Prime: Orientation and Training?

If you own your own truck, Im not sure of all the O/O details... other than your truck has to be less than 3 years old.

I dont reccomend leasing right now... the news indicates the economy is turning a corner... but I have yet to hear an upbeat post from my L/O buddies.

Freight rates are still low... doesnt matter how much you can run if the rate wont cover the expense.

 

Agree with U2 - I've actually been tracking the rates an L/O would be paid for the loads I'm running as a company driver. Even leasing an older tractor - with a correspondingly lower payment - I can't see where I'd be making even as much as I am as a company driver right now. As an owner-operator leased to Prime, you make a bit more on the linehaul percentage they pay you, but you're responsible for the fixed costs (FHUT, permits, plates, most of the insurance, qualcomm, etc.) plus your own maintenance. Most of that a L/O would pay (except maintenance covered under warranty) - the big advantage I see is lowering the lease payment. If you own the truck free and clear, you're in a great position right now - if the truck payment is on the same order of magnitude as a Prime lease payment, I'm not so sure about it.

I'd say that you need to do a lot more research - it's the price you must pay to even begin to be successful in this business. You can start with Ken Rutherfords show on Roaddog - a lot of information there, and the Owner Operators folder on this website. I'd also suggest putting together a simple business plan, and a no-BS financial plan before you sink any money into a truck... it's a real eye-opener. And it explains why lease-ops are having such a hard time right now.

 

I'm wondering how someone who isn't privy to what Prime makes per load can determine if they are in a position to lease? I know some companies pay their L/O's on a fixed per mile basis. Like Stevens pays their L/O's $0.82/mile. Pretty easy to come close to figuring out how many miles you need to make your nut. But, as I understand it, Prime pays like 72% or something of the linehaul. How do you know what they are getting on the linehaul so you can make an educated decision? Do they post those figures somewhere?

Is paying a L/O a percentage of the linehaul more the rule than the exception? Or is pay per mile more common?

And how would one know that their linehaul won't go down, say if the economy worsens or fuel prices increase? At least with a fixed per mile compensation plan, unless the carrier decides to change that number, it's pretty easy to figure out if you can make it or not. It just seems to me that although there may be upside for the driver by going with a percentage plan in good times, it could also prevent you from making any profit in the bad times.

There is probably some nuance of this game that I don't understand simply because I'm new to the game. But since I work under the premise that no question is a stupid question, maybe one of you veterans can enlighten me? How are you figuring out that you wouldn't be making any money currently as a L/O IronPony? Is there somewhere that we can see the same figures you see?

 

I would be happy to PM you specific figures and show you exactly what a losing proposition it is currently. I don't feel comfortable posting numbers for the world to see because 1. It is embarrasing, and 2. I don't trust everyone who prowls these threads. I do strongly disagree with the recurring theme that if a lease op fails, it is his/her fault and no fault of Prime. I keep reading that the driver didn't know what he/she was doing or didn't treat his lease like a business, etc... B%$(&^%T!!!!!! Also, you will NEVER see an actual freight bill that Prime gives to their contracted shippers/receivers, you get the supposed breakdown of the linehaul over the q/c. And don't forget, Prime's 28% is PURE profit if a lease op takes the load, even if the figures they provide to the driver are accurate.

 

Billsgirl... I know you're unhappy with the situation. I've been with Prime long enough to see how the freight rates affect an L/Os bottom line. And I"ve seen folks fail at this even when times are good - a lead foot will do it, So will treating your settlement checks like a paycheck. Or bad luck with tires, or some charges on a trailer for damage you didn't report...

And so will depressed freight rates. Average freight rates through '07 were up around say $1.44/mi to $1.85/mi. Since the 2nd quarter of '08 they've dropped to around $1 to $1.10 per mile, and lower. I've seen quite a few loads that worked out to be sub-$1 as well. I've kept track of what my loads would pay, and I can't see leasing working well now. A number of very successful L/Os I knew at Prime were forced out over the last year because of the decrease in rates - so that doesn't bode well for someone who has never done this.

So how do you know if this is a deal for you? Figure on around a minimum revenue to the truck of $2800 per week to cover fixed and variable costs. That doesn't include paying the driver. So add your pay per week on top of that. Then divide by the number of miles you expect to drive. Plan on that being in the neighborhood of an average of 2500 miles per week. And remember... these are averages. You can have great weeks and bring in a bundle - you can have really crappy weeks too. You can go home for a week and come out a thousand or two in the hole as well - and you won't see a "paycheck" until you work it off. The lease payment is there whether you drive or not.

So... you can see where this is going. Lets say you want to make $1000 per week. That means that you're going to have to have around $3800 gross revenue to the truck, and an average rate of around $1.52 per mile. That's the economics of it. In times like this there is very little you can do to increase the revenue side of the equation - outside of training or teaming. You have to lower the cost side to the max in order to even think of making it... which is why many of us harp on the business aspects of this.

Will freight rates go lower? Beats me boogdaddy. If you're crystal ball knows something we don't, let us know. How do you know if leasing will work for you? You don't until you're on the inside to find out about a company - I've heard some really bad things about say Stevens and their lease program - but I'm not on the inside over there to tell you if it's true or not. Companies that have both company employee drivers and lease drivers usually will let a company driver go lease easily. It doesn't work the same way if you can't make it - that's why its really important to know what happens if you can't make it work. As far as I know, Prime's claim to a "walk-away lease" is factually true. The only way you owe money is if the maintenance escrow accounts - I'm thinking of tire fund here - are seriously depleted, and you may owe money there. Otherwise, if there is a surplus, that ends up coming to you - if you aren't in the hole otherwise.

As far as the guys who pay lease operators a per-mile rate, it depends on what costs the leasing company picks up. 82 to 95 cpm is just not even close enough to cover all your costs, and generate enough of an emergency fund to cover the stuff that happens out there. It also means you have to drive you arse off in order to pay yourself.

 

actually you do get a copy of the bill and they are the last pages of your settlement, everything broken down linehaul and fuel surcharges. my husband is a lease op and is teaming atm and is making great money. i cant say how he would be doing solo right now, but january-may were good months for us as a solo. maybe you could check into getting someone to team with. the miles are there, hubby runs east to west coast nonstop. thats all they do. anyways my 2c

 

Thanks, IP, that was very easy to understand. To clarify one point about home time and getting "in the hole".....if you are an L/O and let's say you've been out a month or more and just need to get home to see if your wife is still there (lol)....I understand you still have costs on your offtime, but if you don't have that in the bank, cash on hand, do you pretty much have to stay out until you do so you can make your payment? Or, does the company deduct payments from your settlement each week, and if you obviously have no settlement the week you're off, that means you owe them 2 weeks worth until they're paid up? Is that what you meant by "you won't see a paycheck until you work it off"?

 

you make it up when you come back out, or you time it right and make sure you have a trip turned in for the week to cover your fixed costs while you take some time off.

 

You get a settlement every week, rolling or not. If you go home, you just don't have any revenue to offset the continuing debits from the lease. So when you go negative, "you're in the hole." Any ensuing net revenue after costs in subsequent weeks goes to pay off the debit. So... it might be awhile until you "see a paycheck." If you have a reserve account, you can always draw off of it for your "paycheck" or to transfer it into Prime's account to settle what you owe.

 

Yes I know what comes in the mail and it comes from Prime so that does not necessarily mean it is accurate and reflects the actual freight bill they charge. Just my 2 cents.