I was wondering if we knew the answer to this question, in this scenario the shipper would have new equipment (assuming a Dry Van), run that equipment 100,000 miles (all miles) per year, and have to pay the driver/employee wages and benefits whether the truck was rolling or sitting in line.
How much does it cost a shipper to run their own equipment?
Discussion in 'Ask An Owner Operator' started by powerhousescott, Jul 27, 2015.
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If your answer is more then above, please state what you think it should be. Thanks
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My private chemical fleet was in the mid $3.50 per hub mile on chemicals because we did everything absolutely correct. This is why Shell, Texaco and several other refiners no longer have a fleet, big money.
This is why a common carrier pays so cheap. He tries to build and maintain a professional structure for profit and there is not enough revenue.......well he's going to make his profit and things like trucks and fuel cost what they cost so the drivers wages suffer.
But here, consider this: A private fleet was too expensive for Kmart and Target, no way but Sam Walton said yes, I need it and Walmart vaulted way out in front of their competition never looking back. How?
Because he used his private fleet to pick up and deliver his goods and put it where he needed it now. Full control and full shelves and a happy consumer who gladly came back.
One of the great business lessons of all time.Last edited: Jul 28, 2015
Foxcover, 77fib77, powerhousescott and 1 other person Thank this. -
We just had this cost discussion at our biannual drivers meeting last week. I won't quote the number publicly but for a 3 year old or less very well maintained fleet it's way less than the 3-3.50 numbers quoted above. Good and consistent maintenance goes a long way towards keeping that number down.Last edited: Jul 28, 2015
powerhousescott Thanks this. -
The answer is 25-40 cents per mile.
It probably cost them nothing for it to sit because there big operations allows them to be self insured, or gets big breaks, and everything else is a tax wright off -
runningfr8, Foxcover, truckon and 5 others Thank this.
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There are many variables when it comes to operating costs in this business. For instance, with a private fleet they might have lower operating costs when it comes to insurance if they self insure. Their operating costs could be offset by hauling brokered freight when not hauling their own freight. Fixed costs go on whether the equipment is sitting or running. I would think that most private fleets would have higher operating costs than a common carrier. The main reason is due to their availability of freight options. With a private fleet, the shipper may need his equipment to be at a certain destination on a certain date. If they cannot find freight to pay some of their operating costs to reposition their equipment, they will need to deadhead and that will raise their operating costs. I don't know if Walmart saves money using their own fleet or not. I remember reading somewhere that the main reason Walmart created their own fleet was because they could not find enough trucks to service their needs using common carriers.
powerhousescott Thanks this. -
Being self insured opens up the doors for bigger lawsuits, this is why the shippers prefer to use outside carriers, we offer a layer of protection from the law suing public.
The big breaks that all of you seem to think they get come quite simply from purchasing power, if you buy 100 widgets you get X$ price, if you buy 1000 you get X$ price. You still had to spend a great amount of money to get those huge discounts that everybody seems to believe that they get.
Nobody buys equipment and lets it just sit around to get a tax break, there are much better things to spend ones money on for such tax breaks.
Every dollar that you spend to make 2 dollars is a tax write off. Each and every business owner gets the same benefit.
In order for you to be a successful carrier or owner operator you need to know first what the shipper could do it for themselves. Second what you can do it for yourself, then you negotiate between the two prices and remember that somewhere in their often times is a broker. Once you understand what the real money that is on the table is, you will start bidding your trucks differently.
Quit bidding your trucks on your cost to operate. -
I believe many shippers make more money reinvesting their profits back into expanding their core business. Trucking is a relatively low margin industry. Large carriers may only profit a few cents per mile in an industry that they are supposedly experts at or worse many lose money. public corporations are more concerned with operating ratios and margins than owning anything or employing anyone. That is how Mexico and China are stealing American and Canadian jobs.
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