Operating ratios

Discussion in 'Motor Carrier Questions - The Inside Scoop' started by chalupa, Feb 22, 2012.

  1. chalupa

    chalupa Road Train Member

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    K, I feel even better now...... Celedoom's o/r is 99.3
     
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  3. LSAgentOZR

    LSAgentOZR Road Train Member

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    Get a fleet of 500 trucks and then you can compare yourself to the megas.:biggrin_25517:
     
  4. dave26027

    dave26027 Road Train Member

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    There is nothing more efficient that a one truck O/O who is consistently profitable and successful.

    The larger a Corporation becomes, the more inefficient and ineffective it gets.
     
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  5. ac120

    ac120 Road Train Member

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    Actually, an OR of 90 means a carrier keeps 10 cents pretax for every dollar of gross revenue. An OR of 1.02 (which Dick Simon had before it went under) means losing 2 cents for every dollar that comes in. An OR of 99 means you bring in one pretax penny for every dollar of revenue (it costs you 99 cents to earn that penny). An OR of 100 means you bring in one dollar for every dollar of expenses--there's no profit. The lower the OR number, the more you keep. An OR of 60 is outstanding. You keep 40 pretax pennies for every revenue dollar.

    That carrier highlighted for having an OR of 90 was doing better than one with an OR of 98.
     
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  6. chalupa

    chalupa Road Train Member

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    K, i just didn't see the difference. In theory you should be able to repeat my operation 500 times for 500 trucks. But that's only a theory.
     
  7. V8-MACK

    V8-MACK Light Load Member

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    Good job chalupa,keep it going and best of luck. I surprised the mega co.s don,t spend 3 to make 1 buck.
     
  8. wis bang

    wis bang Road Train Member

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    They have a name for that in Economics, the law of deminishing returns. There comes a point, maybe 501 trucks in your example where your return shrinks despite doing everything the same.

    At first the ecomomies of 'scale' help; as you scale up the return is the same because you have 'gains' that off set the growing inefficiencies.

    Since trucking companies also grow by gobbling up other trucking companies, it is possible to pass the point of diminishing returns by a large amount during a merger and during the time where the new part of the organization is adjusting to their new ownership managemetn will fail to see the drop in return until the company is in dire straits.

    The downturn in the economy forced alot of companies to fold up like an empty tent because they just couldn't work their way to profitability when ther e was no business.
     
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