Pony, my apologies for the paragraphs or lack there of. My mother taught college English/Composition. She would have had a fit if she read all that. My bad, I should know better.
No, I'm not saying that anyone shouldn't have the opportunity to try and make it work. The bottom line is that this is a business and needs to be treated as such. You make a good point about doing your due diligence in picking an FM. It would be the same as if you were going to open a McDonalds, or NAPA Auto parts, or a grocery store. Doing the demographical research is key in knowing who your customers are and where your revenue is coming from. As a business owner if you can't identify your customers, what their expected buying habits are, and what your customers typically spend on your product and/or services, then your setting yourself up for failure. Essentially your offering your services to Prime to move their freight. As a L/O Prime is your customer, you need to know that your customer is going to spend enough with you so that you can pay your expenses, and still make a living. Otherwise whats the point.
Maybe I should have canned my FM and found someone else in Springfield. My wife compared it to an abusive relationship where the guy is physically, mentally and emotionally abusive but the woman won't leave him because she loves him and believes that it will get better. I kept trying to do what ever I could to prove that I could be his "go-to" guy to get something done. I didn't mind taking that $.79pm load thinking that good $ was at the other end. Problem was that the next load paid $.92pm
I think anyone who wants to give it a shot, go for it. But, they have to be smart about it and remember that this a business.
Prime's lease deal. The math gets done.
Discussion in 'Report A BAD Trucking Company Here' started by BigKid2, Jan 16, 2009.
Page 37 of 82
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The Lease at PRIME (in my opinion) is a CRAZY HIGH PRICED DEAL ...
You gotta look at the numbers and see for your self but consider this as you do it . I have my own truck , bought it myself , and make money with it . This deal keeps you shackled to them ( PRIME )
HERE IS MY THOUGHTS
1. COSTS of OPERATION ( fixed costs ) IFTA, INSURANCE, PLATES, PERMITS, ESCROW TRUCK PAYMENT , QUALCOM (or other unit if you are charged)
2. VARIABLE EXPENCES ( Controlable) Fuel, Oil changes, Tires, Other fluids, Washes, etc
If you purchase a truck though one of these deals and make it to the end find out some other small details which can also help you make your decision
1. ESCROW ACCOUNT : is it mine or does it stay attached to the unit you are paying for this its really your money but some of these companies keep the escrow attached to the truck because of high turn over ratios etc. Ask if you decide to leave and owe the company zero dollars upon depature $0.00 do you get your escrow balance . I will suspect you will be amazed to find out you infact will not . ( i could be wrong)
2. TRUCK RESIDUAL BALANCE : At the end of your lease term the truck will have a balance owed on it . In some rare cases its a ONE DOLLAR BUY OUT $1.00 but I have heard of balances of in excess of 10-15k or more . Find this out its very important . They will try to sell you on this ... WELL IF YOU COMPLTE YOUR LEASE YOU CAN LEASE ANOTHER UNIT FOR THE WRITE OFF .... Yeah right ... It means they have deprecitaed the unit and need to put another in the fleet and if you purchase it they will loose the WRITE OFF and have to infact pay TAXES off the agreed purchase contract because now its a PURCHASE and not a LEASE ... so they will try to keep you in a LEASE .... benefits them and they say it benefits you .... but does it really ????
Be sure in your contract it states a PURCHASE AMOUNT for the UNIT and a RESIDUAL AMOUNT if any or you are not buying anything .... ITS JUST RENT FOLKS ....
If your new to this business here are some other things to wonder about
1. If your truck is in a DOT inspection and they find a problem who has to pay for that problem .....? DING DING DING ... YOU DO ... and how ? Your escrow or your pocket , or a pay advance ......
2. If your truck breaks down on the road and you need a tow to a shop to get lets say a TURBO.... $2200.00 TO $3000.00 plus labor whos bill ? YOURS
NOW they will say its under warranty , OK lets say it is .... READ THAT WARRANTY VERY CAREFULLY does it cover towing ? does it cover 100% parts and labor ?
Big issue is DOES IT COVER YOUR TRUCK SITTING IDLE gaining no revenue at 800-1000 a week fixed costs
IF IT DOES you are in it to WIN IT ... TOP SHELF DEAL
But it wont and it dont .... You will end up in the whole and in trucking its hard to pull out of this THUS the high turn over in these
LEASE PURCHASE DEALS !!!!!!!!
Most never complete them although some do. But ask the ones that have had sucess how much home time they got .... Do you have a family ? CONSIDER THIS BEFORE YOU TRY IT
Other things to know !!!!
Whats your cost of OPERATION ?
How much does it cost you for every mile that truck runs down the road . 0.80 - 0.85 or 0.90 cpm or low as 0.75 my actual cost is
0.58 which includes 0.05 i put in a escrow that is mine ( not the companies) fuel costs my about 0.45-0.51 depending on the costs of fuel so your COST OF OPERATION WILL VARY ... Your plates , permits, insurance, etc will run you about
0.02 - 0.03 cpm not a huge expense could be up to 0.05 with IFTA
Be safe make a good decision
KY24 -
The problem with prime is that their lease is an open ended lease. Its not a lease purchase. Their buyout at lease end is roughly 50% more than what the truck is worth. My lease, the buyout on the truck if I chose to buy it, was $55,000! For a $30,000 truck. You will not find a $1 buyout with prime. They claim that the $50,000+ purchase price is what the dealer would give them at turn in. Funny, walk a freightliner dealer and you will find off lease Prime trucks that they are selling for $35-$45 grand. You can't purchase the truck the first 2 years of the lease because Prime wants to keep the trucks on their books for the depreciation deduction. Except in the instance of an ACE lease. In which case you will need $10,000 down to get into. The bottom line is if you sign a 3 year lease with prime and then you purchase the truck with your lease completion bonus, you will be paying almost $200,000 for a $115,000 truck. and it will still take you 6 years at least. Do the math. Here are the numbers from my lease.
Truck payment 1st year $871.00 per week X 52 weeks=$45,292
Truck payment 2nd year $781.00 per week X 52 weeks=$40,612
Truck payment 3rd year $711.00 per week X 52 weeks=$36,972
TOTAL $122,876.
Then to actually BUY the truck, the purchase price is $53,455
Keep in mind that on top of the weekly truck payment there is a $0.045 lease mileage charge for all dispatched miles. Assuming 125,000 miles per year that comes out to $5,625 per year. $16,875 over 3 years. Prime will tell you that if you finish the lease that there is a lease completion bonus of $0.0325 for all dispatched miles. Thats not a bonus, its part of the $0.045 mileage charge. Their bonus is your money that they took out of your pocket each week, and they made interest on. You don't honestly believe they would take money out of their pocket and give it to you as a bonus, do you?? So, lets take that $12,187.50 off the purchase price as a "down payment".
$53,455-$12,187.50=$41,267.50
$41,267.50 financed for 3 years # 13% comes out to $1,390.47/month.($320.88wk)
$1,390.47 X 36 months = $50,056.92(interest included)
So lets add it all up
$122,876.00 (lease payments)
$ 50,056.50 (purchase price including finance charges)
$ 12,187.50 (your lease bonus as the down)
$ 4,687.50 (the difference between bonus and mileage charge)
$189,806.92 TOTAL
And at the end of it all, the 6 year old truck with 750,000 miles on it, that is out of warranty, will be ALL YOURS!!
Doesn't owning your own trucking business sound FUN!?notarps4me, Mortar Man and jlkklj777 Thank this. -
First, my brokerage costs are fixed at 28% of linehaul - that's their cut, and I do get to inspect the original freight bills. They have a large number of clients who prefer their service, and pay a premium to obtain it. Rates are favorable with the indexes you see posted on the web. Plus - at the worst of the recession, I spent a lot more time running than the competition fleets and O/Os combined who were SITTIN' and spending their days biotchin' about ZERO freight.
It's YOU, isn't it?
Thought so. Leasing a tractor is just like leasing a car - ever done that? If it isn't covered in the warranty, who pays? YOU DO.
DING DING DING!
If it's expensive and you aren't into Prime for a bundle of operating costs (lead foot syndrome,) they'll spread those payments out. OTOH, if you've been treating your ride like you should (and not a company driver on steroids) those kind of problems shouldn't come as a surprise.
Advantage: ME.
Hmmm, come clean now...
YOU! Thought so.
Also, as you stated above, those truck payments keep coming - whether you are shooting for ownership or are leasing. Its more, "How much hometime can you afford?" And that cuts both ways... company drivers mostly don't get paid unless those wheels are turning. And they don't turn when you're chillin' with your woman on the couch.
At the end of the last quarter, my operational cost was 66 cpm... that includes those escrow accounts that is MY money, earning interest. BTW... the interest I receive on my escrow is piles better than what you're getting at the bank (or what I get on my own operational reserve in the bank for that matter.)
My fuel cost is 48 cpm, but after fuel surcharge (billed and guarantee) and corporate discounts drops to 14.9 cpm. And yeah, that's why you're usually passing me.
Now here's some other thoughts. I'm doing pretty well (in my opinion - but that's the one that counts, isn't it?) right now. That could change, but if it does it's going to change for the owner-op in just the same way. Except part of my deal is a floor on my losses. I get the same per-mile deal that many of the "great deals" promised to owner-ops as their complete deal - as a guarantee. 95 cpm plus guaranteed fuel surcharge reconciled every 100,000 miles as a MINIMUM. Everything I make over that as a percentage of linehaul and 100% of accessorial payments is mine in any case. If the bottom falls out of the economy - the individual owner-operator gets squat.
I checked out my deal from the inside, and saw how it worked or didn't during the worst economic times since the great depression. That informed my decision greatly. It also allowed me to see how various FMs and their fleets prospered or didn't - hopped on with one of the better ones. And I have a list of second choices as well.
Google the articles on the CRE lease deal - it seems those guys are lucky to feed themselves in the best of times. I could be wrong, but as an example - this is why you have to be very careful getting into something like this. And yeah, you'd better have some business sense/experience, and a plan. Part of that plan needs to be when and how to fold your hand and bow out. Part of that business sense needs to be how to read and interpret a weekly settlement statement. If it appears as "jibberish" to you, then you'd best RUN quick - right back to your company truck until you can understand it. And anyone contemplating this with a zero bank ballance and a whoppin' set o' bills (like a mortgage) - had better heed the prospect that if you don't have an operational reserve going into this, the ups and downs of your settlement could just eat your life alive.
Gotta go - duty calls!CivilWerks Thanks this. -
The other route to take is to drive a company truck for 4 or 5 years, save your pennies and dimes. Walk into a Freightliner dealer and put $20,000 or so down on a new truck.
The math: $115,000-$20,000=$95,000 financed for 5 years # 11.5% (some can get better through a private bank or credit union) comes out to $2,089.30/month. Total after finance charges $125,358+20,000 down comes out to $145,358. And the truck is 1 year newer. A savings of $44,448.92 or $8,889.78 in your annual salary.
I realize that not everyone would want to take that route, but, weighing the alternatives through Prime.....No thanks.
They say hindsight is 20/20 and mine is crystal clear. I never should have leased a truck with prime, but it is an experience I will never forget nor will I do it again. Leasing a truck from Prime was a mistake for me, and I am learning from my mistakes and moving on. Some can make it there and are happy, some like me want more from this industry, and I feel that my experience with prime has made me a better business owner. But thats just me.notarps4me Thanks this. -
I can relate. I know the feeling...
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I've read enough to know not to do it. I'm still trying to get into trucking but it is nice to know what I can before hand. The ratio of people who are against leasing through Prime as opposed to those favor it is about 50:1. That 1 being ironpony.
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But at the end of the day I was just giving you real numbers from my operation ...
I am not trying to sway you either way I dont drive for PRIME or in some threads called CRIME which I think are the same folks that owned a company called
MIDWESTERN back in the 80's who started this L/P stuff in the first place
There are many places you can buy at truck I personally bought mine from a COMPANY who sold a decomissioned unit after a layoff at a terminal they had but look into
LONE MOUNTAIN TRUCK LEASING $1.00 buyout
ARROW TRUCK SALES
FREIGHTLINER SELECT TRUCKS
All of the above will require a down payment ranginging from $2000.00 TO $5,000.00 Down but its your truck take it where you want to place it not like a L/P deal where you are starnded to one company
Ask PRIME aka; CRIME ( just saying ) if you can take that truck to another carrier ? Answer is NO
You will do fine when you do your research first
Being a O/O is a business not a job
best of luck to you in what decission you make ...
KY24 -
I do have to pay my expenses such as BREAKDOWNS, DOT etc never said I didnt but here is where you are NUTS IN MY OPINION
YOU SAID
Also, as you stated above, those truck payments keep coming - whether you are shooting for ownership or are leasing. Its more, "How much hometime can you afford?" And that cuts both ways... company drivers mostly don't get paid unless those wheels are turning. And they don't turn when you're chillin' with your woman on the couch.
Wrong a company driver at home may not make a check but also they dont aquire expenses to be with their family or in a shop ....If you LP a truck that payment does not stop for nothing unless
1. you die
2. you quit
Dont sit there and be a CHEERLEADER for a LP it may work for you ( thats great) but if someone want to be a TRUE O/O and not a glorified COMPANY SLAVE for CRIME (PRIME)
Why not ask your owner of your company what happened to his big outfit called MIDWESTERN where he started to introduce this LP thing back in the 80's I think
So dont call me MR OWNER OPERATOR ... MR LEASE PURCHASE or should I say MR LEASE/ RENT ( cause we all know its not designed to be a purchase)
You speak of volume discounts as if PRIME/ CRIME is all that has them in the world
If you purchase a truck at a outside vendor and lease it on to a major carrier such as lets say SCHNEIDER ( I dont work there) I pull tank for a small company ... You mean they dont get the same discounts and buying power as CRIME ..... Sure they do same NATIONAL TIRE ACCOUNTS , FUEL, PARTS, INSURANCE, etc the list goes on
Tell the truth about your home time
You do good to probally be home 1-3 days a month and you probally
(I dont know this ) have a family such as KIDS etc that are not already grown
Home time is a key to drivers these days and they want to see their familys not just LEASE/ RENT a CASSCADIA cause it looks cool
Sorry but we just have to agree to disagree
another key I saw was you say your fuel cost is 0.48 then 0.19 with the FSG which is fine but at the end of the day the freight is paying you 0.80-0.90 for all miles. then you take away
1. the 0.19 for fuel you speak of
2. truck payment lets say 0.15-0.20
3. Insurance
4. Escrow
5. Idle time ( not meaning idleing the truck meaning sitting still till next load )
6. IFTA
7. PLATES
8. PERMITS
9 0.04 you say they charge you for the truck for each dispatched mile another thing to look at here for a newbie is if you are Dispatched 400 miles empty and you pay 4 cpm for that with no revune how much did you make on that empty move ANSWER = NOTHING you paid them 16.00 plus fuel even if you get FSG going by your numbers its roughly $80.00 in fuel also ...
So at the end of the week what do you make really after the ESCROW is taken out at I would say 7-10 cpm
net what 0.30 cpm
WOW !!!!!!!
I guess I am MR OWNER OPERATOR as you say yourself cause I net no less than 0.70 cpm pure profit and in some cases over $1.00 and thats for all miles
HMMMMMMMMMMM !!!! ( as you stated )
I guess I am doing quite well MR LEASE/ RENT
GOOD DAY TO YOU SIR -
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