Steps to "Lease On" to a company

Congratulations on the journey. Sincerely.

You didn't answer directly and you don't like writing books so how much was your line of credit for fuel so we can see what the minimum amount of cushion you advise starting with?

So far we 3500 + fuel acct =X

Can you fill in the blanks?

 

After working for a company for over 20 years I decided to get back into being an O/o however my timing with the market was slightly off. I have always believed in having multiple reserve backup not just one or two but plenty of them (Home equity, stocks & bonds, various investments, multiple cash on hand accounts etc.) In trucking some people think $10k is enough to start a business whiles others know that it isn't. After scoping the Trucking March in June of 2022 I saw a storm occurring but could not see how bad it would get however, instead of running my own authority with all this factoring or quick pay stuff I went lease on. This too has been a bumpy road because other carriers don't respect you necessarily even with almost 30 years of experience and sometimes you have to simply move on to the next. Wait time between finding a carrier that has direct customer accounts, operator professionally with their dispatchers, account receivables, good profitable operations and even basic Fmsca Clearinghouse accessibilities for some carriers (large or small) can be a challenge. Some Owner operators and drivers think big companies is better however (look at 'Yellow') that is not always the case on how a company is operating.

Whiles a Owner Operator who is planning on leasing onto a carrier a good rule of thumb is have that extra $40k in the bank in case you need to change carriers. Usually $10k/mth if you still have a mortgage or a car note and truck payments etc. At the end of the day being Leased onto a carrier is still a business and should be treat just as a business.

 

Good advice, money helps when you hit bumps in the road. When I take on an owner operator I look at if they are going to be able to serve to the company’s standards. Good equipment, knowledge, and fiscal strength are important to us. Otherwise, they’re probably a liability and won’t be able to serve for long.

 

$10k, which in early 2012 was about two weeks’ worth of fuel or a little bit less. I had to make sure I hauled some loads of fat cattle because the packing houses paid in 7 days on fats. That kept me going the first few months until I didn’t need the line of credit anymore, then spring of 2012 I was running feeders out of Cali and it was off to the races.

This was back when most people who had guys pulling their cattle trailers wouldn’t pay you until they got paid. That’s why I had to haul fats to make sure I had money in the bank. Leasing to a company that offers a fuel card and pays within 7-14 days would’ve been a way easier road. The line of credit wouldn’t have been needed, I could’ve just gone to work.

 

Thanks for the numbers and explanation.

So more or less in 2011 you had a $13,500 cushion and on an inflation calculator that puts it at $18,739.32 in today's dollars.

Which is pretty close to the bottom range of 20k that the op is looking at.

I guess the next two important comparisons are what was your equipment at that time and I'm beyond ignorant of the cattle hauling market so what was the situation like in 2011 as compared to today?

 

I had to run on my own fuel money, and fuel was over $4 and I was running 4k miles a week on the low end up toward 6-7k on big weeks. That’s why I needed the $10k loan and I’d pay on that with the money from the fat cattle loads so I could keep buying fuel until the money from the feeder loads started showing up. I said early on in this thread that my opinion that $20k would be plenty provided the OP is going to a company with good freight and a fuel card.

My truck at the time was an 03 FLD120. I put it on the road Jan of 2012. By May of 2012 I paid my friend back for the down payment money. By Oct of 2012 I paid cash for an overhaul. And by March of 2013 I didn’t owe a thing on it and tore it down and rebuilt it. Like I said, I wouldn’t recommend my route to anyone, but in my opinion going to a company with good stable freight, a fuel card with big discounts, and 7-14 day pay having $20k left after getting the truck would be plenty. Anyone could make a go of it at the company I’m at now if they were in that position.

 

As far as the market back then, rates followed the fuel. About $4 a loaded mile. When I started running Cali a couple times a week we were getting $3 a mile on fats out of Montana to Fresno and $4 a mile on feeders east to Colorado. Not sure what the rates are now because I don’t talk to anyone doing the long stuff anymore, but my brother is 5.50 to 6 a mile on what he does, but he runs for a guy who owns 5 trailers and they mostly haul their own stuff.