Hi all! First post! Just some background, I had another company that I sold for mid-low 8 figures and am looking into getting into various businesses. I am really attracted to the trucking business because it seems that it might scale really well.
I have spent many hours reading these forums and it seems the general consensus is that if you run your business properly, you can make money, barring what the occasional naysayer may say (which is true in any business, really -- "glory days are gone", "not like it used to be", etc).
From doing a lot of modeling, reading industry research whitepapers, etc, it seems that the business might be really good long term, especially if LNG pumps become more prevalent, which would greatly reduce fuel cost at current rates (albeit with a larger capital cost on your initial purchase).
Here's what I came up with:
Average revenue per loaded mile: $1.85 to $2.00
Expect 10-15% deadhead miles
Avg revenue per actual mile: 1.57 to 1.80
Fuel cost per mile: 0.65
Truck cost per mile (leasing, maintenance, depreciation, whatever): 0.25 to 0.30
Misc cost per mile: (tires, incidentals, phone calls, etc): 0.10 to 0.15
Driver cost per mile: 0.40 to 0.50
It is my understanding that your avg revenue per mile goes up once you build more direct relationships and have more trucks to be able to service your regular suppliers and brokers promptly and reliably (i.e., there is an economy of scale to get higher rates). So once you have about 50 trucks and some good business development guys, you could expect more like $2.00 to $2.20 per loaded mile, or $1.70 to $1.98 per actual mile. I assume your costs would go by somewhat with volume pricing as well.
This puts total costs at 1.00 to 1.20 before driver, and 1.40 to 1.70 after driver.
So, with a small fleet, you can expect an adjusted gross (before admin costs) of -0.13 to 0.40 per mile (avg of 0.135), and with a larger fleet, you can expect something like 0.00 to 0.58 per mile (avg of 0.29).
At 2,300 miles per week, this is adjusted gross profit of $1,345 to $2,890 per truck per month depending on your fleet size.
Your back office costs would probably be something like $40,000 per month if you wanted to be fairly hands off and hire all the right people from the beginning -- this would cover rent and salary for a manager, two dispatchers, a secretary, a senior driver/trainer, an IT manager, a biz dev manager, and some kind of marketing/sales budget to go for the direct loads.
So, basically, it seems the profit is really really good once you get a lot of trucks. You need 10 to 20 trucks to break even, but once you have 100+ you are making great money, maybe around $150k per month assuming $60k in back office costs and $2,100 per truck net.
My question... is something wrong about my assumptions? If not, what gives? Why isn't everyone doing this?
Input on starting new fleet
Discussion in 'Ask An Owner Operator' started by Memphis, Dec 2, 2013.
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