Leasing at Prime

It's not a motivator... cash in the bank is what keeps your business running.

 

I'm going to say this only with the best of intentions. EVERYBODY gets in a truck and thinks that this is so easy even a caveman can be a millionaire tomorrow. That's not the case. There is so much more to this than just running down the road... a fer instance is the HOS regs... unless you are an expert at how they work you're going to have trouble with them, and especially with elogs enforcing how they are applied to the letter. There is only one way to do this, and that is EXPERIENCE. It's hard enough to do this on the company side, let alone with the millstone of a truck lease tied around your neck. 4 out of 5 will fail to complete their first lease, most of them in the first year. This is primarily due to a lack of funds, AND A MAJOR LACK OF EXPERIENCE IN TRUCKING. You guys should plan on running a minimum of 2 years on the company side to gain the experience in trucking that is the prerequisite to being a successful lease operator!!!

I haven't looked at that stuff in a long time, but I doubt that it gets to that level of detail, especially as it applies directly to a Prime lease. When you go to lease orientation, one of the things they'll ask you is do you want to pay for the "basic accounting service" that runs $21.75 per week. It's invaluable, and answers most of those questions with some basic breakdown of what you're asking about. I don't know about you, but I feel that is money well spent. Most lease ops never bother with this, let alone looking at their settlements on a weekly basis... that's another huge problem.

I'm really hesitant to turn that stuff loose for the simple reason that you have to be proficient in how a spreadsheet works in order to use it. If you don't know how to do that, "Excel (insert version year) for Dummies" is a good place to start... and a copy of Microsoft Office. My spreadsheet has been tailored to the way I operate, and I am changing it once again to match my needs as an owner-operator leased to Prime, and using Abacus CPAs as my tax preparer. That's different than a lease-operator. Plus... and this is huge, it's done in the Open Software Organization Apache Version 3 spreadsheet software... I'm not using Excel. If you are proficient in MS Excel, the jump to OSO Apache is a minor inconvenience.

Really, what you want is something that answers the operational questions about your business that the Basic Accounting service doesn't. You want it as simple as possible, with as little data entry as you can get away with. I played with this for a couple of years while I ran on the company-side, and the least amount of effort that you can expend on this is where you want to be. It should follow the format of your settlement so that data entry is quick and straight-forward.

I break out the numbers to determine my fuel cost per mile (the way it's explained in the ACE-II business class,) keeping track of my maintenance cost per mile for both items charged to the settlement and out-of-pocket costs, keeping an eye on changes to my fixed costs, and tracking cash flow into the business both in terms of dollars and expressed as the operating ratio. Everything else outside of that is pretty much extra stuff, but it does force me to LOOK at my settlements every week.

Not at all... that's why I started this thread. I wish more potential Prime lease-ops would get involved like that so we can get you through that all-important first year.

A word on fuel economy. When I started this little journey, the experienced lease ops were telling us that getting over 7mpg was essential. Well, it was THEN. On my first lease, with fixed costs running around $1100 per week, it was quite obvious that getting up around 8mpg was essential to having a reasonable cash flow. Well guess what? When I finished my first lease, Prime was proud to offer me a 2013 Cascadia for $1300 per week, and we're not talking about a PeterPacker or a Kenworthless... they're more. You guys are going to have to scratch for every 10th of a mpg you can get in order to make this work, and it's only going to get worse as the government packs more efficiency requirements onto heavy truck manufacturers in the future.

You're going to pay the IFTA tax you owe... and it doesn't matter how much you pay for tax at the pump. If you don't pay enough, Prime will be pleased to hit you with an IFTA charge to cover it. If you overpay, you'll be getting a refund. You pay what you pay. So the ONLY strategy for buying fuel is to subtract the state per-gallon fuel tax from the pump price after our corporate discount, and buy as much of the cheapest base-price fuel that you can find in-route. It doesn't pay to drive even 10 miles to save a few pennies per gallon.

And especially IGNORE anyone who tells you NOT TO BUY FUEL JUST BEFORE TUESDAY CUTOFF! That will cost you a few thousand over the life of your lease. There is only one reason that even Prime tells you to do this: The biggest complaint about leasing is no money in the settlement. The easiest way for a carrier to fix this is to tell a struggling lease op to NOT BUY FUEL. It'll artificially inflate your settlement check by $300 to $500... but you'll still need that fuel on Wednesday. And most likely you'll pay more for it.

Hills... get off the cruise control, and run them on the pedal. Lead a little because it takes a few seconds for the turbo to spin-up, and limit how much turbo boost you use. Let off as you approach the crest, allow your momentum to carry you over. On a long down-hill stretch, allow gravity to bring you back up to speed. On shorter stretches, just use a little power to regain your speed.

Steeper grades. Downshift early, and don't try to force the issue. Delaying downshifting by pouring fuel into the engine will just use more fuel than you would otherwise. Establish a climb that doesn't have you pushing the throttle to the floor, and limit the amount of boost you're using. Don't worry if you have some more RPM than what Prime tells you is enough... its going to decay on a steep climb, unless you happen to have the engine's torque production at the point you need for the given load and grade. If you have a steep downgrade before going up, let gravity help you some... but don't be exceeding the speed limit, or Prime's max speed for your truck. For gawd's sake... stay in gear!!!

So how do you know if you're getting anywhere? Start a fuel log. Get a spiral notebook- don't use your computer for this, a pen and a ruler. Divide it up into columns... I used trip number, location, leg fuel used, leg distance, leg fuel economy, trip fuel used, trip distance, trip fuel economy, and the all important note column. Divide your trip up into "legs" that have some logical breakdown... writing it down at pee-breaks, fuel stops, end-of-day are good choices. You might want to do a leg for steep climbs in a trip. Write down the fuel used and distance... USE A CALCULATOR TO FIGURE YOUR FUEL ECONOMY. Add up all the leg fuel quantities, and leg distance travelled... and figure your over-all fuel economy for that trip. Now you have a record of what you did, and you can look back to see if you really are getting better or worse... as a way of developing your technique. A given rule of industry thumb is that in the same truck on the same load, drivers can easily vary as much as 30% in fuel economy. Get religious about keeping this up.

Now you have a way to evaluate changes in your technique. Only change one driving habit at a time, give it a couple of weeks to see if it really works. Keep what works, ditch what doesn't work. Get inquisitive about anything that can be different one load to the next.

Just antigel in the winter. Everything else is pretty much snake oil. If it really made any difference to use a fuel or oil additive, the energy companies would already have incorporated snake oil in their formulations. You'll note stuff like Motorkote depends on some guy telling you how much better he did, not real SAE testing. Hand me a million bucks, and I'll tell you pouring my dog's piss in the fuel tank will get you a zillion miles per gallon too.

It will get you a 2% improvement in fuel economy which is hard to measure... fuel company testing. That makes sense because the engine isn't working as hard to move the oil around because it is thinner. It's also more expensive, and Prime won't cover your PMs using synthetic. You have to pay for them no matter what as a lease op, but you won't be charging it to your settlement. The real advantage comes with using it for extended drain intervals coupled with oil analysis, but again as a lease op you can't do that. You're contractually held to getting your PMs at the interval established for your engine.

Airtabs are an offshoot of NASA technology, and there has been enough R&D testing (including wind tunnel work) to show the potential for a 2% improvement in fuel economy. I'd say it's real. They are supposed to help stabilize your truck in the wind, and cut down on spray in rain. You might get away with putting them on, but understand Prime has every right contractually to charge you for taking them off at your expense at the end of the lease. The same goes with a FASS.

FASS conditions the fuel, filtering out more of the impurities, but understand on the DD15 that Prime buys, you have that to an extent in the base system. Where FASS excels is removing air from the fuel... and you'll have a lot of dissolved air in the fuel towards the end of a day. It might help in the 3% to 5% range in fuel economy. You are contractually prevented from putting something on your truck like this, Aircel (magic tubes in the compressed air flow), or a bypass oil filter.

Well, don't just listen to me! Find as many SUCCESSFUL lease ops as you can, and throw question at them... find out what they do that makes them successful. Here's a tip... Prime has a driver rating system in the dispatch software. It takes into account your CSA score, accidents, on-time rate, and other things. The higher it is, the better access you have as a lease op to better-paying freight. It takes time to build that up, and the confidence that a lease FM has in your abilities. So answer this... two new lease ops, one fresh out of training with only a few months experience, the other with a few years under his belt as a company driver with a track record of on-time, no tickets, no accidents. Who gets the better paying (and more customer-sensitive) freight???

Ask away! That's what the thread is for, and we all learn something from it.

Next time you're at the terminal, drop by the leasing office, and ask them for a sample copy of the lease. Also ask them for the per-week costs for a Cascadia, a Pete, and a Kenworth. Understand that a first-time lease op needs every financial advantage they can get, and piling even a few hundred extra per week on that payment for a fancy truck is stupid.

 

That's the spreadsheet app in Apache...

 

Yep, that should work. You'll just need to work with your RA person on that.

Your trainer is completely wrong. The $1.02 per mile figure for linehaul only works as a weekly guarantee, and averaged over every 100,000-mile period. If you drop below that week-to-week, they advance you enough to make that up, but it is only a "loan" that comes out when you go positive over that. They also check at 100,000-mile intervals that your linehaul revenue is above the minimum... if it isn't you get enough to raise you to that level. That's the "guarantee," but it's really a revenue floor meant to keep you whole in a bad economy. Now, what you do make is 72% of linehaul, FSC (split the same way, but only on amounts over the weekly FSC number) and accessorials... and you get all of that money. For example, if you have a 1000-mile trip, and the revenue from all sources for that trip is $2500 or $2.50 per mile... you get all of that in the settlement that you turn the trip in on.

You have to sign a release as their guardian for each trip, and rider insurance which is a couple of bucks per week is tacked onto your fixed expenses. I believe they have to be over 11, but I could be wrong there.

The buyout price on a lease is specified in your contract by month. If you choose to use Prime as your lender, it's a $13,000 down payment discounted by $1,000 for every year of service, and the tractor cannot have more than 450,000 miles on it for that particular option.

Sounds well thought-through. Service life on the tractor is always a guess, but having enough set back for an in-frame by 1,000,000-miles ought to be OK. You'll need a fairly substantial maintenance fund for after the 3-year lease in any case. That's assuming a DD15 makes it that far... we just don't know yet. Evidently the ISX engine has a good chance of needing an in-frame by the 800,000-mile point. Plan on paying off the truck (if you need financing) on a two-year note.