How much per mile to make a l/p work?

what kind of fuel mileage you getting to cost $800 to run 1000 miles that's $0.80 a mile in fuel . Depending on what the OP is doing if he can manage 6.5 to 6.8 on that same 1000 his fuel cost would be 0.56 to 0.61 and that's at 3.99 per gallon

fuel and tires are your biggest variable expenses that the OP can control and can increase profits by doing so . Every MPH over 55 you loose 1/10 MPG I average 7.2 loaded in a 2006 century with a 515 detroit my avg speed is 58 I get just over 9.1 empty at the speed of 60 mph . My fuel costs on the same 1000 miles would be as follows at 7.2 mpg
1000/ 7.2 = 138
138 x 4.00 = $552 now if I shop my fuel I can prob find it for 3.79-3.85 let's use 3.85
138 x 3.85 = $531

so my cost per mile fuel only can be from $0.55 a mile to as low as $0.53 ( if I shop it right ) the 0.02 can add up on the bottom line just by shopping your fuel or using your carriers fueling network some places get up to 0.30 off a gallon or more . Which reduces your fuel cost and your over all CPM
( cost per mile ) for fuel or overall numbers .

Fixed expenses of 250.00 a week is a tad high unless your considering maint escrow as a fixed expense some do and some don't but even still if you figure in the 100 I think the OP can save around at least $50 a week on the fixed but that changes from carrier to carrier .

For instance :


im a L/O not a LP and my fixed cost weekly are
$137.50 weekly .. That is $ 100 in escrow and $37.50 in insurance . My carrier picks up the tab for things like .. Tolls , Plate , Scales , EZ Pass , Permits . So I don't get nickeled and dimed for the little stuff .

Most carriers pay

0.90 - 0.95 base
fuel around - 0.40-0.43 ( currently )

so the OP could look to make around 1.33-1.38

my base is

$1.14
fuel 0.38
bonus 0.04

so it's all in the carrier you choose .

There the is allot more to running a successful business than turning on the key and driving . It's the learning curve of the business man that sets the men from the boys . It's survival of the fittest . If your prepared you'll succeed if not you'll fail . But forgetting company driver habits and choosing the right carrier and controlling your costs are the major attributes . Also in a LP I can tell you that if you want to go home every week don't do it . You will NEVER pull out of the whole .


Hope this helps

 

No one person can answer this question accurately.
I ran at over $1.90 a HUB mile last year, and over $2.40 a HUB mile the year before. Leased to a carrier, pulling their trailer.
Are my operating expenses bigger? Obviously. I get physically aroused when I hit 6mpg loaded, and 5.5 is more like an accurate average. I pay for my own plate too, but that is under @$2k a year.
So you can chase those miles, for CENTS per mile, or get into a more specialized field for DOLLARS per mile.
My expenses are more ($1.27 all miles last year), but so are my earnings. Grossing over $200k for @100k miles works for me.

Martin

 

It's also a lot easier top make it if you get away from this cheap ### freight mentality of 1.35 to 1.50. There is absolutely no reason a person can't average 1.75 or more. It's just a matter of picking up the phone and calling the right carrier.

 

The OP was asking about a LP or LO deal not running the boards or getting direct freight

 

This is just my opinion. You are wanting to at some point be an Owner Operator, I assume.

So the first thing to do is learn the business. OOIDA is the first folks to call. They are your professional organization. Google them. They have webinars which cover different topics. I am just starting them so I can't give you advice on their value yet. They are $50 a piece and that adds up quickly. But not as fast as your expenses are going to in a lease purchase.

I gamble. The one thing in gambling to remember is the House never changes the rules to give an advantage to the player. Lease purchases were not a way for companies to provide their drivers a way to become competitors. They are a way that the company can increase their profits. They can write off the purchase of new equipment twice. They can insure an 11% return on their money by getting you to make the payments. You do not get a brand new truck, you get one they have used for a year. They have sold the truck to a shell corp and are taking a third write off. All legal because they can afford to have people working to get Congress to pass these laws. Unless you are with OOIDA or some other group, you are on your own.

That doesn't mean you can't be successful at a lease purchase. It is just much harder then it looks. At one time Trans Am did not require you to be a lease purchaser. They went through a time where you could not work for them unless you became a lease purchaser. I don't know what the policy is now.

If you do a lease purchase, let OOIDA's lawyers look at it before you sign. They have some of the standard agreement's on file already. Almost every company has a plan because there is so much in the companies favor for doing them. Also, some companies give bonus money to drivers who talk other drivers into signing with them.

Just think about Rent a Center and Aaron's Rental. Do you think that folks buying Televisions for $19 a week are really getting a good deal. You might end up with a television but you will have paid 2 or 3 times what it is worth. Trucks are the same things. Miss a payment and they come and get it.

 

Wooly, you make some good points but there are a few that are far too broad.


I'm confused by this idea that L/P is always worse than buying your own truck. Many L/P agreements are walk away. If you try and fail you get to walk away with no credit hit. Try that buying a truck. I know too many cases of o/o's who failed owning their own truck. At what point you admit failure is up to you. If you're hard headed and lose your home and savings why is that blamed on the company? A bad businessman is a going to fail no matter how he gets into the truck. In my mind a huge point in favor of L/P is that walk away clause. If you don't have the knack for business you'll find out pretty quick for less of a financial hit. Again, YOU have to determine the failure point. Even if you luck into a $5000 buddy deal of a truck that needs nothing to start out and gets 8mpg you're still out $5000 plus tags/insurance/etc. and you have to pay for fuel/maint/etc.

Part of being a smart businessman is picking a good business partner. There are L/P companies that are close to 100% O/O and L/P. JCT being an example. There's a flat company in Montana doing the same as well. Its in their best interest to do everything they can to help their L/P's succeed. Both companies can and do put drivers in brand new equipment. Then there are the companies we all know who take a new driver and immediately start if not pushing at least strongly suggesting L/P to a new driver. Those are the companies that we all wish would go away, period. Getting involved with them is a bad business decision from the start.

IMO, with few exceptions anyone thinking of jumping into ownership or leasing should start by driving a company truck like they are paying every penny of its operation. Track every dime they can of its operation and practice driving like they are paying for the fuel so they can see what they are getting into.

 

I think the real question here is how much are you guys clearing per mile after ALL expenses. If you average 1.75 and you expenses on average are 1.27, you are clearing 48 cpm. That's company driver territory... How does that justify the risk and liability of becoming an O/O?

 

As a L/P If I were one I'd take .42 CPM to me! Plus I'm getting equity in a truck I can trade up or in, I'm not giving it away as a company driver. I think this question is right in that he needs to keep it out of the ditch before he can run a business. Thanks.

 

What happens when you have a major breakdown issue. That. .42 cents becomes smaller and smaller until you decide it's not worth it. The mega carrier finds another lollipop to run for free at the expense of a bus ticket and motel room.