
In 2022, a survey conducted ahead of National Truck Driver Appreciation Week revealed U.S. truckers do not feel appreciated by the general public. AP file photo
Shelley VandenBerg and her husband signed a lease-purchase agreement with a small trucking company in 2016 right after obtaining their commercial driver’s licenses. The lease brochure discussed monthly payments of $1,500 for the truck, but they ended up almost double that, she said. The Idaho couple soon discovered that they were earning less than their team-driver peers and sought to get out of their contract, which required them to carry freight for the cargo company and to use its maintenance shop. The Idaho couple was sued and almost lost their vehicles and house, VandenBerg said.
After they extricated themselves from the lease, they borrowed money from family to obtain another truck. This time, they signed with a third-party company call Wasatch Leasing, and the treatment was polar opposite, VandenBerg said. The leasing company worked with the VandenBergs to help them succeed while the earlier lease seemed designed for them to fail, she said.
“There are very vicious people out there, and they will eat you alive,” VandenBerg said of the trucking industry.
The VandenBergs are not alone. They are among about 175,000 drivers — likely many more — caught up in what a scathing report from a task force commissioned by the Federal Motor Carrier Safety Administration calls an onerous practice that deserves to end. What’s clear is that freight carriers shouldn’t be allowed to exploit drivers.
The problem is that the report could get overlooked in the Trump administration’s anti-regulatory zeal despite the president’s appeal to workers. The Transportation Department, which oversees the FMCSA, should make sure this doesn’t happen under the new secretary, Sean Duffy.
The Truck Leasing Task Force report describes these lease-purchase contracts as traps for drivers, resulting in lower earnings than their peers and most often ending without the driver owning the truck. The contracts concentrate power into the hands of the freight carrier, which provides the lease in exchange for a contract to carry freight only for the carrier.
Under this structure, the company that controls how much money the driver makes by providing the freight loads also has the power to repossess the truck and lease it to another driver. The incentives don’t line up for a mutually beneficial situation. Under some leases, the trucking company also provides maintenance and other services that give the carrier even more control over the driver.
The separation of truck leasing activities from freight operators should be the rule. It’s essential for a fair truck lease and keeps the market from being distorted. If Republicans want to stand up for workers and independent drivers, this would be a good place to start:
“At the (often early) end of their lease-purchase relationship with motor carriers, drivers are often surprised to learn that they have accrued no equity in the truck, or they leave mistakenly believing that they have been forced to give up equity that they had accrued in the truck,” the report said.
It would be easy for Duffy and his team to brush off this report as a wobbly arrow the outgoing administration hurled unnecessarily and ineffectively at motor carriers. The report certainly is lopsided on the argument that these freight carrier truck leases are not good for drivers. (There’s some dispute why there wasn’t more input from freight carriers or their trade-group representatives, but that’s water under the bridge).
The details are egregious enough that Congress should take a deeper look. Lawmakers such as Senator Josh Hawley, a Republican from Missouri, have declared themselves friends of workers and foes of abusive companies. They should read the report and keep in mind that contractors, even though they must register as a business to get their motor carrier authority, are self-employed. In that sense, they aren’t like other small businesses. The business is the truck and the driver — nothing else. They aren’t contract experts and most can’t afford legal help if ensnared by the fine print.
The argument for allowing freight carriers to provide truck leases seems to land on the ease of getting a lease for which a driver otherwise wouldn’t qualify. No down payment. No credit check. These attributes should raise all kinds of red flags. One concern should be that a person who doesn’t have the wherewithal to save up for a truck down payment isn’t ready to be an owner-operator. The better option would be to gain some experience as an employee driver first.
Freight companies that provide the leases argue that they are cultivating small-business ownership and that many drivers successfully complete the typical four-year contract to own the truck. The task force said that the freight companies didn’t provide data on success rates. The reality is “that most drivers do not complete these programs and leave the trucking industry in deep debt and with a sense of failure despite promises of financial independence,” the report said.
Even if drivers end up with the trucks they lease, the amount they earned during the contract is below that of employee drivers, especially when considering insurance, Social Security payments, health care outlays and other expenses that independent contractors shoulder.
There are concerns that taking action would open a Pandora’s box that would then take aim at contract drivers. This shouldn’t be the case. Contract driving and owner-operators are a backbone of the trucking industry, and they require financing for large trucks. That financing simply shouldn’t be done through the freight company that also controls the cargo that flows to the truck lessee or purchaser. Duffy and other Republicans who profess to care about workers shouldn’t disregard the report or the very real trouble these lease-purchase contracts cause. Independent drivers deserve to be treated fairly, not to become targets of predatory practices.
Thomas Black is a Bloomberg Opinion columnist writing about the industrial and transportation sectors.
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