Landstar 101

Landstar 101: Understanding The Business Model

Before you lease onto Landstar, it's important to understand one thing: Landstar is not a traditional trucking company.

There is no dispatcher assigning loads to your truck. There is no load planner deciding where you're going next. And while Landstar does provide fuel cards and fuel advances, the system works differently than many traditional carriers.

At Landstar, you're operating your own business. Landstar provides the freight network, customers, agents, technology, compliance support, discount programs, and settlement system that allow you to operate that business.

Whether that's a good thing or a bad thing depends on the type of owner operator you are.

Truck Only Or Truck And Trailer?

One of the first decisions you'll make is what type of operation you want to run.

Dry Van

Many new BCOs start with only a truck. In the dry van division, Landstar provides the trailer and the compensation structure is typically 65% of linehaul revenue plus 100% of the fuel surcharge.

For many owner operators, this is the easiest way to get started because it requires less capital and less equipment responsibility. You bring the truck. Landstar provides the trailer.

Open Deck

Open deck works differently. If you want to haul flatbed or step deck freight, you generally have two options: bring your own trailer or rent a Landstar trailer if available.

Unlike the dry van division, there is no 65% and pull a Landstar flatbed option. Whether you own the trailer or rent one from Landstar, you operate under the compensation structure for that equipment type.

For example, flatbed operators typically receive 73% of linehaul, while three-axle step deck operators typically receive 74% of linehaul. You still receive 100% of the fuel surcharge.

The difference is that operators using a Landstar-owned trailer pay a weekly trailer rental fee, while operators who own their trailer are responsible for their own trailer payments, maintenance, tires, and repairs.

For many new BCOs interested in open deck freight, renting a Landstar trailer can be a way to enter the open deck market without making a large upfront investment in equipment.

The downside is that trailer availability can be limited and waiting lists for flatbeds and step decks are not uncommon. Many operators eventually purchase their own trailer, but renting can be a useful way to learn the business before making that investment.

Fuel Cards Work Differently At Landstar

This is another area where Landstar differs significantly from many traditional carriers. At most trucking companies, you're given a fuel card and simply fuel the truck as needed.

Landstar's system works differently. You receive a fuel card, but the card is not automatically funded. Instead, when you book a load, you can request a pre-trip advance.

Historically this has been up to 30% of the linehaul revenue, although Landstar has periodically increased that percentage during periods of high fuel prices. In the data used for this article, advances were available up to 40% of linehaul.

That money is loaded onto your fuel card. You can use it for fuel, repairs, maintenance, tolls, operating expenses, or theoretically anything else you want.

You could blow it in a casino if you wanted to. That would be a terrible business decision, but nobody is stopping you.

That's because Landstar treats you like a business owner. The company isn't managing your cash flow. You are.

The advance is offered on a load-by-load basis. It's your responsibility to decide how much to take and how to manage that money.

Discount Programs

One of Landstar's biggest advantages is purchasing power. Because of the size of the network, BCOs gain access to discount programs that would be difficult for many small fleets or independent owner operators to negotiate on their own.

Programs include discounts on fuel, tires, repairs, maintenance, parts, equipment purchases, and various trucking services.

The exact discounts change over time, but many BCOs consider these programs one of the most valuable benefits of leasing onto the network.

These aren't just a few cents per gallon. In many cases, the discounts are among the best available anywhere in trucking.

Real-world fuel examples from the data used for this article included:

• TA Mount Vernon, MO: Pump Price $5.08 | Landstar Price $3.92
• TA Earle, AR: Pump Price $5.19 | Landstar Price $4.11
• Petro Perrysburg, OH: Pump Price $5.89 | Landstar Price $4.52
• TA Ontario, CA: Pump Price $7.19 | Landstar Price $5.89

That's not pocket change. A BCO buying 20,000 to 30,000 gallons of fuel per year can save thousands or even tens of thousands of dollars through fuel discounts alone.

And fuel is only one category. The same purchasing power extends to tires, maintenance, repairs, parts, and other trucking-related expenses.

Many prospective BCOs focus heavily on percentage pay when comparing carriers. Experienced owner operators often pay just as much attention to operating costs.

A carrier that saves you tens of thousands of dollars per year on fuel and maintenance can be just as valuable as a higher pay percentage.

Self-Dispatch Means Self-Responsibility

Many recruiting websites focus on self-dispatch as freedom. And it is. But there's another side to that coin: responsibility.

If you deadhead 500 miles for a bad load, that's your decision. If you haul cheap freight into a weak market, that's your decision. If you position your truck perfectly and catch a great-paying load, that's your decision too.

The rewards and the mistakes belong to the same person. You.

That's probably the single biggest difference between Landstar and a traditional trucking company. At most carriers, your job is to drive the truck. At Landstar, your job is to run the business.

For some owner operators, that's exactly what they've been looking for. For others, it's more responsibility than they want. Neither is wrong.

The important thing is understanding the difference before you make the jump.