to branding and customer satisfaction.
Secondly, when subcontracting to an independent driver, you have less control over their actions, their driving routes, and other companies they work with. In fact, for a driver to legally be considered an independent driver rather than an employee, the trucking company can’t have control over them. Giving up that control could possibly put the business and its reputation in danger.
With so many benefits and drawbacks involved, it can be a tough for industry professionals to decide whether or not to opt for an independent driver. Fortunately, by knowing all the facts, you’ll be well prepared if ever you have to make this decision in your career.
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