A
accounts payable (payables): amounts owed by a business to its creditors.

accounts receivable: amounts owed to a business by customers as a result of extending credit to those customers.

adjusted gross income (AGI): the portion of income on which an individual computes income tax.

advance: money paid to an owner-operator before he hauls a load. The money is typically subtracted from an owner-operator’s next settlement.

aerodynamics: refers to the action of air on an object. If a truck is aerodynamic, it means it was designed for minimal air resistance.

agent: a person or organization authorized to conduct business on behalf of another person or organization. In some cases, an agent works directly with an owner-operator to match available freight with his truck. A leased owner-operator is also an agent of the carrier.

asset: any type of property, personal or real, that can be sold within one year.

authority: see operating authority.

B
backhaul: return trip.

balance sheet: a document that lists all assets and liabilities of a person or business.

bill of lading: a written contract between shipper and carrier that identifies the freight, the origin and destination, the receiver, and the terms of the agreement, including freight charges.

bobtail: a tractor without a trailer attached.

bobtail insurance: insurance that is valid when a trucker has an accident while running without a trailer.

budget: a document that lists income and expenses and enables a person or business to allocate available cash among various
expenses.

C
C corporation: a legal structure designed for large, complex businesses; see corporation and S corporation.

capital: net worth; money available to invest in equipment that will produce more money.

cargo insurance: insurance that covers damage to or loss of freight. Carriers typically provide cargo insurance for leased operators. Owner-operators with their own operating authority have to provide their own cargo insurance.

cash flow: the difference between cash brought in and cash paid out.

cash flow statement: a document that shows cash in and cash out during a specific period.

chargeback: items in a leased owner-operator’s settlement for which the company pays but later deducts from the trucker’s pay.

claim: a charge against a carrier made by a shipper or other party for lost or damaged freight allegedly caused while the freight was in the carrier’s possession.

collateral: a pledge of security for borrowing money; something that a lender can seize if the borrower defaults on the loan agreement.

commodity: goods shipped; most often general commodities, a loose description of a wide variety of freight.

common carrier: a business with the primary objective of providing transportation services. For interstate operations, only the U.S. Department of Transportation can issue common carrier authority; see contract carrier.

consignee: the person or firm to whom freight is shipped; also, receiver.

containerization: a shipping system in which large cargo containers are used easily and efficiently on trucks, trains and ships.

contract carrier: a trucking company that engages in for-hire transportation of goods under contract with one or more shippers, as opposed to a common carrier, whose services extend across the entire universe of shippers.

corporation: a legal business structure in which the company is separate from its owners. A corporation enjoys tax benefits and legal protection not available to other forms of business; see C corporation and S corporation.

cost per mile (CPM): the cost of operating a trucking business per mile traveled. CPM is calculated by dividing a cost by the number of miles driven and is usually expressed in cents.

D
deadhead: travel without a load.

dedicated run: a run that involves hauling freight to and from the same locations on a regular basis; also, hauling freight to and from the same shipper and receiver on a regular basis, regardless of location.

deductible: money paid out of pocket by a policy holder before his insurance company pays a claim.

deductible expenses: business-related expenses that are allowable deductions from adjusted gross income and, therefore, reduce taxable income.

Department of Transportation (DOT): the federal agency that oversees and regulates common carriers, such as trucks, trains, ships and airplanes.

disability insurance: insurance that pays a weekly benefit plus medical expenses if illness or injury prevents the insured from working.

dispatch: a service that schedules and coordinates freight pickup and delivery; see dispatcher.

dispatcher: a person who schedules and coordinates freight pickup and delivery.

dynamometer: a device used to measure the performance of an engine and drivetrain. Often shortened to dyno or dyno test.

E
electronic control module (ECM) or electronic control unit (ECU): a device on an electronically controlled engine that monitors engine performance and records some diagnostics.

endorsement: special qualification(s) required of commercial driver’s license holders for hauling specific types of commodities or for operating specific types of equipment.

escrow: money held by a carrier in the name of a leased owner-operator to protect the company in case the contractor quits while in debt to the company; to provide money for the owner-operator’s use in an emergency; or to reimburse the carrier for items paid for by the company on behalf of the owner-operator.

estimated tax: income taxes paid quarterly by self-employed people.

exempt carrier: carrier that hauls commodities that are exempt from DOT economic regulation.

exempt commodities: freight that is not regulated by DOT. Unprocessed agricultural products (fresh fruit and vegetables) are the most common types of exempt commodities.

F
Federal Highway Use Tax: tax paid by all carriers for each vehicle that runs in interstate transport. Typically, a leased owner-operator pays his own tax. The tax is based on the size and weight of the vehicle and is reported on IRS Form 2290.

Federal Motor Carrier Safety Administration: part of the DOT, responsible for issuing, administrating and enforcing the Federal Motor Carrier Safety Regulations and the Hazardous Materials Regulations.

fixed costs: costs that do not vary by the number of miles run.

freight bill: see bill of lading.

fuel tax: tax levied on fuel by state and federal governments. The federal tax remains constant, but state taxes vary and are based on the number of miles run in a state.

G
gross combination weight or GCW: weight of the tractor, trailer and cargo.

H
hazardous materials or hazmat: any substance the U.S. government has determined to be dangerous to public health when packaged or transported improperly.

I
inbound: freight moving from one point to another.

income statement: see profit-and-loss statement.

independent: an owner- operator who has his own operating authority and is not leased to a carrier; see owner-operator.

Individual Retirement Account or IRA: a tax favorable retirement vehicle that allows an individual to contribute up to $2,000 a year. Contributions are tax deductible, but the payout is taxed at the rate at the time of payout; see Roth IRA.

insurance agent: a representative of one or more insurance companies. An independent agent represents more than one company; a captive agent represents only one company.

interest: the cost of borrowing money, expressed as a percentage, usually an annual percentage rate (APR). intermodal transportation: movement of goods involving more than one mode of shipment on a single freight bill.

J
just in time: freight scheduled for immediate use at its destination.

L
layover: nondriving time while under dispatch; can be a scheduled rest or time spent waiting for dispatch instructions.

lease or lease agreement: a contract between an owner-operator and a motor carrier that spells out the responsibilities of each party and is signed by both.

leasing: an alternative to traditional equipment financing, whereby the lessee pays rent on the equipment and makes monthly payments; see TRAC lease.

lessee: the party to a lease agreement that has possession and control of a vehicle owned by another person or firm.

lessor: the party to a lease agreement that grants possession, control and responsibility for the operation of a vehicle to another person or firm.

less than truckload or LTL: multiple shipments on one trailer.

liability: outstanding debt.

liability insurance: insurance that covers property damage and bodily injury to another party, including bobtail, nontrucking use and unladen.

limited liability company or LLC: business structure that offers limited protection for the owners. Profits pass through the owners’ personal income tax returns.

M
manifest: document describing the contents of a shipment; often incorrectly used interchangeably with bill of lading.

mutual fund company: a company that pools the money of thousands of investors in stocks, bonds and other investments.

N
net income: the amount by which revenue exceeds expenses; also called net earnings.

net worth: the difference between a person’s assets and liabilities; also called owner’s equity.

nontrucking use: liability insurance that covers an owner-operator when he is not under dispatch; sometimes is erroneously called bobtail insurance.

O
occupational-accident insurance: insurance that pays an owner-operator a weekly benefit plus medical expenses if he is injured at work.

operating authority: operating permission granted to interstate common carriers by the U.S. Department of Transportation. When an owner-operator signs on with a company, authority automatically extends to the owner-operator.

operating costs: day-to-day costs of running a business; see variable costs.

operations: the department of a carrier responsible for finding loads, dispatching trucks and handling customer service.

outbound: freight moving away from a point to another point.

over the road or OTR: generally refers to any haul, trucking operation or driver that is regional or national.

overdimensional: freight that is legally too heavy, too long, too tall and requires a special permit.

owner-operator: a person who owns and operates a commercial vehicle.

Owner Operator Independent Drivers Association or OOIDA: not-for-profit association for leased owner-operators and independents.

P
partnership: business owned by two or more people. Each partner is taxed individually.

payload: weight of the cargo as the basis for the revenue to be paid for that load or shipment.

per diem: amount of business expenses a person can claim each day without those expenses being taxed as income; commonly applied to meals.

physical damage insurance or PD: insurance that covers damage to an owner-operator’s equipment due to an accident involving another vehicle. The law does not require a truck owner to have physical damage insurance, but the lienholder usually does.

preventive maintenance or PM: system of regularly checking and caring for equipment to reduce the number of repairs.

primary liability insurance: insurance required by law to protect the insured in case of damage to property or injury to another person. Carriers are required to have such insurance, and may deduct an amount from an owner-operator’s settlement to cover its cost.

private carrier: company that transports its own goods over the road.

profit and loss statement, P&L or income statement: detailed report of how much money a business made or lost over a specific period.

progressive shifting: fuel saving driving technique in which the driver shifts gears by accelerating just enough to gain the minimum rpms to shift into the next gear.

pro number: identifying number on a freight bill for invoicing and tracking purposes.

Q
qualified retirement account: a bank account set up by an individual as a retirement plan that adheres to IRS rules. In most plans, contributions are tax deductible, but payouts are taxed at the person’s tax rate at time of retirement.

R
recruiter: person who finds new drivers and owner- operators to work for or lease to a trucking company.

reefer: refrigerated trailer.

residual value: in a TRAC lease, the amount owed to the lessor at the end of the lease; similar to a balloon note.

revenue: income.

Roth IRA: Individual Retirement Account that allows an individual to contribute up to $2,000 a year. Contributions are taxed at the current rate, but payouts are tax free; see Individual Retirement Account.

S
S corporation: legal business structure designed for small businesses. To qualify, a business must have 35 or fewer shareholders. To maintain S status, the business must follow certain guidelines.

Schedule C: IRS form that lists all business income and expenses. The difference (profit or loss) is reported on Form 1040. All sole proprietors must submit a Schedule C, “Profit or Loss Business Sole Proprietorship,” with their 1040.

self-employment tax: Social Security and Medicare tax for the self-employed.

settlement: an owner-operator’s net revenue. A settlement is a record prepared by a trucking company for its owner-operators that shows total revenue earned for the pay period, minus company charges to the owner-operator.

shipper: firm with which freight originates.

sole proprietorship: legal business structure in which one person is owner. This is the simplest way to structure a business and the method recommended for most owner-operators.

spec, spec’ing: slang for specification or specifying; a detailed description of a truck’s standard components and optional features; choosing standard components and optional features.

specialized carrier: motor carrier that transports a particular type of freight.

surcharge: charge in excess of what is usual or customary; can apply to freight rates, fuel prices or fuel taxes. A surcharge is usually assumed to be temporary.

T
tandems: the two drive axles on a tractor.

time sensitive: high priority freight that, if late, results in an economic hardship to the receiver.

TRAC lease or terminal rental adjustment clause: vehicle lease that enables the lessee to keep the vehicle at the end of the lease, provided that he pays the lessor the vehicle’s residual value.

trade cycle: length of time between purchase and trade of a truck or trailer, based on factors such as balance owed, equipment age, maintenance costs and repair history.

traffic: department within a shipper’s organization that is responsible for coordinating transportation of goods.

truckload: maximum weight legally allowed on a trailer or, when used in relation to freight rates, the minimum weight of a freight shipment necessary to qualify for a truckload rate; also, a full trailer load shipment described and controlled by one bill of lading; see less than truckload.

turn: round-trip freight run.

U
under dispatch: insurance related term that determines when an owner-operator is covered by a carrier’s liability insurance.

unladen: relatively new type of liability insurance that covers the owner-operator when he is pulling an empty trailer, regardless of dispatch status.

V
variable costs or running costs: costs that vary with the use of a truck, including fuel, repairs and road; see fixed costs.

W
wheelbase: distance, in inches, from the center of a truck's from hub to the center of the space between its tandems.

workers' compensation: a state-run insurance program that pays for all medical expenses related to a claim involving an illness or injury that prevents the policyholder from working.