please explain Owner Operator why lease to a company?

Fortycalgloc: Quote:>>Because you don't know what you're doing. The above poster was merely stating that for that extra 11 cpm, you handle everything to do with compliance, insurance, no fuel discounts, etc. It's not worth it.


What he said:^^^^^ Does 11cents a mile extra cover all your additional expenses you have in keeping your own authority plus compensate you for all the extra responsibility and administrative work, if so do it.

 

I had stated that the 11 cents extra DOES cover everything in relation to having the authority plus more. I was leased to the company and they paid very good while I was leased to them, and the rates they offered while on authority were even better so why not stick with them is what I'm trying to say.

 

And everyone is telling you that 11 cents will not cover the extra costs. Have you even priced insurance? That alone is going to be anywhere from 9 grand to 15 grand annually. Get yourself an insurance quote and then tell us how good that extra 11 cpm is.

 

Clearly you haven't read my previous posts. I stated that I crunched the numbers in excel and there is a profit.

 

I have read your previous posts. My previous posts have been an attempt to show you that somewhere you messed up in your numbers. You have left out costs somewhere. Tell ya what, show us your numbers and how you concluded you would make more money on your own authority, for 11cpm more than you would leased on. Insurance alone will eat up that 11 cents, so where is this gains in profit going to be?

 

I have said a few times that it doesn't make since. But if you think it does and have crunched the numbers then do it. Come back in a few weeks and tell us how it's working out.

 

If you're getting 11 cents more a mile under your own authority versus a leased operator doing the same haul, especially if they're at one of the big carriers that passes discounted fuel tires etc cargo insurance covered by the percentage their carrier takes, there's no way you net more than them. Their headaches are much fewer and their costs are lower than yours if all other things are equal. Of course this would vary from carrier to carrier but that's why it's apples to oranges for a leased operator pulling in a $2.25 per mile hub average versus an independent averaging the same number.

 

.11cpm is an almost negligible amount, and it certainly won't cover the additional costs of running your authority vs their authority.

Example: under "their" authority they pay the cargo insurance....

Another?

Under their authority they supply the trailer, at no cost.

Off the top of my head I'm going to say that you would need to be getting an additional .75cpm to run your authority, with the associated additional costs, in order to be getting any financial benefit out of the arrangement that would justify doing it, as opposed to running under their authority...

I would need to see the numbers you're working with, as without the numbers it's just conjecture

The only advantage that using your own authority would give you is, that you would not be beholden to them for freight. They would get no piece of the action from any loads you booked outside of them, using your own authority....

At which point I would have to wonder why you would be "leased" onto them?

You would be much better off treating "them" like anyone else....

And billing them like you would the others.

Not to mention negotiating every rate on every load they offer.

 

We used our trailers while leased to them. Also I guess having everything paid off is a plus

 

For an O/O operating a single truck, there is less financial opportunity running your own authority than if you were leased to a carrier who had really good paying direct customers, provided you were compensated based upon a relatively high percentage of the gross...

However, there is also less opportunity to grow beyond the single truck model, if you are relying on someone else's customer base as the basis for your success...

This is what BBB is referring to when he talks about risk level.

The amount of the potential reward is dependent upon the level of risk taken.

In my opinion, this is not the economy to take a really big risk in....

Not to say that success can't be had during these present times, but the risk level is high enough, in these current times, to be a deterrent. Just mho.

Timing is a big part of being successful in business, it's not just your decision to take action, but also when to act upon that decision....Timing can be critical.