The freight market has been tough over the past year, and with his front-row seat to the action, Tobenna Arodiogbu said he kept seeing owner operators getting wiped out.
Arodiogbu, co-founder and CEO of the CloudTrucks software platform for owner operators, said although the market seems to have leveled out some, his company was motivated by the downturn to implement a program that would better ensure the success of the owner operators that lease onto the CloudTrucks authority. The company’s Virtual Carrier platform recently launched a minimum revenue guarantee (MRG), designed to provide owner operators with the consistent and predictable revenue that is typically only associated with company driving roles.
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Virtual Carrier drivers who drive at least 2,000 loaded miles each week over a two-week period are guaranteed a weekly revenue of $4,500, and those who drive at least 1,500 loaded miles each week over the same period are guaranteed $3,250 in weekly revenue. That’s about $2.25 per mile and $2.16 per mile on average, respectively.
Arodiogbu said the idea is to provide a safety net under the condition that they maintain their rate per mile and adhere to safety standards.
“We decided to launch this because we were seeing that when we look at the drivers who are leased onto our authority, there's quite a bit of variance on their performance sometimes. You can have two drivers who live in the exact same area, and one of them is making $5,000 a week and another one is making significantly less than that,” he said. “We started asking ourselves what exactly is going on and how can we help make the lower-performing driver become more like the high-performing driver. As we dug into this a lot more, we came to the realization that it's a tough market right now, and sometimes you might be sitting and waiting for the perfect load, or maybe you took a load that took you into a bad market, and now you're trying to figure out what to do next.”
Arodiogbu said one bad week can lead to another and result in an owner operator shutting down their operation, but the MRG gives them some peace of mind if something goes wrong.
“Even if you've had five great weeks in a row, it doesn't mean that you might not have that one load that puts you in a market where you just can't find a high-paying load to get out, but with this you can plan with a lot more confidence,” he said.
While many company drivers across the trucking industry have access to this type of pay, it’s less common for owner operators. More trucking companies have opted into this model in an effort to recruit and retain drivers, but that wasn’t the goal here, Arodiogbu said.
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He said the program is different not only in that it serves owner operators but because they still have the freedom to pick their own loads. The company pilot tested the program with a small group of owner operators on its platform prior to the official launch so it could receive feedback and make appropriate changes.
Arodiogbu said CloudTrucks initially tested a model where it provided the guarantee while helping drivers select loads, but the company found that owner operators didn’t like having someone “looking over their shoulder.” Drivers wanted something that served more like an insurance policy.
The program launched at the beginning of the year, but the feedback has already been positive.
“CloudTrucks is helping us out in the tough market,” said Tory Matthews, owner-operator at Mr. Boone Logistics. “We still get the flexibility of maintaining our own business: picking our own loads, running regionally and being home on the weekends, if we choose to.”
