How do truck companies make it?

It depends on what your per mile costs are. It's relatively easy math. Each individual truck will have it's expenses, and then the office expenses are spread out over all the trucks.

 

Costs per mile?
I'd like to hear your sincere opinion on this one Lilbit...

1st option: I just bought a brand new equipment (trk and trl) and have around 3400 monthly payment...
2nd option: I am driving my already paid off truck and trailer...

Should I be considering accepting lower rate from a broker under the second option and how much lower?

Thanks in advance.

 

Even if you have the truck and trailer paid off, you don't accept lower rates. You need to be planning for replacing that truck, even if you don't need to right now.

If you are driving an already paid of truck and trailer, you still need to be keeping replacement in the mix. Just because it's paid off doesn't mean you won't need to replace that truck at some point.

If you aren't planning for that, then what happens when something happens that puts that truck out of service? That's where too many go wrong. They figure they have a paid off truck, so they can get away with charging less and then end up out of luck when something major happens to that truck.

 

I appreciate your answer. I did know all that already before and am exercising that same phylosophy from the very beginning of my trucking business.
Your previous statement "depends on cost per mile...each truck will have it's own expences" brought to me some confusion, so I was just testing you. Hope you understand and forgive me.
Thank you for the clarification...I agree 100% with what you've just said.
Wish all other drivers would be able to see it this same way...we all would be getting some significantly better rates from brokers these days.

 

I have never understood why some think just because they have their equipment paid for they can haul at cheaper rates. Just poor business people that shouldn't even be in the business.

If you have a $2500 a month truck payment or a $0 truck payment you shouldn't haul the load any cheaper. I see guys taking a cheap load just to make payments because they are either broke and behind in payments or they just are idiots at math. You have replacement cost and one of these days you will either need to replace the truck itself or the drive train. The smartest thing a person can do when their equipment is paid off is take that monthly payment and put it into savings and not touch it.

One thing is for sure we have had drivers cutting the rates and hauling cheap since the mule train days and it will continue way after we are all dead and gone. I just sit back and laugh and now that I am not one of them. 10-4.

 

No problem on 'testing' me! I should have been more specific with the previous post.

Some states have lower registration costs, some small companies will have a few more trucks, so their 'office' costs are spread out over more trucks, etc. If a person lives in a state with no state income tax, those costs will be less.

The cost per mile will vary some, but if an owner is not planning for equipment replacement, they are setting themselves up for major problems.

 

lilbit is exactely right--as well as the truck ages your maintenance fund has to increase as well as compared to a new truck
once the truck is paid for--you will retain more money than before--but then your write offs and taxable income income will be higher as well
its kind of a give and take situation